The U.S. Debt Problem Explained

 


November 21, 2011

Please note – the story below is one which we received in an email from a client. The numbers are not exact but they paint a pretty realistic picture of the U.S. Debt Problem. The Congress and Super Committee of 12 are trying to come up with budget cuts amounting to $1.2 trillion over 10 years. Their deadline is November 23rd.


Most people find millions, billions and trillions difficult to comprehend.  Politicians are no exception.


The figures shown in ‘The U.S. Debt Problem Explained,’ reduced to a pretend household size, are alarming.  The conversion is, of course, arbitrary and very broad-brush.  Nevertheless the scaled-down figures give a much more comprehensive idea of the problems facing the U.S.

The U.S. Debt Problem Explained!
 

Here is why S&P downgraded the US credit rating:

·         US Tax revenue:   $2,170,000,000,000 (trillion)

·         Fed budget:   $3,820,000,000,000 (trillion)

·         Deficit & New debt:   $1,650,000,000,000 (trillion)

·         National debt:   $14,271,000,000,000 (trillion) – before this year

·         Recent budget cut:   $38,500,000,000 (billion)

·         Proposed budget cuts by the Super Committee over 10 years:   $1,200,000,000 (trillion)

 

Now let’s remove 8 zeros and pretend it’s a household budget:

·         Annual family income:  $21,700

·         Money the family spent:  $38,200

·         New debt on the credit card:  $16,500

·         Outstanding balance on the credit card:  $142,710

·         Total budget cuts:  $385

·         Proposed budget cuts over 10 years:  $12,000 total

As you saw in the numbers above, a $1.2 trillion cut over 1 year would not prevent the debt from increasing. Over 10 years that only amounts to $120 billion per year!! How unreasonable! And it appears they won’t even be able to agree on that.

 

Let’s hope for a miracle.

 

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

Source: Anonymous

 

 

 

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