Macroeconomics for Microbrains

The GOP loves using their ‘family budget’ analogy when referring to budget negotiations. They get drunk on the talking point “families have to tighten their belts in these times, so should the government” and how we have to “live within our means”.

There are a few great articles out there by bloggers and the mainstream media on exactly how ass-backwards this metaphor is. These articles are written by people who know more about economics than I do, so I am going to let their articles stand for themselves. However, on a political level, even if you allow the budget debate to be dictated by their message frame — it still falls on its face, every step of the way.

You can see from the poll numbers on how Minnesota voters feel about the budget crisis at Minnesota Budget Project. You can also see how national voters felt about the debt crisis solution. In the end, we can conservatively say that a majority of Americans support tax increases when they combined with efficient budget cuts.

Let’s debunk this talking point:

Payment Delay on Loans

In Minnesota, to solve the budget crisis, the state simply put off paying their bills. There were no cuts, no tax increase, just a delay in the payments. This is one of the easiest financing tricks to analogize to a family budget. These payments still need to get paid, these are payments that are now owed. If you attempted to simply cut these

Most college educated people can relate to this financing problem. The GOP proposal to shift K-12 payments would be the equivalent of perpetually deferring your student loan payments. It may help you now, but if you don’t find a way to make more money to cut more out of your personal budget, it does nothing to solve your crisis. Not to mention the interest payments in both scenarios. There is no way to consider this an answer to the problem.

The worst example was also in Minnesota, with the selling of tobacco bonds. The best way to truly describe the financial disaster this will create is to…well…relate to the family budget we all love to discuss! What the Kochlers family did was in essence sell their $5,000 annual bonus for 5 years to receive $25,000 to pay off a horrible ER visit that they could not foresee. Now, each year for the next 5 years, they will pay about $15,000 each year to balance the loan.
This isn’t a good analogy, because to truly understood the absurdity you have to add about six zeros, twenty years, and about twenty percent to the example. It is truly kicking the can down the road.

Tax Increase on Top Tax Bracket

Obviously, this is why the shutdown in Minnesota has occurred. There were two proposals here: First, there was a 1% Income Tax on $150,000 Earners (Top 1%); then there was a proposal for a 2% Income Tax on ‘Millionaires’ (Top 0.03%). This is also a hard parallel to draw, because families can not just arbitrarily increase their income. Originally

There must be a way to draw some analogy to a government budget, because Republicans are so concerned with ‘tightening the belts’ of government spending because real American families have to as well. The reason Democrats are so bent on revenue raisers is because they believe that government programs being cut are too important to our communities while Republicans believe that regardless of a program’s importance, there must be a limit on spending.

Most Republicans and suburbanites cannot fathom it, but so many families that are in poverty are working two jobs. When they realized that their income could not pay for the bare essentials, they picked up another job because it was the only real option. You have to feed your kids, put clothes on their backs, and have a roof over their heads. With 20% of the country living in this situation, it is difficult to believe that the families that are struggling have to cut their family budget. Most of them are finding other incomes. If it’s the upper-middle to upper-class families (oops, job creators) that have to cut their family budgets overextended themselves by buying two homes, three BMWs, and a yacht then it certainly is not up to government to have the rest of us suffer.

Sin Taxes (Cigarettes/Alcohol)

This is an easy one. There are consequences if we don’t pay on time, overdraft, and break some other rule with the governing body on our loans. This is essentially the same thing. Since we pay the cost of health care, and you are a citizen, you have a few responsibilities. If not, you pay a higher rate. Some people pay a %24.99 APR on their credit card, others only 9.99% — all because of their lifestyles.
If the private sector can do, you cannot tell me the public sector cannot do it. Many health insurance companies charge you extra on your premiums and deductible if you are a daily smoker or a chronic drinker. The theory is simple, we pay more for you, so you are going to pay more for you. With the state paying billions of dollars of health care costs on these two substances alone, it is an easy call to make.

Health Care

We continue to cut health care and debate the efficacy of a national health care option. However, this might the easiest parallel to the family budget and the most important as far as handling a sound budget. Progressives want to pay for prevention and regular doctor visits now for people rather than pay for the Kochlers ER visit we discussed earlier.

Apparently, a Republican family would not buy their child their asthma medication to prevent an attack now, instead opting to just wait until they need to go to the ER — and pay 10 times the cost. No family could get away with this in their budget.

Abortion and Human Cloning, Voter ID Requirement, and Immigration:

Yeah, nothing to do with family or government budgets. There has been an over 100% increase in abortion bills at the state level. Immigration policy is rampant in the GOP debates right now. Yet, they are the party that is focused almost solely on finances and budgets.

Debt Default

There is not much I’m going to say about this because it is so obvious that it still shocks me months later that this is even part of the discussion. I want everyone who support the United States defaulting on their debt to call up their mortgage company, their loan companies, and any other outstanding financial they have and immediately start the defaulting process.
Then, especially with employers now checking credit histories, I want you to try and find a job or get another loan to correct your situation. If any American family followed this logic, they would never own anything ever again. The Republicans govern one way and then run their businesses and families another.


You cannot call yourself the party of efficiency if you promote defaulting on debt, shifting loan payments, downplay the need for more income, and cannot see the value is paying for things now rather than later.
The secret is this: Republicans run successful business. But they run government the opposite. They hate government and have no respect for the thousands of essential services they provide. So they try to run it into the ground.

The difference between government and a business is that you can stop them.


About Creed

I often ramble. What some people can eloquently say in 10 words, when most people would take 25, I will intentionally take 100. It's always been this way. This blog is mainly to spare my friends, family, and co-workers from my epic long rants.
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