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Thread: The US budget and revenue numbers, very simplified

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    God/dess Mr Hyde's Avatar
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    Default The US budget and revenue numbers, very simplified

    I pulled this together from some stuff I've read and plagiarized...it's a simplification of how deep a hole we're in WRT to our national budget deficits, revenues, and debt. Here are very round numbers of what we take in and spend at the federal level...

    U.S. income (mostly tax revenues) is $2,170,000,000,000. That's $2.17 trillion dollars that the US collects in revenue at the federal level. Now, some other numbers....

    - Federal budget: $3,820,000,000,000 (what the US passed last year)
    - New debt: $ 1,650,000,000,000 (the difference between revenues and budget)
    - National debt: $14,271,000,000,000
    - Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)


    Now, if we analogize this to a typical American family's budget, here what those numbers would look like....

    - Annual income for the family: $21,700
    - Amount of money the family spent: $38,200
    - New debt added to the credit card: $16,500
    - Total amount owed on the credit card: $142,710
    - Amount cut from the family budget: $385
    -Amount that the credit card will have next year with this budget cut-$158,825

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    Banned Melonie's Avatar
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    Default Re: The US budget and revenue numbers, very simplified

    ^^^ thanks Mr Hyde for the 'family sized' number crunching. It seems that once gov't budgets started to involve trillions, that most people have totally lost perspective on what those dollars really mean !!!

    However, the even scarier part is that a family would have to 'account' for unfunded future liabilities i.e. 'mortgage payments' rather than just accounting for the current year - whereas gov't budgets do not. When one does that to include promised Social Security benefit payments, promised US Treasury Bond repayments, promised gov't worker retirement benefit payments etc. the 'per family' share rises to well over $500,000 !!!

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    God/dess Zofia's Avatar
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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by Melonie View Post
    However, the even scarier part is that a family would have to 'account' for unfunded future liabilities i.e. 'mortgage payments' ...
    There you go again, making things up. Sometimes you are just too funny. But, if you were being serious, you would also account for the "family's" future income. But, that would just ruin your narrative. LOL

    Z

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    Banned Melonie's Avatar
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    Default Re: The US budget and revenue numbers, very simplified

    ^^^ yeah, OK ! I should know better than to post anything without full supporting documentation by now ...


    (snip)"The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

    This gap between spending commitments and revenue last year equals more than one-third of the nation's gross domestic product.

    Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling

    Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.

    Corporations would be required to count these new liabilities when they are taken on — and report a big loss to shareholders. Unlike businesses, however, Congress postpones recording spending commitments until it writes a check.

    The $61.6 trillion in unfunded obligations amounts to $528,000 per household. That's more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises.

    "The (federal) debt only tells us what the government owes to the public. It doesn't take into account what's owed to seniors, veterans and retired employees," says accountant Sheila Weinberg, founder of the Institute for Truth in Accounting, a Chicago-based group that advocates better financial reporting. "Without accurate accounting, we can't make good decisions."(snip)

    from


    Of course the 2010 figure of $528,000 per household is no longer accurate ... it's now even higher !!! And obviously the USA Today author used an analogy of future year corporate spending commitments being under current year corporate accounting mandates where I used an analogy of future year individual spending commitments ( i.e. 'mortgage payments' ). But the point is valid for either, i.e. that pre-existing claims on future income DO matter everywhere else but US federal government accounting.

    ~
    Last edited by Melonie; 08-13-2011 at 11:33 PM.

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by Melonie View Post
    Corporations would be required to count these new liabilities when they are taken on — and report a big loss to shareholders. Unlike businesses, however, Congress postpones recording spending commitments until it writes a check.

    The $61.6 trillion in unfunded obligations amounts to $528,000 per household.
    There you go again, making things up. Under FASB rules, the accounting rules that govern US publicly traded companies (and a lot of not publicly traded companies as well) liabilities are not counted on the income and expense ledger as you would have the government count them. Liabilities are accounted for on the right side of the balance sheet. Sheesh....

    Z

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    Default Re: The US budget and revenue numbers, very simplified

    how soon they forget ...

    (snip)" Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don't like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet.

    On top of AT&T's $1 billion, the writedown wave so far includes Deere & Co., $150 million; Caterpillar, $100 million; AK Steel, $31 million; 3M, $90 million; and Valero Energy, up to $20 million. Verizon has also warned its employees about its new higher health-care costs, and there will be many more in the coming days and weeks."(snip)

    from

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    Default Re: The US budget and revenue numbers, very simplified

    The snipping aside..... It would seem obvious to most that developed nations throughout the world have for decades spent more that they take in...... The difference being made up by debt.

    Anyone that thinks this money can be paid back with money of close to equal value is not paying attention to history...... Pols love to spend..... And we like getting stuff.

    Sure everyone wants govt to live withing it's means...... But everyone also wants to go to heaven.... they just don't want to die to get there.

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    God/dess Mr Hyde's Avatar
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    Default Re: The US budget and revenue numbers, very simplified

    The good news is, the overwhelmingly vast majority of our debt is owned by the US, in various forms.

    And even that owned by China is safe. They have nowhere else to buy bonds as safe as ours in the quantities that they need them.

