The U.S. Government Spending Plan

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It hasn’t been much of a secret that the U.S. economy has been struggling for the past couple of years. We have all felt it. Some of us have lost jobs, businesses, and quite a chunk of our retirement savings. But, since the citizens of the U.S. are struggling, guess who else feels the pain? You got it, the U.S. government.

In order for them to continue to operate, they need an income just like the rest of us! And, since many of us have a lower income compared to past years, the government makes less in taxes.

Budget Fundamentals

If you have put together a budget for your household (if you haven’t done this, you really should!), you first try to total up how much money you make each month. Next, you make an estimate of what your expenses are. If you’re lucky (or if you are already wise financially), your expenses total up to less than your income, which would allow you to save and invest. If you want to live on this earth without ticking a bunch of people off (because you owe them money), then this is probably the plan you’re going to want to stick with.

Curiosity About Government Spending

As I go through my own budget, I sometimes wonder how my income-to-expense ratio would compare to that of the government’s. I mean, I know the government deals with billions of dollars instead of a few hundred bucks here and there, but their expenses should still be less than their income, just like mine.

Thanks to this great find from my wife, I don’t have to wonder any longer (and neither do you, because I am generously sharing the information)!

Government Spending Scaled Down to the Average Household

Thanks to ChamberPost.com, I know have a great understanding of how the government is handling their money.

The government currently has a set income which is dependant on our tax dollars. If we scale that income down to the average household income, we can say that they currently make $40,711 a year. Using this same ratio, that means that their expenses are $60,741 a year! So, according to these number, they are spending 50% over their budget each year! Granted, these are the numbers before the 60 billion dollar budget cut, but even if it passes, the expenses will still be equivalent to more than $59,000 per year, which still puts them $19,000 over budget!

Government Spending in Household Dollars

And, as you’ve most likely already picked up on by the chart above, their current debt is equivalent to $244,266 when scaled down into the average household income!

This is actually a pretty scary picture. Unless the government decreases the expenses to be less than their income, that debt circle will just keep getting larger and larger. It looks like we’re in some serious trouble.

What are your thoughts when you look at this chart?

Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

13 Comments

  1. It’s easy to be in that kind of financial position when you are spending other people’s money and have no individual or personal obligation for the repayment of debt.
    Same problem in the workplace too!
    http://www.youtube.com/watch?v=KrG9i1iMItY

    • Very true Sharon! Bob McEwen (sp?) (a highly regarded economist) made some fine points on this. Basically, those that spend money that they did not earn will spend it far more frivilously than they will their own. Hence, the government can easily throw money into different sectors without much thought because it does not directly affect them.

  2. It sure does look like it. I’m not a big fan of Ph.Ds telling me that things will be okay. This is why you have to look at for yourself and plan for the future. It means that you have to save money because who knows what will happen? If you ever take a look at the US Debt clock the figure is absolutely crazy.

    -Ravi Gupta

  3. I’d always wondered what these numbers would look like if they were scaled down to a more “manageable” number. Now that I know, it’s a pretty scary picture. When I finished school, I had debt equal to almost 2 times my yearly income of 30k. Obviously, changes needed to be made, so I started paying down quickly. That, along with raising my salary has changed to me now having 50% of my yearly salary in debt.
    Changes obviously need to be made. Revenues increased, expenses decreased and things will even out, but they have over 6 times their annual income in debt!

    • Great job paying down your debt and increasing your income! Maybe you should teach a class for the House and Senate! 😉

  4. Fascinating post. Maybe there will be a short sale on the White House?

  5. This is a great approach to see something that is way beyond our understanding in a light we can all understand. What should they do? The answer is simple too, have a plan to bring it in order in a reasonable time frame. The problem is no one wants to really solve the problem.

    • You are so right! No one really does want to solve the problem, but it’s essential that everyone makes everyone else THINK that they want to solve the problem…

  6. Interesting post. Before you know it, State of the Union’s are going to be sponsored by companies. The government should look into generating passive income.


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