a new way to look at the deficit

Lately, there has been a lot of talk about the federal deficit. Most people understand that as a country, we are in debt. But what many do not understand is how we got there. Everyone also understands that there are two parties that are in charge. So instead of trying to explain things the way that most do, I am going to pretend that it’s a household instead of a country. The two parties usually involved in a running a household are a husband and a wife (let’s assume this is a heterosexual couple running this household). I’m going to make one more assumption in this household—the couple has several marital problems and does not always get along.

Before the couple got married, each spouse had some savings. Instead of keeping their previous finances separate, they decided to combine them and use them to start their marriage. After a few months of marriage, he develops a few bad financial habits---he must have all the latest electronic toys and a develops a gambling addiction. Neither of these bad habits are paid for in cash. He eventually runs up credit card debt to feed his habits. The debt and interest payments are higher than she is comfortable with, and he continues to spend the money. For eight years, due to his habits, the couple spends more than they make.

So the wife decides she needs to take charge of the finances. Before she’s ready to do this, she consults financial counselors and family, and they agree that she should manage the finances. So she takes control. However, in the first few months of her control of the finances, there is a major spending issue that comes up that they cannot control. Her old gas guzzling SUV breaks down to the point it is not worth fixing. So she goes and buys a car, so she can get to work and therefore keep her job (and income). She makes the decision to buy a new hybrid vehicle. She justifies her purchase by looking at the long-term savings. She will no longer have to pay for frequent repairs and will save money at the pump (going from 12 to 50 MPG). Now that he all of a sudden pays attention to the household finances, he yells at her for buying a car. He claims she should be more fiscally responsible and either buy a clunker or take the bus and that she’s running up the household debt by buying the car. The price of her car is a drop in the bucket compared to the electronics and gambling that he spent the household money on.

Does this sound familiar? Let’s translate this to politics. The husband in this situation is the Republican Party. His financially irresponsible habits of gambling and electronic toys are the Party favorites of war and tax cuts. The responsible wife trying to clean up after him is the Democratic Party. Her purchasing a new car is the Democratic Party’s health care reform bill--- it spends money in the short term but corrects problems in the long term. The husband has very little credibility here on financial issues, as he blew the couple’s finances on gambling and electronics. So why is America even listening to him in this situation? Clearly the wife needs to get her message out more. And this is true for the Democratic Party.