Federal vs Family Budget Cuts | CheckBook IRA LLC Video
“Retirement Guy” explains the current Federal budget cut of $38 Billion and puts those numbers into perspective by comparing them to a family budget.
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Hey! This is Retirement Guy about to tee off. But first I wanted to share with you some really good news. Congress, and the first golfer, have been celebrating their scorecard. They came out and trimmed $38 billion from the federal budget. Now smiles, as you can see, were everywhere! They were all congratulating and high-fiving each other on a great scorecard. They’re all crowding around sharing the glory.
But is a 38 really a great score? Well, it depends. Was it on the front nine? Or was it the first five holes? We need a context. We’ll have to educate ourselves just a bit. After all, I usually don’t deal with billions of dollars. But maybe it is a good score. It certainly could be. I remember the first time that I broke par with the two under seventy. I was pretty proud of that I wanted to share the news so I did, with one of my rancher friends. He just sort of gave me a blank stare and said, “Gee, that sounds like a pretty high number.” It is kind of deflating actually. But maybe if 38 is really terrific. Well, let’s take a closer look at these numbers.
Let’s have some comparison. Now, right here is a scorecard and just remember the first time anyone who looked at a scorecard that didn’t know anything about golf, they needed to have some understanding, they needed to know what the the terms meant like, bogey, and Birdy, and regular greens in regulation, and fairways hit.
So, let’s take a look at these numbers.
OK, so here’s the politician’s scorecard. Now, look at some of the terminology. Tax revenues, federal budget, new debt, national debt, and the gigantuan numbers. You know, so what is a 38 really mean? Well, we’re going to change this, we’re going to use, Joe 8-pack terms. You say now, “who’s that? I mean I know of Joe 6-pack.” Well, Joe 8-pack because what we’re going to do is we’re going to take eight zeros off of the numbers. So, first of all, instead of tax revenues, you and I, what we would talk about would be, net income. Now remember, for the Federal Government, it is net income because they don’t pay taxes, they don’t pay social security, heck, they don’t even have Obamacare. They exempted all themselves. They don’t have OSHA. There’s a lot of things that they don’t have. So, the money they take in, unlike you and me, is net income.
So there’s this gigantuan number $2.1 trillion. Now, nobody makes that kind of money expect for Peyton Manning. So, if we take eight zeros off of that, what do we get? $21,700. So, we’re going to say that’s Joe 8-pack’s annual income. $21,700.
Now the Federal Budget, well that’s just a fancy term for the money we spent. Well, how much is that? Well, $3.8 trillion. Well, for us eight zeros, it comes out to $38,200. So already we can see, we’re kind of in trouble here. We made 21,000, we spent 38,000. Well, that’s actually not very good news.
Well, the next term is new debt. What we would call it would be, further debt. You know, how much further in the hole did we go last year. Well, if we took in 21,000 and we spent 38,000, then if we knock off eight zeros, we’ve gone into debt, $16,500. Not a good track record.
And then, our national debt, well the term for us, basic would be, Total in-Hockness. How much do we actually owe altogether. Well when you knock off eight zeros, it’s $142,710.
Now, let’s just take a look at his financial statement for a minute. Pretend this is your son-in-law, you know, the one you don’t like because he kind of reminds you of you when you were young.
OK net income: $21,000. Total money spent, they spent $38,000. They went in debt $16,000 this year alone. And the total debt is $142,000. Now we have some context for $38 billion. Let’s just see exactly what that would be. $38 billion, if we knock off eight zeros, are you ready for this? That means that as these 8 zeros melt away, that we have cut back our budget, yup that’s right, $385.
So, here we are, Joe 8-pack is gone into debt $16,500 this year but he’s high-fiving everyone because they cut back $385 this year. Well, what does that mean? That means $1.05 a day. So every single day, he’s going into debt, $45 more. He’s going into debt. Now that’s not how much he takes in, that’s how much he’s spending that he actually doesn’t have. He’s putting it on credit cards.
So you talk to meathead, and he’s going into debt $45 a day, and he says, “But it’s okay pop because on the way out, we don’t buy that extra pack of gum for $1.05, we’re making great progress.” So, now I know we’re just golfers and you know, we’re just workers, and so forth, but you know we are surrounded with some of the best and the brightest and they have our best interest in mind. And they probably know quite a bit more than we do.
“So, in my state of the union, our state, myspace is a nation, whatever you want.”
Now, some of the things we’re dealing with of course are numbers. And you know, politicians, they’re good with numbers.
“In fifteen months we’ve travelled to every corner of the United States, I’ve now been in fifty-seven states, I think one left to go. Last in Hawaii I was not allowed to go to even though I wanted to visit.”
So what does all this mean? Well, first of all, you have to study yourself. You can’t rely on the government to tell you. They’re not going to tell you the score. It’s not always in their self-interest to tell you the score. Fact is, they want to keep it quiet most of the time. But second of all, would you loan Joe 8-pack any money? I mean, this group is just not serious about the debt, and the lenders are taking notice. I mean, would you loan them more money if they came to you and said, “I owe $142,000 and I went $16,000 in debt last year, but I cut the budget $1.05 a day”?
The lenders are noticing this about America. In fact, Greece’s financial statements are better than the United States.
“What just might be one of most troubling numbers regarding the country’s economic situation. Startling. New numbers from the ranking member of the Senate Budget Committee. A new analysis by Alabama Republican Jeff Sessions claims that to pay down the massive US debt, every American would have to kick in nearly $45,000. That is more than any European nation including Greece.”
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This is the Retirement Guy saying till next time, fairways and greens.