The worst part is not that President Obama has recently forfeited the rhetorical war with Republicans by adopting their tired trope–like regular families are tightening their belts during this recession, the federal budget needs to, as well–but that the analogy is horribly wrong. Their are probably no two entities that technically have budgets that are less alike than the United States Federal government and a typical American family.
People know they will grow old, retire and die. National governments plan to exist in the future – A married couple knows they have a more-or-less set life span. They will get older, weaker and less able to work. They should run a financial surplus only during their middle age to pay for a set retirement period when they will plan on running a deficit. National governments, on the other hand, don’t retire. They actually need to plan on continuing to exist well into the future. And they should expect their countries to always be getting progressively more advanced and wealthy.
Families can’t print money. Our government can - Obviously, when you are the one who can print the dollars, it changes radically what it means to owe someone else more dollars.
Families don’t actively need to choose to reduce the money they take in, but our government does – Perhaps the biggest difference that makes this analogy beyond absurd is that most families can’t independently choose to simply increase or decrease their revenue, unlike the government, which has the power to raise or lower taxes. In fact, the main reason we even have a midterm budget deficit problem to “worry about” is because we expect the federal government to actively take huge steps to reduce the government’s revenue by over $4 billion by extending the Bush tax cuts.
Please find me the “typical American family” that is seriously concerned about cutting their budget because it plans for no reason to actively take steps to make itself poorer in two years.
Playing on psychology to discount taxes as a solution
I know this analogy appeals to politicians who want to force “tough choices,” i.e. cuts to poor people who are not them, instead of tax increases. It inherently plays on the fact that most typical families can’t easily increase their salaries, and so almost always need to look to cuts to deal with their budget problems. The analogy helps to obscure that the government does have the simple option to raise its income through taxes.
If a politician said, “Times are tough, so the government needs to behave like a Sonoran Desert Toad; just like a toad during the dry season burrows into the ground and does nothing until it starts raining, during our economic dry season, the government should totally shut down until the economy grows again,” you would think they were crazy. But the reality is that the hugely complex federal government probably has about as much in common with a Desert Toad as it does with a typical family budget. Analogies can just as often be used to spread horribly false impressions as they can be used to explain something.




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Families don’t pimp their decision makers to the highest bidder.
“Families don’t pimp their decision makers to the highest bidder.”
What do you mean? Of course they do! At least, they do unless they’re willing to work for less money than they’re worth.
I don’t think you can underestimate how much the corporate slash and burn mentality *as a means of maximizing profits* is impacting how these republican’t reps are viewing the government. This has been a key means of maximizing profits over the past 10-15 years in sluggish mature American capitalism. Apart from a few tech and biotech companies, they’re not innovating their way into profits. They just ceded the whole green revolution to Europe and China.
Republican’ts are acting as mid level managers, figuring out where to take the pounds of flesh while leaving executive class priorities untouched. I imagine by the time they get to Congress they’re already well versed in this mentality.
It could be that Americans generally are too pimped out to predatory capitalism to engage in collective self governance. Certainly, no one blew the whistle on the no-doc mortgages Goldman Sachs et al were ordering up until they had already formed a tsunami.
Not a great thing that the leadership vacuum at the pinnacle of both government and corporate power was filled by organized crime.
Definitely in the tradition of corporate cutting:
http://www.nakedcapitalism.com/2011/02/wisconsin-governor-uses-police-state-tactics-literally-on-democratic-senators.html
This comment at Naked Capitalism sums it up pretty good:
“February 17, 2011 at 9:20 pm
NEW PA GOVERNOR WASTES NO TIME TAKING OVER PUBLIC PENSION FUND
Wednesday, February 16, 2011
Corbett taps PA pension critic for state pension board
Wally Nunn, the blunt-spoken Vietnam veteran, ex-chairman of the Delaware County Council and retired Citigroup SmithBarney bond banker, is Gov. Tom Corbett’s choice for a seat on the $25 billion Pennsylvania State Employees’ Retirement System board. See Corbett’s recent nominations here.
With his Wall Street background, money managers can count on Nunn not to upset SERS’s high-maintenance investment program, which spends hundreds of millions of dollars a year on private money managers for hedge, buyout, real estate and commodity funds and other investments.
Nunn is a lot more likely to support cuts to future retirees’ pensions. He’s on record – in a piece The Inquirer published last June – criticizing Pennsylvania’s “bloated pension system enjoyed by state workers, public school teachers and (even more so) elected officials.”
Nunn called SERS “the pension system from hell” with unfunded liabilities that threaten to swamp the state budget. And he called last year’s bipartisan pension reform law (which pushed back billions in subsidies for the state teachers’ and state workers’ pensions into the future) a “Ponzi scheme”.
