Government to Individual Comparison

[maat55]

I was just wondering what the governments finances would look like if it were a family of four earning 100k.

I guess that taxes(All kinds) would be the 100k income.
SS and medicare would be the live in retired parents.
Defense would be all the insurances(Car, home, health etc.)
The debt would be credit card debt.
Government employees and associated costs would be the utilities.
Schools and infrastructure would be a car payment
Congress, senate and white house would be the mortgage.

I'm sure this could be added to. I wonder what the allocation of income would be and would the family be bankrupt or headed that way.

Oh, and national healthcare would be the new lexus they are looking at.

[cooliemae]

The GDP for 2007 was 13,807 Billion Dollars and the current national debt is 10.7 Billion.

The debt accounts for 0.08% of the GDP.

So, if we're going to compare the goverment to a 100k household, that would be like carrying about 8K in debt. Not good, but not bad.

Just like any family, in order to get rid of the debt, we have to cut back on spending or keep current spending levels and earn more money (higher taxes).

The question is what do we cut, or who do we tax more?

[kork13]

The GDP for 2007 was 13,807 Billion Dollars and the current national debt is 10.7 Billion.

The debt accounts for 0.08% of the GDP.

So, if we're going to compare the goverment to a 100k household, that would be like carrying about 8K in debt. Not good, but not bad.

Actually, the case is much more severe. Remember, "income" is tax revenue. Total 2007 tax revenues were $2.7 Trillion. Total national debt is $10.7 Trillion. Total debt is nearly 4 times the total annual tax revenues!!

In terms of this scenario, Uncle Sam's family makes $100k/yr, and holds $400k in debts!!! YIKES!!!

[maat55]

The GDP for 2007 was 13,807 Billion Dollars and the current national debt is 10.7 Billion.

The debt accounts for 0.08% of the GDP.

So, if we're going to compare the goverment to a 100k household, that would be like carrying about 8K in debt. Not good, but not bad.

Just like any family, in order to get rid of the debt, we have to cut back on spending or keep current spending levels and earn more money (higher taxes).

The question is what do we cut, or who do we tax more?

I believe the national budget is 3.? trillion and the interest on the debt is 489 billion. Thats 16% of the budget, just for interest on the debt. I can't figure out how to incorporate the 40 trillion unfunded funds for SS and medicare.

[maat55]

Actually, the case is much more severe. Remember, "income" is tax revenue. Total 2007 tax revenues were $2.7 Trillion. Total national debt is $10.7 Trillion. Total debt is nearly 4 times the total annual tax revenues!!

In terms of this scenario, Uncle Sam's family makes $100k/yr, and holds $400k in debts!!! YIKES!!!

And that is just on the credit cards.

[kork13]

One thing of interest... The GDP is $13.8T, that means that the gov't only collects about 19% of that in taxes. How is that possible? I'm not sure what business taxes are, but I know they're higher than individual tax rates. And isn't the majority of Americans in the 25% or higher tax brackets?

[Inkstain82]

This imaginary family has the most incredible credit score in the world. It doesn't even follow the normal rule of credit, because people are so trusting of them that they are the only ones who will still be paying in an economic meltdown and they can borrow money at obscenely good rates.

[maat55]

This imaginary family has the most incredible credit score in the world. It doesn't even follow the normal rule of credit, because people are so trusting of them that they are the only ones who will still be paying in an economic meltdown and they can borrow money at obscenely good rates.

I've heard that it's world credit rating is in jeopardy.

[Inkstain82]

I've heard that it's world credit rating is in jeopardy.

Depends on who you ask. Economics are complicated, and I can guarantee you that at any given time, there is an expert making any conceivable argument.

You'll mostly hear that the U.S.'s debt is losing it's attractiveness from gold-standard libertarians who will use *any* news as justification for their railings against fiat money. Maybe they are right, but I'm pretty skeptical and I've seen too many of their predictions not come true (wasn't the dollar supposed to collapse with this mortgage crisis? Oops.).


If nothing else, U.S. debt retains it's status as better than anything else out there. We're the last domino to fall, and if we start defaulting, all investments are lost anyway and the entire system has collapsed.

[cooliemae]

Here a good read if your interested in our debt ratio to other countries.
America’s Debt to Income Ratio as Compared with Other Countries

[noppenbd]

One thing of interest... The GDP is $13.8T, that means that the gov't only collects about 19% of that in taxes. How is that possible? I'm not sure what business taxes are, but I know they're higher than individual tax rates. And isn't the majority of Americans in the 25% or higher tax brackets?

The median household income is around $50K I think, putting the majority of Americans well below the top of the 15% tax bracket. And remember, the system is progressive, so if you are in the 15% bracket with $50K taxable income you do not pay .15*50K=$7500. You pay 10% on the first $16K and 15% on every dollar above $16K (married filing jointly). So you might pay around $6.7K, which is only 13%.

Plus I'm guessing that this 19% is only IRS revenues, and doesn't include state income and sales taxes.

[prosper]

THis is an interesting scenario, but their is one thing missing. The Federal Government literally has a money tree in their backyard

[maat55]

THis is an interesting scenario, but their is one thing missing. The Federal Government literally has a money tree in their backyard

I hope that tree is a redwood.