I've seen this image doing the rounds on Facebook, etc:
I'm dubious out these figures. Is this an over-simplification? Can you use those figures in the same calculation?
Is this an over-simplification?
However, it's not so much an over-simplification as just plain wrong.
Summary of points (from the source above)
Bad idea: Vote them out* and demand a balanced budget.
*Ok, voting them out might not be such a bad idea.
The Bottom Line...
Ps. Another bad idea.
Remove banking regulations by passing the Gramm–Leach–Bliley Act of 1999 and allow the creation of giant financial supermarkets that could own investment banks, commercial banks and insurance firms, something banned since the Great Depression (see Glass-Steagall Act of 1933).
Basically, allow investment banking firms to gamble with their depositors' money and drive the economy into crapper by 2007. Not smart.
The numbers aren't quite the same for the year I could find data, but the overall story is correct. According to the GAO's Financial Statements of the United States Government for the Years Ended September 30, 2010, and 2009, the figures would be:
Is it an oversimplification to compare the Federal budget to a family budget? Definitely. Federal obligations are much more complicated than that of a family, Federal borrowing costs much less than credit cards, Federal income growth (and volatility) is very different than typical wages, etc.
The overall comparison for income, expenses, and deficit are correct:
To say the $16,000 billion in debt is like credit card is not an accurate comparison.
Of the $16,000 billion in debt, approximately $10,200 billion is held by the public and $5,800 billion is held by other government agencies.
The $5,800 billion that is held by other government agencies is debt that was purchased mainly by the social security trust fund. For most of its existence the social security trust fund ran a surplus (that ended in March of 2011 when the first boomers started to retire. Since then the fund has been sending out more payments then it has been taking in). This surplus allowed the fund to pile up an excess of $2.5 trillion. The fund was required to purchase government bonds with the excess. This allowed the US government to spend the money in the trust fund. This is similar to borrowing from you retirement account in order to spend the money now. All that sits in the trust fund now is $2.5 trillion in US government bonds.
The argument is frequently made for this type of debt: "we owe it to ourselves". This always makes me chuckle. The US government owes the social security trust fund $2.5 trillion. I'm not the US government so don't count me in the "we" part of "we owe it to ourselves". I'm also fairly certain I will never see a dime of social security so don't count me in the "ourselves" portion either.
The remaining $10,200 billion that is held by the public is mainly short term debt. Around 83% of the public debt is held in bonds that mature in less than 10 years. This means the US government is more exposed to interest rate moves since it is continually rolling over short term debt and issuing new debt at the prevailing interest rates. This makes this debt closer to a very large adjustable rate mortgage.
It seems that another reason this is a bad analogy is that, "America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion."