It seems to me that this country is faced with situation that is a rare occurrence in the past few years. You see, the White House and the Congress are apparently going to come up with a budget before the next fiscal year commences. Yep, that’s right – no “continuing resolution” that merely extends spending at the expiring fiscal year rate – and no partial government shutdown while feuding politicians fuss, fume, posture, and name call over the budget. An event of this magnitude would normally occupy front and center attention, however, other happenings, including mass shootings and political debates have kinda overshadowed the budgetary activities, but as usual I have tried to track what’s going on in Washington. So here are some observations on next year’s budget.
First, let’s take a quick overview of the anticipated budget for the fiscal year October 1, 2019, through September 30, 2020. The government expects to spend $4.746 trillion. (Almost 60% of the budget is obligated to pay for mandated expenditures such as Social Security, Medicare, and Medicaid with interest on the U.S. debt accounting for some $479 billion.) On the other hand, the federal government estimates it would receive $3.645 trillion in revenue resulting in a shortfall of a $1.101 trillion. This deficit must be made up by borrowing through U.S. Treasury-issued, interest-bearing IOU’s.
Okay, let’s put some actual numbers to this information. Government expenditures are anticipated to be $4,746,000,000,000 if I got all the zeros in correctly. Income is estimated at $3,645,000,000,000 with a deficit of $1,101,000,000,000 that would add to the debt which was $22,322,413,855,280 and rising when this was written. Don’t know about you, but numbers like these are simply beyond my comprehension – as one politician commented several years ago, “A billion here and a billion there will eventually amount to a lot of money.” Anyway, as a result of my inability to mentally grasp these numbers I have decided to put the federal budget in terms we ordinary, everyday folks can understand.
According to the most recent U.S. census figures I could find, the median household income for our county was $65,032 (The “median,” a handy dandy mathematical way of getting a handle on a set of numbers, divides those numbers into an upper half and a lower half.) What that means in this case is that half of our county’s household incomes were above $65,032 and half were below and thus represents a kinda typical household in our county So let’s take a look at how this household unit would be handling its finances if it followed the federal government’s example.
First of all this household would be already in debt about $398,000.00 on which it would currently be paying over $30,000.00 in interest – with nothing being paid on the principle. Its budget would call for total expenditures right at $84,600.00 leaving a shortfall of about$19,600.00 it would have to make up by additional borrowing thus adding to the household debt – and the interest on it.
Furthermore, this pattern of expenditures in excess of income and an ever-increasing debt would have been an ongoing way of life for this hypothetical household for some time if it followed the federal fiscal lead. I’ve known a few folks who have tried something similar and have gotten away with it for a while, but eventually found themselves facing bankruptcy. Some local governments have had a similar experience with the same results and a couple of states are being confronted with financial reality. So why is the federal government different?
Well, each year the Congress and White House agree to extend the country’s line-of-credit, that is, the limit on the amount of debt the government can assume. Otherwise our country couldn’t pay its bills and, like ordinary folks, businesses, and local and state governments would face bankruptcy This continuing extension of the debt limit is kinda like a credit card company continuing to increase the limit on customer’s credit as long as the customer keeps paying the minimum amount due each month – except there is never any paying down of our country’s debt. Nope, it just keeps increasing.
Well, the more I think about this, the more I realize there’s nothing I or most anyone else can do about it. Yep, it’s gonna be up to our great and great-great grandchildren to get this country out of this financial black hole – if they can. At least that’s how it seems to me.
Bill Taylor is a regular contributing columnist and area resident.