What If the National Debt Were Your Debt?
- Articles, Blog

What If the National Debt Were Your Debt?


According to the White House Office of Management
and Budget, the federal government collected $2.2 trillion in 2011. That includes revenue
from all sources: income taxes, payroll taxes, corporate taxes, excise taxes, estate taxes,
tariffs, and all other sorts of taxes and fees. Also in 2011, the federal government
spent $3.8 trillion and was $14.6 trillion in debt. These numbers are too large to comprehend.
Let’s put the federal government in perspective. The average American household earns about
$50,000 a year. Now imagine if the federal government were the size of an average household.
In 2011, this household-sized government would have spent almost $88,000, or $38,000 more
than it earned. That’s like the household spending its entire income and then buying
a brand new SUV. If the government spent all of its money, how did it pay for the SUV?
It used its credit card. Last year, the government spent all of its
money plus $30,000 more. That’s another SUV. And it did the same thing the year before
that. Our household-sized government has been spending more than its $50,000 income for
a very long time. In fact it has racked up a credit card balance of $320,000. The government
currently pays about 3 percent interest on its loans, so that means that our household-sized
government racks up about $10,000 a year in interest. Now imagine if you earned $50,000 this year,
spent $88,000, and had $320,000 on your credit card, that charged you an additional $10,000
a year in interest, you might be contemplating bankruptcy. Our government is no different.
Our government has demonstrated that it can’t be responsible with its credit card. It’s
time to take the credit card away, before it becomes impossible to pay the bills.

About Gregory Ralls

Read All Posts By Gregory Ralls

100 thoughts on “What If the National Debt Were Your Debt?

  1. Unless the huge deficits itself is slowing growth. I won't buy a house, car, etc. unless the budget is brought under control. And just because someone disagrees with you does not necessarily make them an idiot.

  2. Budget deficits can cause crowding out but since Investment-Saving relationship is relatively flat in the US, it does not have much effect. If you think that cutting spending would help equilibrate the economy, well look at Europe. They are going through austerity and getting double dip recession.

    The point is to promote the increase in output and by doing that, the national debt will look better. Thats what happened during the birth of the dot com industry.

  3. You are lumping Europe in one big basket. I hear Germany is doing well. It is only countries with out of control welfare states with the big problems with austerity (PIIGS). I believe that increases in output has been maxed out. There is only one way to go, cut spending.

  4. You are right, Europe and US are different. Germany is actually not doing so well because they are in a recession.

    Im not saying we should increase spending irresponsibly. All I am saying is cut spending in areas that are inefficient, maintain spending on programs that create postive externalities & increase subsidies for R&D & education. If government cuts spending to "balance the budget", there will be no fiscal policy. Fiscal policy is what is needed to promote economic growth.

  5. I think what he's saying is that it's going to be incredibly complicated and messy.

    Can you really get everyone to agree on an interpretation of the original constitution, and agree also agree to collectively abide by it? I mean consider for a moment just how many factions cant that agree on anything.

    These days we got people that want everything from corporate fascism, to socialism, to a modern christian theocracy.

  6. The constitution is pretty easily understood on most parts. How we elect, branches of govt, and their powers. That is the easy part, and the Federal government is supposed to be easy. All rights not mentioned for the fed. gov. are states rights. If people disagree, they may move to a state that they do agree with.

  7. Tell china to screw off and amend the constitution to say that the government can't spend off of credit…. Also, make it say that you need a decleration of war from congress in order to go to war and that the government cannot issue a double tax on income like the federal income tax… Just a few "wacky" Ideas.

  8. So why is anyone lending the United States money? That is one broke family who will obviously never be able to pay their debt off. The U.S. should really just declare bankruptcy then cut spending by 50%.

  9. Two problems with this presentation:
    1) It does not address what happens when the interest rate goes to 6% (or more), which it will – it has in the past, it will in the future.
    2) It dies not address the other obligation of $6,500,000 (AKA $125 Trillion in unfunded liabilities). How is this household going to pay off almost $7,000,000 on a $50,000 income? Oh, yeah – THEY CAN'T!!!

  10. The problem here is so many people depend on the government debt that stopping cold turkey ala bankruptcy would out do the Great Depression in terms of economic turmoil and the Reign of Terror in terms of social.

  11. You cannot compare government debts to the household debts. The idea of bankruptcy for a government is ridiculous; because the government is the source of money it cannot default on a debt in a currency that it controls.
    Deficit spending is one of the biggest contributors to economic growth. In fact in the history of the US the deficit has risen annually except for 6 brief periods, all of which were followed by recession.
    You're argument is invalid and you're praying on the ears of ignorance.

  12. Deficit spending adds to both sides of a ledger, not just one. Otherwise the quintupling of our deficit spending since the recession would have resulted in the greatest economic boom ever.
    Every cent not covered by debt is printed, resulting in inflation that eliminates that "growth".
    Interestingly deficit spending has rarely ever had a positive effect, and often extended recessions.

