Quotulatiousness

October 21, 2013

The US debt iceberg

Filed under: Economics, Government, USA — Tags: , , — Nicholas Russon @ 09:53

Jon Gabriel has put together a clear, understandable way to show the relationship between the US government’s revenue, deficit and debt numbers:

When Washington raised the debt ceiling this week, the Beltway media breathlessly reported that the fiscal crisis had ended. Lawyers danced in hallways, bureaucrats twerked on the Metro, congressional aides kissed strangers in the streets — the Tea Party has been defeated! It was like VJ day for wonks.

As our political class exchanged high fives and reporters praised a return to “sanity,” I wondered how these odd creatures defined insanity.

America’s fiscal crisis is not that our debt ceiling was too low, the fiscal crisis is that our debt is too high. When I mentioned this to left-leaning folks, they seemed indifferent. “Obama lowered the deficit.” “I think Bush spent more.“ “It’s Reagan’s fault!”

So I made this infographic:

US debt iceberg

Since most graphs look like this, I focused on just three big numbers: Deficit, revenue and debt.

The analogy is imperfect, but imagine the green is your salary, the yellow is the amount you’re spending over your salary, and the red is your Visa statement. Then imagine your spouse runs into the room and shouts, “great news honey, our fiscal crisis is over. We just got approved for a new MasterCard!” Your first call would be to a marriage counselor or a shrink.

H/T to Nick Gillespie:

What is it that Hemingway always used to say? That thing’s not loaded? Or something about how the “dignity of movement of an ice-berg is due to only one-eighth of it being above water.” Yeah, well, the horrors of federal finances is pretty undignified just looking at the amount of spending versus revenue we do and then it gets really sloppy when you look at the huge amount of debt below the waterline.

4 Comments

  1. We have the same problem in Canada, though not to the same degree. It will take a brave politician to change the spending habits of government and fix this. The fix is easy too, just stop spending more money than you take it. The hard part, finding the place to stop spending. In my book that is pretty easy too, just stop giving away money to people and businesses that don’t need it. Shutter all the corporate welfare first, then stop grants to arts and crafts and all the mooching organizations. Focus on core requirements, safety, defence, etc.

    If you have to give a business a break, make it a tax break, and don’t give them anything out of public coffers ever again!

    Comment by Dwayne — October 21, 2013 @ 11:21

  2. There are very few governments in the world not running deficits, and getting them all out of the habit will be a painful adjustment. A big problem is that most people don’t understand what is meant when talking about budgets, deficits and debt. For far too many people, a “balanced budget” is thought to mean that the government has paid off all its debts and can now take on new debt for this pet policy everyone in the media is pushing. A lot of people think the debt == the deficit, so if we “eliminate the deficit”, we also eliminate the debt.

    Spending money is why people elect politicians to go to Ottawa/London/Washington/etc. … few of them are happy if their MP doesn’t get some tangible sign of more government money coming into the riding.

    Most people also have no clue how what percentage of the government’s budget goes to which ends: another reason why there’s always someone loudly crying for us to cut foreign aid (somewhere in the region of $5 billion in a total annual budget of around $250 billion): they think it’s a much bigger slice of the pie.

    Sorting out the actual corporate welfare numbers is much harder (it’s buried in several different parts of the budget, and not all of it is directly monetized anyway), but I think we’re both of the opinion it’s much higher than foreign aid. Arts funding is another one of those more-heat-than-light items: I think it’s probably tiny in proportion to other non-essential spending.

    Comment by Nicholas — October 21, 2013 @ 12:33

  3. You are right in saying that very few governments are not running deficits, and the Eurozone is showing us the future today :) The Mastercard analogy is great too! Problem is that the banks are too willing to extend credit too quickly.

    I only pick on Arts funding because it is one of the most useless wastes of government money. I am an advocate of the patronage system of day gone by. If an artist is worth it, they will find some philanthropist who will be willing to bankroll them. Otherwise, starving artist was a term for a reason :)

    I see the media and the “progressives” are starting to push national baby sitting again. God, I hope I don’t have to pay for everyone’s childcare… my wife stayed home and took care of our 3 kids, and we did without many things to make that happen. But I think our kids turned out okay. National Baby sitting is just another vote purchase idea by the bankrupt socialists side of the aisle in hopes of bribing more folks to vote for them by giving them something that other people will have to pay for. They can bite me.

    Comment by Dwayne — October 21, 2013 @ 21:04

  4. They can bite me.

    Actually, I think that’s item 7 of the election manifesto…

    Comment by Nicholas — October 22, 2013 @ 06:44

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