    That said...we simply MUST move toward a balanced budget. It will be easier once the economy recovers and tax revenues go up, but we have to trim entitlement and military spending, and find some way to make health care more affordable.

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by Melonie View Post
    how soon they forget ...

    (snip)" Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities,
    It is clear that neither you nor an untrained writer for the Wall Street Journal know the difference between a liability and an expense. I can forgive an ignorant journalist. But you simply pull the vaguest unauthoritative source for your fantasies. When you learn the most basic of accounting rules feel free to post again. Until then rest assured that you are simply making a bigger fool of yourself.

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by mikef View Post
    Anyone that thinks this money can be paid back with money of close to equal value is not paying attention to history..
    And you would prefer deflation? Now that's really stupid.

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by Zofia View Post
    And you would prefer deflation? Now that's really stupid.

    Well everyone in the financial media talks about how Japan is suffering from deflation..... But the average Japanese citizen doesn't mind that their money holds it's value.... The cost of living has been very favorable to most in that country..... Here we allow the financial media to tell us what is right or wrong.

    Using the word stupid is a poor way to argue..... reminds me of another poster here.
    Last edited by mikef; 08-15-2011 at 02:40 PM.

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    Default Re: The US budget and revenue numbers, very simplified

    ^^^ I certainly know the difference between a future liability that is accounted for, and a future liability that is NOT accounted for !!! That is the basic point. Current year expense accounting by the gov't clearly understates the fact that future year liabilities also exist.

    I understand that from a technical standpoint the gov't manages to explain this via a Supreme Court ruling that Social Security 'contributors' have no inherent contractual right to receive future benefit payments. So, in theory at least, next year's US congress has no legal obligation to spend money on Social Security benefits, thus from a technical standpoint no future year 'contractual' payment obligations actually exist thus no need for accounting of long term US taxpayer liability . THIS is the 'sleight of hand' gov't accounting in question.

    Asserting that such accounting practices are 'proper', and that such accounting practices accurately depict the future creditworthiness of the US gov't, is still the functional equivalent of an individual not being required to account for future year 'mortgage' payment obligations, on the basis that that individual could simply choose to stop making said mortgage payments without repurcussions. Of course, in light of recent events regarding delinquent mortgages / foreclosures etc. maybe you ARE right after all !!!

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by Mr Hyde View Post
    I pulled this together from some stuff I've read and plagiarized...it's a simplification of how deep a hole we're in WRT to our national budget deficits, revenues, and debt. Here are very round numbers of what we take in and spend at the federal level...

    U.S. income (mostly tax revenues) is $2,170,000,000,000. That's $2.17 trillion dollars that the US collects in revenue at the federal level. Now, some other numbers....

    - Federal budget: $3,820,000,000,000 (what the US passed last year)
    - New debt: $ 1,650,000,000,000 (the difference between revenues and budget)
    - National debt: $14,271,000,000,000
    - Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)


    Now, if we analogize this to a typical American family's budget, here what those numbers would look like....

    - Annual income for the family: $21,700
    - Amount of money the family spent: $38,200
    - New debt added to the credit card: $16,500
    - Total amount owed on the credit card: $142,710
    - Amount cut from the family budget: $385
    -Amount that the credit card will have next year with this budget cut-$158,825
    Updating the numbers according to Obama's latest proposed budget :

    Annual income for the family : $24,700
    Annual spending by the family : $37,900 ( they presumably will spend a lot less on guns ,ammo, hunting trips and foreign travel )
    New debt on the credit card : $13,300
    Total owed on the credit card : $153,500
    Spending cuts : $385
    Total debt owed at the end of next year : $166, 800.

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by Mr Hyde View Post

    U.S. income (mostly tax revenues) is $2,170,000,000,000. That's $2.17 trillion dollars that the US collects in revenue at the federal level. Now, some other numbers....
    No, that's tax revenue. Tax revenue and U.S. income are two different things. Total U.S. income for 2011 was approximately $15 trillion.

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by eagle2 View Post
    No, that's tax revenue. Tax revenue and U.S. income are two different things. Total U.S. income for 2011 was approximately $15 trillion.
    Correct. The Federal Government is bankrupt ; not the ocuntry as a whole. Not yet but we're getting there.

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    Default Re: The US budget and revenue numbers, very simplified

    Quote Originally Posted by Eric Stoner View Post
    Updating the numbers according to Obama's latest proposed budget :

    Annual income for the family : $24,700
    Annual spending by the family : $37,900 ( they presumably will spend a lot less on guns ,ammo, hunting trips and foreign travel )
    New debt on the credit card : $13,300
    Total owed on the credit card : $153,500
    Spending cuts : $385
    Total debt owed at the end of next year : $166, 800.
    Btw,many analysts say that both the income and outlay number are too optimistic i.e. revenues will ultimately be lower and outlays higher thanks to the recession. Oops , I mean "recovery" ( ? ).

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    Default Re: The US budget and revenue numbers, very simplified

    To add another cheery note : In his most recent congressional testimony, Treasury Secretary Tim Geithner admitted that Obama has no plan to reduce the deficit. None. Just that he doesn't like the Republican plan.

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