Posted: 3:31 am
July 31, 2008
TODAY we are going to start with a quiz.
Let's say your family owed $8,899 on this exact date in 2007. But after a year of buying food and clothes, paying for the kids' education and health costs, as well as the occasional splurge at McDonald's feasting on Angus burgers, your family now owes $9,540.
What was your family's deficit over the past year? Or, put another way, how much deeper into debt did you go?
The correct answer is:
A. $389
B. $641
C. $0, we just put it on the credit card.
D. We'll declare bankruptcy like everyone else.
E. Go away, I don't want to play your stupid game!
In this day and age, answers C and D will work. Debt is something to be shrugged at and shirked, especially if you're a major financial institution.
And if you picked E, please put down this newspaper immediately and get out of my sight.
For those of you who are taking this seriously (and who had a calculator at the ready), you probably picked B, which was $641. And in fact, if you subtract the family's debt level last year of $8,899 from the current level of $9,540, you'd come up with additional indebtedness of $641.
So that, of course, would be the right answer - unless you're an elected official in Washington. Then you'd swear the correct answer is A, $389, even though simple math tells you differently.
With me so far? The next part isn't so easy, so mainline some caffeine if you want to stay with me on the rest of this.
Earlier this week, the White House budget office said the federal government's deficit for the fiscal year that ends in September will be $389 billion, give or take the cost of extra bullets we might need to fire in Iraq.
You are probably thinking that's an amazingly large number, and it is. But the figure - like in the case of the burger-eating family above - isn't even close to reality.
Our nation's debt was $8.899 trillion on July 25, 2007. Just put the word "trillion" after the above family's budget to make things simpler.
On July 25, 2008, our indebtedness had risen to $9.540 trillion.
Do the math.
The US went $641 billion deeper into debt over the past year - even as the government was claiming a deficit of "just" $389 billion.
