Certain Republicans—oh, hell, let’s just generalize and say all of them—enjoy throwing out homespun analogies as a way of validating the soundness of their policy ideas. They say things like, "You know a family has to balance its budget, and so, by the Lord Harry, should the fed’ral guvmint!"
Because there isn’t one Republican member of Congress alive who doesn’t wish deep in his crabbed little heart to be Sam Ervin.
Being Republicans, of course, proof of the soundness of ideas is not required. Everybody knows that certainty (signaled by the phrase "everybody knows"), along with a lacquer of Good Old American Common Senseis enough to dismiss any reservation about a lack of so-called evidence (See? I did it right there, with "so-called." Whee!).
It spoils these analogies to examine them in detail, but, well, we’re Democrats. It’s what we do.
And in that spirit, I say to the we-got-to-balance-our-federal-checkbook-same-as-any-family-over-the-kitchen-table crowd: Are you serious?
I know, I know. That never works with Republicans, tragically cheated as they are of genes allowing reasoned step-by-step thinking or sense of humor. But once again, we’re Democrats. Some things we just cannot resist.
So let’s follow the argument, here.
You have a wallet full of credit cards. You’ve been all over town, buying up things with them. Check the statements. Seven hundred billion down at Big Pharma, for "Part D." A trillion at two separate outlets of War, Inc. And a whole bunch of charges for subsidies at various company stores.
That’s one big bill!
Luckily, you had a financial planner who didn’t put scruples ahead of creativity. Take that War charge, for instance. That was on the Visa card. Just pay it off with the Master Card. Boom! When they called those loans due? You went down to Abdullah Bin Abdulaziz’s payday loan shop, and got some dough. Or you got the guys down at Goldman Sachs to securitize the debt, look like you had enough assets to cover the loans and then some.
Then the economy went to shit. And everybody started asking to get paid.
And out came Good Old American Common Sense: "We don’t have a revenue problem, we have a spending problem."
Visa bill huge? Stop running it up! Problem solved!
And there the analogy collapses like a wet sock.
Because no matter much you reduce next month’s charges, there’s still that balance. It’s a bazillion dollars. And every month it just gets bigger.
the built-in deficit will result in $100 billion of bond issuance each and every month — meaning that through at least the spring of 2013, our national debt will be growing two or three times faster than the economy. So we are rolling the dice big time in a global bond market which is now a volcano of leveraged speculation and massive front-running of the expected multitrillion quantitative easing 2.0 (i.e. debt monetization) by the Fed. In this environment, one hiccup and it’s game over.
Wait! Maybe things will get better down at the factory, and you’ll get a raise, and the same percentage of income applied to payments will let you pay off the credit card! That could work!
No. Not so much. A big enough raise doesn't exist that would let you could pay the balance off before they take your house. Even the old supply-sider himself, David Stockman, sees it:
We have no choice but to accept the negative trade-off of some harm to the economy to start paying our bills. Otherwise, we're dependent on the Chinese, we're dependent on OPEC, we're dependent on a bunch of hedge fund guys to buy our debt, and this game is about over.