  13. So many gvts have debts. I know Qatar, Saoudi Arabia and Monaco which haven't got a debt, their might be another few. That raises the question, what is wrong with the system? And also : what does a gvt do which is NOT in debt. Spending it all in a most irresponsible way?!

  14. There are so many reasons your comment and this video are misleading and inaccurate that I don't know where to start.. so just pick up any Economics 101 textbook and read what it says about the U.S. debt. Or ask any economist. Or any educated person, really.

  15. Well inflation in the last couple of years has been under 2%, so I don't know what inflation you're talking about. And no, the deficit grew in response to a severe global financial crisis and ensuing recession, so clearly there would not have been "the greatest economic boom ever."

    And interestingly, this country has been engaged in deficit spending on a nearly-continuous basis for almost 250 years, so your claim that is has never had a positive effect is strange.

  16. It's simple math.You double the amount of money, it's value is halved. But it doesn't happen overnight. I see it hitting in 1 to 2 years.
    We have not been a country for 250 years.
    Deficit spending doesn't just magically appear because of global financial crisis's. Somebody has to spend the money. But it was so massive that if it worked, yes we should be in a big financial boom, not still suffering.
    Our growth was not due to deficit spending, it was in spite of it.
    Not enough room to explain.

  17. You can't use "simple math" to describe an economy. Real life much, much more complicated than that.

    Yes, I was rounding. Hence the "almost 250 years."

    Deficit spending doesn't "magically" appear, but it does automatically appear as a result of decreased tax revenues and increased spending un unemployment, etc. In addition, the debt to GDP ratio automatically increases as a result of decreased or negative output growth and the aforementioned automatic spending increases/revenue decreases.

  18. And please, "it was so massive that if it worked we should be in a big financial boom?" How are you measuring the size of the stimulus? In absolute terms, 800 billion is massive. But relative to the 16 trillion dollar U.S. economy, which is all that matters, you can't say it's "massive." And even if you still want to call it massive, it doesn't matter, because the recession could have been even more "massive." So in the end, we will never know if the stimulus worked or didn't.

  19. Keeping to 1 post.
    Deficit spending from 2009-11 was 25% of our economy. If deficit spending worked, yes there should've been a boom.
    If deficit spending's so great, why's it bad that people bought overpriced houses for nothing down before the last recession? You know, the thing that caused the recession?
    The Government only moves money, or borrows it. No wealth was created.
    What we need is to create wealth, not the illusion of moving it, or using credit cards.

  20. the national debt is nothing like private debt: horizons are much longer, yields are much lower, and all the govt needs to do is get GDP to grow as fast as the debt. How? By not cutting spending/raising taxes when output is lower than the long run equilibrium!

  21. I calculated this in 2011. Assuming that all payments go to the oldest expenses first (which they don't), we were at the time paying off the year 2007. I guess it's actually like Congress says "pretend we paid you" and to the Fed they say, "IOU."

  22. But a government isn't a household and treating it as such is the wrong way to go about it.

    Having a deficit is actually beneficial to a government so long as the borrowed believe it will be payed.

    The problem with a deficit is when it is so high that the borrower loses that faith.

    A government without a deficit would likely fall into a depression and would never move forward.

    A government with too large a deficit would likely go bankrupt.

    But a house doesn't benefit from a deficit.

  23. Wait a second , actually it's less than 3% if we account for inflation. (1.4%)
    Older money was wroth more so the interest paid was a little less. The ideal should get the debt charge from 3% to 1.4.% to cancel out any true expence , if it goes below the 1.4 value actually the value of the debt would decrease over time even if the number in dollars goes up every year. I'm wrong in any way?

  24. That points out the flaw with our unsustainable monetary system. You might want to watch "Money as Debt", which you can find here on youtube.

  25. Right, govt is a business that provides services. This business is run with our money. Now, if a business spends more than it makes, are you going to invest in that company? No, of course not, you are a smart person! You know that a business accruing debt continuously will collapse, leaving you with nothing. In the case of the collapse of the govt Americans will be left with none of the services, none of the protection, none of the benefits, and none of the money the put into the failing system.

  26. makes sence ,kinda, some dept is ok and benificial i guess,but do you think those $16trillion dept we now have and a deficit of $1trillion and those $2.9trillion interest we have to pay ,would give any borrower confidence to loan us more money ?
    i think we are about to hit the limit on who will borrow/loan us money,what happen then ? idk

  27. But this same government will have to keep paying this back through interest and it will take money away from the economy doing so. If the government did not do anything except keep order, we would have a much better economy. Our problems stem from things like welfare, and healthcare.

