Two high profile bipartisan budget commissions have been working on plans to return the US to fiscal balance. One, under the auspices of the Bipartisan Policy Center (a non-profit group), is chaired by former Senate Budget Committee Chairman Pete Domenici (R-NM) and former Clinton White House Budget Director (and former Federal Reserve Vice Chairman) Alice Rivlin. A second, the White House’s National Commission on Fiscal Responsibility and Reform, is chaired by University of North Carolina President (and former Clinton chief of staff) Erskine Bowles and former Senator Alan Simpson (R-WY).
As the public and media digest the reports of these groups, politicians and the ever-present “man on the street” will demand—repeatedly—that the government “…balance the budget, just like the American family does.”
Before lauding the common sense frugality of the American family, consider the following.
According to the Federal Reserve’s Flow of Funds data for the second quarter of 2010, the federal government’s outstanding debt was $8.7 trillion. Add to that the nearly $2.4 trillion debt of state and local governments and the total government debt clocks in at a staggering $11.1 trillion. That figure even exceeds the debt of non-financial business, which came in at a shade under $11 trillion.
The American family would not—could not—tolerate such shoddy finances.
Except that we do: total household debt (including consumer and home mortgage debt) totaled more than $13.4 trillion in the second quarter of 2010.