Keeping Up with the Joneses

You might run across this e-mail making the rounds. It's labeled "Federal Budget 101." The authors cleverly subtract eight zeros from the U.S. revenue, budget, deficit, debt and recent debt reduction figures and make the trillion dollar numbers more comprehensible by applying them to the mythical Jones family' household budget.

In the analogy, the Joneses have an income of $21,700 - what would be $2,170,000,000,000 in federal revenue dollars - but are spending at a rate of $38,200 by borrowing an additional $16,500 a year making their total debt in the form of loans and credit card balances $142,710 or $14,271,000,000,000 for Uncle Sam - you get the idea. In an effort to rein in their debt, they cut $385 of spending, or in congressional debt reduction terms, $385 billion for 2011.

"What family would cut (only) $385 of spending -- in order to solve $16,500 in deficit spending? You would think the Jones family would recognize and address this situation, but it does not. Neither does Congress" scold the authors.

Good simplistic reasoning. The problem with analogies, however, is that you don't get to only use the part that makes your point. The authors didn't note that the Joneses' take home pay of $21,700 just happens to be $650 lower than the national poverty level for a family of four. The vast majority of the funds poverty level families spend are for life's necessities; food, rent, heat, gas to get to work and education and health care for the kids.

Even throwing in their borrowing, at $38,200 a year they sure ain't vacationing in the Caymans. According to the National Center for Children in Poverty, a family of four needs to earn twice the poverty line, $44,700, to provide children with basic necessities.

And a NPR/Kaiser/Kennedy School Poll shows that people with incomes between the poverty level and twice the poverty level "also reported serious problems. For instance, about 40 percent -- fell behind in their utility payments or couldn't pay for medical care; and more than a third -- had too little money to buy enough food."

So just what do the authors expect them to cut? Food? Heat? Meds?

In downgrading U.S. debt from AAA to AA+, Standard & Poor's condemned the "political brinksmanship" of both parties but it takes special note, in three separate passages, that it finally acted because it's become apparent "the majority of Republicans in Congress continue to resist -- any measure that would raise revenues"as part of comprehensive fiscal reform.

Here's where the analogy hits home. The Jones family clearly needs to do something about the disparity between income and outgo, but cutting alone will not do the trick. There's simply no way for them to get out of this jam without increasing revenue.

Just like what Congress needs to do.