  28. What he said is not true, deficits destroy savings. Savings and capital accumulation cause economic growth. China saves money within its economy with low taxes and low deficits, this gets people there to have more spending power and many individuals make better decisions with money than governments, so the economy has a 10% growth rate. In the US however, we have a sad thing called "welfare" and "defence" where the government redistributes money and spends more than it can redistribute.

  29. You cannot compare a macroeconomic entity to a microeconomic entity. It's like financing a family the same as you would for a single kid. The economics may be similar but the factors are much more complex. For example, our debt is NOT owned mostly by foreign countries; it's owned by us. Citizens & the government itself owns most of the debt. Also, debt is common for most nations & it's paid off over a large amount of time, much larger than a bank loan is.

  30. Well if you look it up germany's interest rate on debt is arround 1% lower than inflation , so it's a possible thing.

  31. Stopped watching at "That's like the family buying a new SUV"

    Yeah, the only issue is that IT ISN'T. Government isn't buying everybody shiny frivilous things with the extra money. It's being spent on defense, medical bills, previously promised obligations, and a lot of other things. This is a horribly skewed analogy.

  32. wrong on both counts. the government doesnt issue currency the federal reserve does, thank wilson for that. the household has income and outgo same as the government.

  33. There is one thing this video isn't taking into account. Once a person or household goes into bankrupcy, it's creditors are forced to negotiate the debt in order to receive anything. That is probably what America is counting on. Most of the developed world, actually, is probably planning to go bankrupt and than bailout on their debt completely. This is YOUR money, YOUR savings that they are gambling away.

  34. Ha, used a pimped out Lada Niva as the example for things we overspeant on.I appreciate that little detail anyway.

  35. Yeah, it's incredibly offensive and deceiving. It's not even a valid analogy. Wealth at the individual level simply doesn't work the way it does at the national level. The national debt could probably be paid off more easily than fear-mongers like to say. That's not the problem.

  36. It doesn't matter what you spend the money on, it is still debt. The point is that all of those things are contributing to the debt and that we are making the problem worse every year. If you would have listened to the entire thing you would have heard why the comparison is valid instead of plugging your ears like an ignoramous

  37. An excellent and insightful rebuttal, but I'm going to go with data and statistics over how you think economics "probably" work.

  38. I did read the whole thing, then I looked up the organization producing the videos. Their a propaganda plug funded by the Koch brothers. Comparing social security and medicare to buying shiny cars is idiotic. Here's a better one, you're in debt and getting older so your medical costs are going up, on top of that your house got broken into so you buy a security system which puts you in further debt. Comparing it to shiny cars just dumbs down the issue and takes it out of its rightful context.

  39. A government is NOT a business. The two aren't even remotely comparable. They don't run the same way, perform the same kinds of services, they don't have the same goals, same kind of employees, same laws regulating them, or almost any similarities.

    On a side note though a business can continually take on debt so long as the rate is low enough and the business is growing fast enough.

  40. LearnLiberty is a propaganda arm funded by the Koch brothers. Their audience is absolutely the historically ignorant, only problem is that said group is the vast majority of the population.

  41. The data and statistics don't actually support his argument. They only say that the U.S. has a large amount of debt. For one thing, not very many people rely greatly on the value of my property, while many people rely on believing in American currency.

    If anything, this video is the one that's going by how the person thinks economics works. It sneaks in an assertion that people are being lazy / "socialist". BTW, you guys really shouldn't make a habit out of thumbing down moderate criticism…

  42. It doesn't matter if the govt provides the same stuff. It provides a service for a fee. That is the definition of a business. A business cannot take on debt forever. That is a simple fact. If you can do algebra you know that.

  43. The government does NOT provide a service "for a fee". It is fundamentally different to levy a tax than to sell a product.

    The government doesn't collect money the same way a business does, doesn't provide services the same way, doesn't allocate money the same way, doesn't respond to changes in the economy the same way, literally does nothing the same way as a business and if you don't understand that you need to go to school and learn how both a government and a business work.

  44. Pretty soon all people will say "Fuck it, Im not working anymore, I'll just go on the dole like everyone else." The country will collapse and it will be taken over by China.

  45. The fact that the economy can't seem to survive without governments propping it up constantly with deficit-spending is, in itself, pretty sad. I think our nations can enjoy healthy economies while at the same time keeping the books balanced, but it involves doing things quite a bit differently than what is currently being done. For starters, spending on agencies such as DHS and NSA needs to be severely cut back, as do military expenditures.

  46. you could actually cut all of the military (legit all) and we'd still be in the red…medicare and social security are the main reasons why we're in debt…now we can't seem to find people who will make tough decisions until it's up to my generation to pay a 130% tax rate

  47. You have my sympathy. What will you do? If you cut medicare and social security, there will be riots across the USA. There will be chaos and violence.

