Guest opinion: John Q. Public faces daunting financial future

2011-09-26T00:05:00Z Guest opinion: John Q. Public faces daunting financial future

By BOB BROWN

The Billings Gazette
September 26, 2011 12:05 am  • 

It is said that “facts are stubborn things.” So are the figures on which facts are based.

The following example didn’t originate with me, but in revising and verifying it, I consulted the highly respected, bipartisan Concord Coalition. It is headed up by former Republican Sen. Warren Rudman of New Hampshire and former Democratic Sen. Bob Kerrey of Nebraska and has been monitoring the debt and factually warning about it for nearly 20 years.

Comprehending the magnitude of the debt owed by all Americans, now measured in trillions, is overwhelming for most of us who live in a world of hundreds and thousands. Recognizing that few analogies can be absolutely accurate, stubborn fact-based reality can, perhaps, be made more comprehensible if the numbers that illustrate it are distilled down to amounts relevant to real people.

To begin with, here are the actual raw numbers:

Projected federal government revenue (government’s income from taxes) for 2012 is about $2.635 trillion.

The federal budget (spending) for 2012 is set at $3.609 trillion.

The new debt, as a result of the 2012 budget (the difference between income and spending) is $974 billion.

Total interest bearing debt owed by the federal government is about $14.685 trillion.

The budget cuts made earlier this year resulting from negotiations between the president and Congress over the debt ceiling came to about $37.7 billion.

How would government finances equate to a member of the American public?

Well, John Q. Public has an annual income of $26,350, but he’s spending about $36,090. His new debt is therefore about $9,740, and must be added to the $146,850 that he already owes, and is paying varying rates of interest on. To get his finances in order, John recently took the “bold” action of reducing his spending by $377.

The newly constituted super committee of 12 has as its goal to reduce the debt by $1.2 trillion over 10 years. That would amount to $12,000 over 10 years, in the example of John.

The Simpson-Bowles Commission’s recommendation would reduce the debt by about $4 trillion over the next eight years through a combination of roughly $3 in cuts to $1 in new revenue. That would be about a $30,000 cut that John would have to make in his spending, and a $10,000 raise in his income, by the year 2020.

President Barack Obama recently proposed a $1.5 trillion tax increase to be paid by wealthy taxpayers that would increase John’s income by about $15,000, and be balanced primarily with reductions of about the same amount, over 10 years.

Simply allowing the “Bush tax cuts” to expire for those making more than $250,000 a year would increase John’s income by about $800 a year, right away.

John’s plight is well known, and he is being inundated with conflicting advice from his constantly squabbling Democratic-Keynesian and libertarian-Republican family members. Both are certain that only they know what’s best for John. Frequently “gridlocked,” John instinctively avoids controversial decisions.

John’s problem is extremely serious but probably not insurmountable if he deals with it soon and seriously. He has options, and Simpson-Bowles may be the best, but his uncompromising and conniving advisers loudly disagree with different parts of it. The longer John delays the more critical his predicament will become, and the more limited his options will be. His household is divided as its debt figures keep multiplying. John Q. Public — the government of we the people — must face up to the stubborn facts and act.

Bob Brown of Whitefish is a former president of the Montana Senate and Montana secretary of state.

 

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