Folks Next Door

One of the things you’ll hear, time and time again, from our friends in the conservative community, is that government needs to treat its affairs more like a household budget. That the federal government, like the average American family, needs to live within its means. Balance its books. Cut back during hard times.

This analogy is almost always wrong. Your average American family, for example, doesn’t keep a standing army. They might have a boat, but they probably don’t have a fleet. Your average American family doesn’t need to build and maintain highways.

But there are areas of overlap. Let’s take the homeowner who is not currently flush with cash. Dad has been “downsized,” but Mom still has her job. The money coming in is maybe just about enough to keep up with the bills.

And then then the sewer line blows up, that part that runs from the house into the main line. The part that Mr. and Mrs. Homeowner are responsible for. The part that runs under the driveway. Fixing it means having someone come in and saw through the concrete, take out the old pipe, put in new pipe, and repave the driveway. It’s going to cost a few thousand dollars, money that Mr. and Mrs. Homeowner don’t have right now. What are they going to do? Fix it themselves? Let the sewage run down the driveway and into the street?

They’re going to borrow some money and get it fixed. There is no other choice. They don’t have the tools or the skills to do the job themselves. They can’t just let it flow into the streets; this is raw sewage.

So maybe that analogy works. The economy is the sewer line, and it blew up. We’re going to have to borrow the money to fix it.

Or maybe you’d prefer the mortgage analogy. Most American families who own homes don’t actually own the homes. The banks own them, and the families living there are renting from the bank, renting until the cost of the home loan, plus interest, is paid off. If we include the cost of the mortgage in our assessment of the average American family’s net worth, we’ll discover that most of them have a negative worth. Most of them, therefore, are practicing deficit spending.

So where is the problem? If it’s good enough for Americans, it should be good good enough for the American government, right?