  48. eliminate welfare, housing program, food stamps, corporate welfare, bank bail outs, wallstreet bailouts, standing military, foreign wars and entanglements, abolish the united nations, that would be a start, after that we can sharpen the pencil and make real cuts, oh and government employee retirement

  49. no, they can provide their own retirement like everyone else, they don t provide much in service anyway, look at the state of anarchy, and 15 minutes after a fire it s a total anyway, and on a trussed house which everything today is , they are not allowed to entern to save lives as it s too dangerous

  50. and anyhow if the fed isn t ended immediately we have to have protected and encouraged the printing and circulation of individual notes as currency, passing that for people who manage their affairs properly, i d much rathar they improve their financial position than those amoral interanationalists

  51. No, we must follow the findings of bipartisan committee, Simpson / Bowles, cut our spending of military, entitlements, stop all pork-barrel spending and then raise taxes on the wealthy to have a balanced annual budget. Annually pay of 4-6 % of our long term debut and put our economy back on sound ground. Don't say we can't do it … Clinton did it 6 times in his 8 years.

  52. Problem is that the national debt IS NOT a person's debt. The faith and credit of the U.S. government is strong worldwide and would be much stronger if IDIOTS like you didn't run around like chickens with their heads cut off saying austerity is the only answer. It's working so well in Europe, I'm shocked you're not talking about that!

  53. if they are "only a few trillions" why the US hasent pay China, and trust me it will be true, in a couple of years.

  54. i know china doesnt owns most of the US debt, but is like a bank, is you dont pay them the next month, you will have to pay them 3% more, and the next month they will charge you 3% more, AGAIN, so let say the US has to pay china 10 million, if the US doesnt pay them the next month, it will rise to to 10.3 million, that happens every month, but the US can only pay 0.2 million so the US owns 0.1 million dollars more to china, each month, now imagine that in trillions.

  55. A decent number of the LearnLiberty presentations are good, and ask thought provoking questions from a libertarian perspective. Rarely slanting what facts are presented and how they presented to get a specific conclusion. This doesn't seem to be true for Prof. Davies though. Government debt and household debt are not the same thing, for one I cant get a 3% credit card, for another I can lose my job. I cant rely on revenues to increase the same way government does. This was just misleading.

  56. "The interest always gets paid" you say, no it doesnt, if the US pays the whole interest each month (0.3 million) it will fuck up the US economy more than how it is now, and the US not only owns money to China, maybe it owns to japan, korea, russia, europe, canda, too.

  57. That's easy i'd default and not pay it like any smart people who is in more debt then they can pay you know like what are government is in right now. Then again I guess if you were smart you'd not put yourself in the position in the first place. I own no one any money and never have not a once not even for a second I pay for my stuff up front I have no credit period but you know credit makes the world go round.

  58. Perhaps this why the government sends so much money on defense.If you have more weapons than the countries who you owe money to. Then you don't have to worry about them taking anything away from you.

  59. wow lets see how this worked out did the US get it's act together and payoff it's debt
    nope now we are closed until further notice lol

  60. Is it possible to change it so that the government's departments do not legally have to spend their entire budgets? That would actually save some money if they exercised frugality and thriftiness.

  61. This is hilarious! Thanks for the laugh, I love it when people make serious videos about subjects they know absolutely nothing about, bravo, Hilarious

  62. The comments confuse me? Do people not realize he scaled it down to make it simple and relative to the everyday family?

    If this comments are serious then they do not understand that the government always manages to get more money from you and spend more.

  63. Don't worry Obama promised to half the debt in his first term in office.. meanwhile he is spending billions on a worthless website and creating a healthcare system that is projected to add an additional 2.5 trillion in debts each year. Good Luck..

  64. As CommandmantNOVA said below, "SOVEREIGN debt is not the same as INDIVIDUAL debt." Indeed. It's crucial to understand the difference. For more information, check out this video I posted three days ago: New Economic Perspectives on the Government Budget, Deficits, and the National Debt

  65. too late – when you are already using a credit card to cover day to day expenses you can not recover unless you give up everything to break the cycle – no government is going to give up everything and expect to survive. they will just hold it together until the other guy wins for 4 years and hope it unravels there so they can be blamed.

  66. As appealing as the video is, this is a gross over simplification of a much more complicated topic. This is not a "must see".

  67. We could make it an option to offer everyone government bonds when pay day arrived. The money would come out of the checks of the citizen. Once the bond is mature then the citizen can collect. If only 10 million citizens put up only 10 dollars per week then we would start looking pretty. So forth and so on…

  68. Debt is really true inflation in disguise.
    If the accounts are always in the negative then inflation needs to rise to match it.

  69. Moral of the story: Our government is that kid who always blew his paycheque on payday, before he paid his credit card bill, which he continued to rack up anyways….all the while complaining and asking his parents to borrow more money.

    Don't be the government.

Leave a Reply

Your email address will not be published. Required fields are marked *