The Republicans are following NJ Gov’s lead in criminalizing public workers.”
http://articles.philly.com/2010-06-29/news/24962949_1_pension-system-pension-reform-powerful-unions
I think all those Congress members need to be forced to go without Health Insurance, a drastic cut in their pay, and also NO PENSION!
I mean, heck. We are in a recession and things are hard out there. Everybody has to do their part, and all that other nonsense they keep saying!
We have a winner. I like this, and it’s totally true.
The basic fact that there are two financial sides to this country, the public and the private, seems to elude people in this conversation. There are a finite number of dollars. If the government is running a surplus, the private sector loses wealth. It is our government’s job to run balanced or in deficit to enrich the private sector. The problem here is they’ve given out trillions for war and for Wall Street, and gotten little to nothing back. The taxes that cover those expenditures aren’t being paid as they used to be.
Stop the wars, raise taxes on the top 2%, and solve the damn problem. With all of that additional income, we increase federal spending in areas that grow our country as a whole. Like education and social services, tech and biomed development. GREEN ENERGY.
If a dumbass, 26 years old high school drop-out can figure this out, our government can too.
But they provide a valuable service. They should be compensated accordingly :)
Great Post! Jon Walker
the USG is a going concern!
family budgets have a life span
what we have in DC is a bunch of FDR HATERS!!!
FDR got it RIGHT! SORRY OBAMA, Clinton, Bush Jr,
FDR saved the USA from RUIN
Reagan F the USA up! Fact
FDR great president needs to be put on MT RUSHMORE, because he saved the USA.
Amen! er, Ah-Men!
God, I am so tired of people taking extreme positions on both ends of the pension issue.
- Unfunded liabilities and pension shortfalls are real.
- Union leaders collaborated with elected officials to conceal the size of those shortfalls and let government take the easy way out: not raising taxes and instead pushing the problem out to the future which, unfortunately has now arrived.
- Retired and about-to-be-retired workers (indeed everybody who is part of a public employee’s pension plan) deserves what they have been promised, but that doesn’t change the fact that sources of funding those obligations have to be found and reforms have to be made to keep the problem from re-occurring.
Also, deconstructing the government-to-family analogy is only correct as far as it goes. Yes, the government can print money and a family can’t. But if the government prints too much money, runaway inflation devalues it faster than it can come off the presses. And the value of our debt dollars is determined by who (which countries, corps, and other gov’t entities) will purchase our treasury instruments (bonds).
Progressives would be much better off focusing the fight on:
a) Pension program reforms (like limits on ROI projections, ending double-dipping and consultant rehire, mandatory contributions by government entities, etc.)
b) Cutting the federal deficit by reducing defense, ending two ruinous and idiotic wars, and raising income taxes at least back up to the Clinton levels.
As long as Democrats and progressives insist on arguing the far left “everything is all right” position, a large number of voters are going to know intrinsically that they are not telling the truth. For example, see Andrew Leonards’ article in Salon today about Wisconsin’s coming Medicaid deficit problem, which is like that facing most states. (Thanks again for the bullship phony sham HCR, Barry Zero.) (And BTW, I’m no fan of Andrew Leonard, but in this case he’s right.)
Currently that statement is up for debate. *g*
Yes, they should be compensated. However, since they love this country so much and want to serve in leadership so baaaadly, they should be more than happy to give up a little small amount for the good of America. *G*
Extreme situations call for Extreme Measures!
Haven’t you heard that enough already? Why is it not okay to demand they give up their pensions and health care too?
Adding: Ending the rapacious “Free Trade” deals and reinstituting tariffs so that we can reconstruct a manufacturing sector are also critical. (Which doesn’t mean I’m hopeful of that happening.)
“Please find me the “typical American family” that is seriously concerned about cutting their budget because it plans for no reason to actively take steps to make itself poorer in two years.”
or plans to make itself poorer by giving some its assetts to a rich neigbor.
Nobody is saying everything is all right. It’s not. These pensions are terribly under-funded right now.
This is not because of double dipping or rehiring consultants, it’s because the Wall Street banks that were managing these funds invested them heavily in MBSs. In 2008 large amounts of the funds went out the window.
As for not printing money, we’ve printed $13 trillion for Wall Street bailouts. It would take a hell of a lot less to stabilize our middle class.
Because they’ve earned it. They were promised it, they abided by their end of the deal, and so should government. The issues I raised affect how government goes about fulfilling that responsibility, and how do we, as citizens and taxpayers, get some reassurance that the abuses won’t be repeated. (By abuses I mean politicans — with some acquiesence from union leaders — not funding pension plans adequately, using that money for other purposes, lying to the voters, etc.)
find a real progressive in DC and talk to us.
