I know this has little or nothing to do with the heating and air conditioning industry. Never the less, I thought it would make interesting (and to the point) reading. Maybe you can share this with your kids.

Much of this topic actually first appeared in an email my wife forwarded to me. I checked the numbers against various government websites and reworked that original email here. I don’t know the source of that email; otherwise I would give it credit.

My kids and I love to talk politics and especially economics. We are always speaking about the deficit and the debt and how our country is completely addicted to overspending to get what it wants and borrowing money from other countries to pay for it all. This behavior reminds me of most every broke person I know.

Here are some basic data points concerning the USA budget.

* U.S. Tax Revenue:                       $2,170,000,000,000

* Federal Budget:                            $3,820,000,000,000

* New Debt:                                      $1,650,000,000,000

* National Debt:                               $14,858,050,692,069*

* Recent Budget Cut:                    $38,500,000,000

 

Since we are dealing with billion and trillions, it can be hard for some of us to put these numbers into perspective, so let’s remove 7 zeros and pretend it’ss our company’s budget:

* Annual Sales (income):                              $217,000

* Overhead:                                                       $382,000

* New Debt to Suppliers and Banks:        $165,000

* Outstanding Balance on Debt:                $1,427,100

* Total budget cuts:                                        $3,850

* Net Profit/Loss:                                            -$165,000

 

Summary

If the US Government were a business, it would be doing $217,000 in sales with overhead of $382,000. That would create an annual loss of $165,000. The company would then borrow $165,000 to make up the difference. Since this has happened for so many years, the company now owes almost 1.5 million dollars to its banks and other creditors. The debt is equal to about 6.5 years of sales.

Management realizes that there is a problem so it starts cutting costs. With overhead and expenses at $382,000, the company only manages to cut $3,850. That’ .01%. That’ a meaningless and ridiculously small cut. What would the bank say?

Here is the scary part: Add seven zeros to all of those numbers and that is where the USA is at.

How many of us could run our business or household the way the government runs is finances? NONE OF US COULD.

Sources
*http://www.treasurydirect.gov/NP/BPDLogin?application=np as of 10/5/2011

You comment are most appreciated.