Last year New York Times columnist Paul Krugman (7/8/11) wrote a sharp critique of those who argue that the federal government’s budget should be compared to a family. He called it one of the “right’s favorite economic fallacies,” pointing out:
No, the government shouldn’t budget the way families do; on the contrary, trying to balance the budget in times of economic distress is a recipe for deepening the slump.
He expanded upon it again this year (1/1/12), calling the government-as-family trick “a really bad analogy,” and explained how governments don’t pay off debts the way a family does–“all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.”
There are other obvious differences. A family doesn’t issue its own currency–a rather monumental difference. The wage earners in a typical family can’t decide how and when to give themselves a raise, which the federal government can do in the form of taxation.
The primary value in comparing the government to a family budget is to sound the alarm about spending–which makes it a very popular budget device on the right.
And the premise for a report on the new White House budget on last night’s ABC World News (2/13/12).
Anchor Diane Sawyer asked, “What does this budget have in common with the kind of family budget Americans wrestle with around the kitchen table?”
Correspondent Jake Tapper responded by removing eight zeroes from the $3.8 trillion budget; thus, the government “family” spends $38,000– but takes in only $29,000. And, Tapper reminds us, “our family”–i.e., the federal government– has already wracked up $153,000 in “credit card debt.”
The piece includes a soundbite of White House press secretary Jay Carney, who is followed by a clip of Republican Sen. John Barrasso denouncing the White House plan–and reinforcing the premise of the ABC report.
This family-to-government comparison has been dissected at length by many economists, and some reporters have pointed out the flaws in the analogy–not to mention that actual damage to the economy that could result from putting this folksy idea into practice. It is strange that ABC would choose to cover the budget debate through the prism of such an obviously flawed analogy. But it sure helps the Republicans make their case against the White House.
What would be “strange” is if the corpress stuck to the facts, don’t you think?
Well, not so much strange …
As utterly fantastical.
Unfortunately, President Obama has also used this idiotic comparison.
Families? You mean like the Mafia? Oh, that explains it.
Did you ever consider that this analogy puts the massive dollar amounts of the federal budget into terms normal people can comprehend? But if that might make the unimpeachable Obama look bad, I guess we can’t have that…
Thank you so much!
I watched this report, and was angered by the its falsity, disgusted at Jake Tapper (whom I previously admired), and depressed by the support given to mistaken ideas on the right. I hoped you would cover this!
In reply to Bearpaw’s comments that the President also used this “idiotic” comparison, he did not. He only said that family’s need to live within their budgets and so does the government.
In reply to Alene Cisney, Jake Tapper used to be someone to be admired,but when he went corporate, he sold himself to the devil
Jeff: There is no easy to understand analogy to the national debt. When the Fed can create lines of credit and can buy US treasuries, there is no comparison between family budgets and government spending. This has nothing to do with Obama.
ABC, like the other networks, does not recognize their role in educating the public. Compared to citizens of other countries, Americans are much less informed about the world. That is due to two minute news segments that oversimplify important problems.
One point that the ABC analogy distorts even further is calling the outstanding debt “credit card debt,” implying high interest rates and gouging policies, whereas the US government pays out very low interest rates at very attractive terms.
ABC has been on the “right” side of the news for decades; I often wonder why Diane Sawyer says essentially nothing of her tenure in Nixon’s camp. Not sure if ABC News is a subsidiary of Disney’s Fantasyland, but it seemed appropriate that Disney bought them – long ago it seems. And as you might expect, ABC is more focused on entertainment than news, and delivers the news for an audience they presume has the same focus that they do; I check ABC when I want a sense of “popular” sentiments. And to their credit, at least they are better than Faux.
Actually, I disagree completely with Krugman. The government is EXACTLY like a family. When a family can’t pay its bills, the first solution isn’t to cut its expenses. The first solution is to increase revenue. For the national family, this means a tax hike. The national family IS a family — it’s just a family that needs more revenue! Salvatore
that $12,000 a year the family spends on their home security is a bit excessive, isn’t it?
Krugman supported the bank bailouts. He claimed an alien invasion would help stimulate the economy. He claimed that the United States was in a depression AND that Ron Paul (if elected) would send America into a depressionâ┚¬”Âeven though we’re supposed to be in one already.
This idiot received a Nobel Prize? People take him seriously? Pathetic!
Yeah, Blame, he’s taken seriously because he knows what he’s talking about. Unlike your trollin’, ignorant self. It’s great fun to see Rightists agreeing whole-heartedly with those imbecile, propagandizing, “liberals” in the Liberal Media.
It’s revealing how stupid the likes of Sawyer and Tapper think the average viewer of their rancid propaganda is. From the stupifying arguments to the childish graphics to the “oh gosh” fake sincereity and sentimentality, they crank out this stuff day after day, and it’s actually getting worse every year. I look forward to their breathless reports after the Iran war starts; I also look forward to how they will “cover” the protests that will ensue, and how they will bury the vast amount of criticism and fury that will be directed at them for having helped start the whole ruinous and nasty affair.
No a family does not issue it’s own currency.Or currency that is worthless as counterfeiting because it is backed by nothing.Is this article supposed to say that government can do all kinds of stupid things that we the people can’t?Yeah I can buy that
Saying the Fed can print money at will does not make the analogy go away it only makes it worse. Instead, the family has deranged uncle who is a counterfeiter in the basement.
Buying bonds is buying DEBT. Saying government debt is soooo… much different than private debt is a distinction with no difference in the results. Government debt is a promise to extract debt from private citizens and corporations.
Still, it’s true we cannot “pay down the debt”. All of our currency is debt. If it was all paid off, there would be no currency. It’s great we are all getting to see just how ridiculous the whole “Let’s use debt as a representation of wealth” thing is. It only benefits the people issuing the debt.
“Permit me to issue and control the money of a nation, and I care not who makes its laws.” –Mayer Amschel Rothschild, International Banker
” All of our currency is debt. If it was all paid off, there would be no currency.” Huh? Paid off to whom? And in what?
So you are saying its okay to have 16 trillion dollars in debt. THERE IS NO ARGUMENT to make that okay you nuts.
Liberals. Face it. you have put your kids future at RISK!
Oh, so in reality the national debt is not my debt or your debt and so who cares?
Oh, it is all or our debt? If it is then let those folks that have been hoarding the nation’s wealth at the red-ink expense of all of the rests of us start pay off the debt that went into their pockets. Like Mitt Romney who had reported on his last return taxable income of over 12 million dollars via a blind trust that kept him from even knowing how he got it.
Every dollar that is debt goes to someone and that has been into the pockets of those that have been doing better and better as everyone else had not been doing all that well: like the declining middle class, working poor, totally destitute and younger generation trying to find a start from under a huge pile of educational debt that is suppose to tool them into interchange parts to fit well into business and industry—until they too become obsolete.
The comparison of national debt to household debt only hold true if one wants to admit the big daddy of the household has used and pocketed most of the lute for himself and the wife and kids are starving to death and just trying to make do on a of red ink while pops is living a life of luxury.