Progressives must first put some real Progressives in Congress
you did not get the memo, the DEM party has a TROJAN HORSE cancer, that must be cured ASAP
Unions and Progressives have not had a friend in the WH for decades
Oh, I was being snarky. I think they should all be paid the national average salary, excluding the top 2% earners from the equation. That would put their pay at (I’m guessing) around 50k a year or so. Hell, I’d even volunteer for the USG to pay for their apartments while they’re in DC. But they’ve gotta have bunkbeds, and share rooms.
These people are there to do a fucking job that was defined by our founding fathers. Represent your constituents.
Not one of them do it.
Anyone who falls for a dumb analogy like this is a simpleton. It’s easy to fool these dopes time and time again. Just ask Karl Rove.
yes but they are part time workers.
I agree some of the Pensions have been misused, but the biggest part of them were disappeared along with other retirement savings vehicles like 401Ks, etc.
Wall Street yanked it all away because they played dirty handed tricks on investors and lost, but they did not take the hit for their loses, they hit us for it!
BTW, I’m all for reform going forward. California is an egregious example, paying 3% x Years of Service after 25 years, and up to 35 Years of Service. This is terrible. Redefine the program going forward, for new hires.
Current employees and retirees must be exempted, as you pointed out, because they have a contract.
Part time is a joke. More like “occassional” workers :)
I know you were. That is why I did the big grins, *g*.
indeed
I’d honestly like to see a plan along those lines, though. Community housing, modest salary, 401k match, decent health plan. Make it a good, average, American job. Then at least, if these rich cronies still want to corrupt our government, they’ll have to take a serious pay cut and live uncomfortably for 6 years *g*
what your asserting may be partly true. What i am seeing happen though, is not any attempt to “get cost under control”, but to cut spending on workers and the poor, and spend it in tax cuts and corporate subsidies, so NO, i dont believe thier going broke bullshit.if there is money for corporations to skip paying income tax, there is money for workers. its a problem of priorities and collaborating with cut and spend anyway republican propagandists and shills, is not acceptable.
Kris –
You’re only partly correct. Yes, the banksters led some pension funds into bad investments. But the real problem is that the fund boards continued to use totally unrealistic ROI projections year-after-year-after-year. In many cases states even failed to make the pension contributions they were (supposedly) required to make.
Take NJ for instance. (I’d rather you take it, cuz I sure don’t want it!) The state has failed to make it’s promised/required pension fund contribution for at least the past year, and I think the past two. On top of that, they are projecting a %54 bil unfunded liability for the five state pension systems. But that projection is based on an estimated current fiscal year ROI of 8.25%! Has NJ earned anything near a real 8.25% ROI anytime in the recent past? Nope. As far as I know, nowhere close. So take a realistic true compound ROI of 3% a year and suddenly the NJ pension funds real unfunded liability is around $145 bil.
CA, where you and I live (you up north, me down south) has done the same shit. Year after year of bogus ROI projections. Decades of not using accrual accounting so that cities and counties and school districts and the state itself could deliberately hide the true scale of future pension liabilities. They’d still be doing it if the feds hadn’t changed the accounting rules for government bodies effective Jan 1, 2006.
I follow you. And you’re right. Our states are partly responsible.
As for your point on Jersey, IIRC, they haven’t paid for the last 8? years.
I agree that we have no progressives in Congress or the WH. What I meant was, people outside of government with voices — prominent bloggers, economists, leaders of organizations, etc. — have to focus on the real issues and the real solutions.
If voters in general don’t believe we’re going to impose a real solution they’ll look to the bad guys by default.
OT, but not really. Ed is going to be WI again tonight with the cameras. 10:00 p.m. EST. Show solidarity and join his show. Also show media which stories get the viewers.
Thanks for helping to dispel this egregious metaphor. Its principal job seems to be to excuse politicians from doing necessary but unpopular things, to excuse them from fulfilling their responsibility to properly manage the federal government, and to excuse their desire to cater only to their wealthy contributors rather than to all their fellow citizens.
The other analogy that needs to tossed into the dustbin is that the federal government (or charities and not-for-profits) need to be run like a business. Apart from its hilarity, “Should it be run like Enron or Chevron?”, enhancing profit is not the only legitimate human need or experience.
first progressives did not know OBAMA was a trojan horse
Helen Thomas thought he was a Liberal, now she knows he is not!
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385×554807
more and more people are waking up, it takes time for people to admit that OBAMA and other Dems Con them.
the GOP tea party morons are also going to help progressives, look at what is happening in Madison WI.
a real dem in the WH would have been exposing the TEA PARTY as clowns, not OBAMA he speaks to them, like they have rational ideas.
