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Government Spending versus Household Spending

By Ron Brown NMLS #270845

Industry Observer with NMLS ID: 40831

March 15, 2010 01:18 PM

As a result of the Financial Crisis/Credit Meltdown/Real Estate Bubble etc., the Federal Government has spent approximately 10% of our countries total GDP annually for nearly 2 years now in an effort to "ease the crisis." So what have we gotten for our investment?

Currently we are told unemployment is not as bad as it could be, and is possibly easing after last month's statistics. Despite this reassurance, we have admitted unemployment of nearly 10% which does not count an individual who has been out of work more than the 26 week initial unemployment period nor does it count the roughly 150,000 persons who wish to enter the workforce each month as they come of age (they have never had a job to lose, therefore they cannot be unemployed). The reality is we actually have one in five (20%) of our workforce either unemployed, or underemployed.

So what is government's answer? In the State of Washington, the legislature is now in "Special Session" figuring out ways to increase taxes for the citizens in order to close an almost $3 Billion shortfall. To be fair they have "cut" spending by nearly that amount already (but the reality of these "cuts" is that they are "cutting" the previous budget's proposed increases rather than actually cut what is currently being spent). The problem is that our leaders are out of touch, and while running around trying to find more ways to take hard earned dollars from us in the form of taxes, they have not come up with any kind of plan to increase jobs other than continue spending on programs that are already in place.

The problem with all of this is simple. There is little, if any, difference between what our government is doing, and an individual who goes out after losing their job, and makes no change to their lifestyle, but just charges everything on their credit card. After all, they will eventually get a job again, and they will just pay the money back then right?

I don't know about you, but this does not seem responsible for an individual, so why is it acceptable by our government?

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Lisa Walston

Atlas Property Group and Abbey Church Properties - Greenwood, IN

In order to lose weight you must expend more calories than you take in. In order to balance a budget you must bring in more money than you spend. Pretty darn simple.

Mar 15, 2010 01:26 PM

David Monsour

Keller Williams Keystone Realty - Gettysburg, PA

ABR - www.realty-insights.com

I found this post because it was reblogged already. Great point though. We are living on borrowed money which ultimately has to be repayed or bankrupted so we are facing something less than ideal either way. Nicely written.

Mar 15, 2010 01:27 PM

Lane Bailey

Century 21 Results Realty - Suwanee, GA

Realtor & Car Guy

I can't understand how a politician can think that they shouldn't have to tighten their belt when all of the "little people" have to tighten theirs.

Mar 15, 2010 01:58 PM

Mar 15, 2010 02:01 PM

Ron Brown NMLS #270845

NMLS ID: 40831 - Federal Way, WA

Lisa - So how do you reconcile that "simple" idea with the fact that every dollar spent by our government is a DEBT to be paid back with interest? If you lost your job, would you spend more in credit than you did when you had a higher income from being employed. If so, you can get away with it for a while, but eventually you won't be able to keep up with the payments unless you CREATE an income, and even then you may be so far behind that you can never repay because of the interest.

Using your diet analogy - it is a proven fact that you will lose more weight if you EAT LESS.

Mar 16, 2010 05:36 AM

David - When the American Taxpaying family is faced with reduced income, we must make changes in our budget, choosing between actual needs and wants. Our government refuses to stop the spending that keeps them in favor with the special interest groups who pay for their election.

Mar 16, 2010 05:38 AM

Lane - When government agencies with the power to tax make budget decisions, they start with what they fell they NEED to spend, and then levy taxes to Create the funding.

It is apparently much easier for government to spend other people's money than it is for a family to do so.

Mar 16, 2010 05:41 AM

I'm not allowed to spend other's money because I think I need to in order to do what I want... Government has gotten out of control... Just because something would be nice doesn't mean we need an agency for it.

Mar 16, 2010 03:49 PM

Donna Rattee

Coco, Early & Associates - Portsmouth, NH

Turning Dreams Into Reality

It is only commonsense that spending needs to be cut...

I think we should do a role reversal...all those that are currently receiving assistance will now replace the workers and those that have worked can now take a vacation and their bills will be paid by the ones we have been supporting! Something tells me that very quickly they would have a different attitude about the fraud and abuse that goes on in these systems.

I see at least a dozen foreclosure properties a week prior to the initial "cleanout" and there are some pretty standard items left behind....the box to the new 52" tv and the box that the Wii, XBOX came in and about a dozen plus cell phones...we are a society of immediate gratification and someone will bail me out...it is crazy!

Don't get me wrong, I love helping people and I was raised that you lent a hand to someone in need but we are rewarding people to not help themselves.

Mar 16, 2010 10:50 PM

Wallace S. Gibson, CPM

Gibson Management Group, Ltd. - Charlottesville, VA

LandlordWhisperer

I've noticed our household spending is WAY DOWN....loosing my wallet a few weeks ago was traumatic until I realized I could use cash until my credit and debit cards were replaced. Using CASH a la Dave Ramsey helped me get a handle on the $1 and $.01 that I was actually spending

I've also noticed that people are still wanting to dicker on rent and when I ask why the property owner should get less $$$ than they have for the last few years, they still don't realize they are over-reaching their budget if they want to shoe-horn into a larger/more expensive home that they won't be able to afford down the road...sounds familiar!!!

Mar 17, 2010 08:21 PM

Lane - Government appears incapable of differentiating between wants, and needs. They certainly don't know anything about saving for a rainy day.

Mar 18, 2010 09:39 AM

Wallace - I give the same advice to my clients. It is funny how much harder it is to part with cash from your wallet versus swiping a card.

I tell everyone - "There's a reason Vegas uses Chips!"

Mar 18, 2010 09:41 AM

Donna - If we did the role reversal, we would be broke as a nation much quicker, I can't imagine how poor the work ethic is for those accustomed to free handouts.

Charity begins at home, and with the family. I have no problem helping out the less fortunate when I believe the money goes somewhere productive. The beggars at the freeway off ramp who "will work for food" never take me up on the offer to give them a ride to a restaurant though!

Mar 18, 2010 09:45 AM

Government Spending versus Household Spending

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