Jon:
Their isThere are probably no two entities…Sorry. /grammarnazi
Good post, which needs to be repeated ad nauseum until the US public “gets it” (yeah: not holding my breath). The analogy bet the govt and a family budget is bogus and stupid.
Some very good comments. There ARE problems with many govt pensions, bc as BeachPopulist points out (and we’ve discussed the idiotic situation with the San Diego city and county govt pensions), many govt pension schemes have been jerry-rigged by whomever based on clearly false ROI info, plus there’s been other folderol going on with these pensions (I don’t remember the details but there was some skullduggery going on with the SD City pension, whereby workers got to work for their last three years at full pay *whilst also collecting a full pension* or something like that).
These issues must be addressed and fixed.
However, we continue to get back to the future, which is that corporations have behaved just as egregiously or worse, and absolutely bupkiss is done to address or reform, and often workers completely lose their 401(k) investments, as happened with Enron & Montgomery Ward. And the company gets off scott free and nothing needs to be changed, and somehow the taxpayer is helping them out.
There’s loads of problems out there, folks, but take good note of the fact that our elected crooks in Wash DC and in state capitals wish only to screw the public sector workers, taking away collective bargaining rights, cutting fed workers salaries, and so on.
And yet: what’s happening with the banksters and Wall Street? NADA, Bupkiss… did I hear correctly yesterday that Bernie Maddoff was dropping some dimes on Wall Street, the Banks and Hedge Funds? I’m sure I did, but…. Where’s the info on THAT???
Oh hey: look over there!!! WI gov’t workers are “making too much money.”
Get the picture??? Kabuki showtime.
Yeah, they’re “Economic Hitmen” who’ve turned their attentions to us in the last several decades (at least). However, there are these:
“Ranting Andy: The Last Silver Margin Call (that mattered)” (Feb. 18, 2011)
“Houston, This Is Blythe, I Have A Problem” (by Tyler Durden on 02/18/2011 10:14 -0500)
For the record– the Sonoran Desert Toad.
P.S. If you want to be one of 500,00 folks from around the world to tell the G20 to freeze Mubarak’s assets, sign here today. There are less than 17,234 signers to go.
Good ideas, all, and like many good ideas, they aren’t going to happen with the current crew of rulers.
http://www.youtube.com/watch?v=7DX9T6A4lsk
“I am so sick of hearing about the goddamn deficit, I could fucking puke blood. There ain’t no fucking deficit, it’s a fucking lie and it’s a fucking illusion in the first place. But I am so sick of hearing about, ‘Well, your leaders misspent your hard-earned tax dollars, so you, the people, now have to tighten your belts and we got to start paying this back, because we, your leaders, misspent your money.’ You know what’d make tightening my belt a little easier? If I could tighten it around Jesse Helms’s scrawny little chicken-neck. Uh, I feel better about the sacrifice right now!”
Nevertheless, there are ways that our governments and families are alike. Both borrow money for things that they think will improve things in the long run. Families borrow to buy houses and cars. Sometimes, they will borrow to get past bad times. There’s no reason government can’t do that, too.
I object to borrowing money to fund useless wars, defense establishments that are far bigger than they need to be, and packing ever more people into prisons for drug and other victimless crimes. I don’t object to borrowing to get past some bad spots, and I don’t object to borrowing to improve things. We have bond issues out here in my state all the time.
To say that the government has to balance the budget always under all circumstances has always struck me as absurd, and now we’re seeing a good example of why.
you know, I lived in Ny when they were also giving these crazy pensions out and no one really complained about it. It was wrong then and is so today. Your idea about a realitic ROI and mandatory funding is spot on. You negotiate it (the state) you pay it — every year using real assumptions on earnings. And those funds should be subject to sticter control. And going forward they have to be brought back to earth. The problem is how do we do it. I think those retired and near retirement should not be penalized, or if the pension is seriously egregious, then it should be tempered. Going forward the pensions must be reduced to realistic levels.
And you know what else? Maybe, just maybe, the states affected need to raise taxes, if only like a reverse Bush tax cut, to get this mess straightened out. But there is no need to gut unions and stop negotiations to accomplish this. I believe the unions will play ball if you give them a listen and guarateee reforms, like you have suggested. But there’s the rub. What we have now are asshole politicians running everything. We can blame O all we want.But we put the asshole politicians in office in 2010.
Unions pushed the politicians not to raise taxes, really?
Also, the argument is not “everything is all right,” but rather Why are you attacking workers right at this pivotal moment?
Don’t you see that they’re trying to blame workers for this manufactured crisis and not assume any responsibility for themselves?
We in a class war in case you didn’t know, whose side are you on really?
Here’s a very apt comment in reply to the Leonard article on Salon that you were gushing over:
and
although it’s not about printing money — it’s the difference between a currency issuer and a currency user — much better. thank you.