The National Debt in Layman’s Terms

Oregon Transformation Project FlashFact

Many Americans are feeling out of touch with the recent squabbles over our national debt ceiling, federal budget, and debt levels.  It’s tough to accept that “trillion” is the new billion; let alone grasp the concept of “trillions of dollars”.

So let’s breakdown the 2011 federal budget into terms that we can all understand:

Our current federal budget numbers:
 U.S. Income (Revenue)                        $2,170,000,000,000
 Federal Budget (Expenditures)                $3,820,000,000,000
 New Debt (2011 Revenue minus Expenditures)   $1,650,000,000,000
 National Debt                               $14,610,000,000,000
 Spending cut from debt limit deal               $38,500,000,000

Now, if we remove some zeroes and make this a family budget, how would this family be faring?

 Total annual income for family:                         $21,700
 Amount of money family spent this year:                 $38,200
 Amount of new debt added to the family’s credit card:   $16,500
 Outstanding balance on family’s credit card:           $146,100
 Amount family decided to cut from their budget:            $385

Would a family that spends $16,500 more than it makes, and with a credit card balance of $146,100, address the problem by only cutting the equivalent of mom’s monthly pedicure?

A 1% trimming is a small start, but certainly not a solution.

Sources:, US Treasury Dept., concept by David Thomas, Equitas Capital Advisors LLC

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Posted by at 05:00 | Posted in Federal Budget | 312 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    There needs to be a recognition family budgeting isn’t exactly equal to the federal government’s budgeting when it comes to the need of balancing a budget.  Afterall, a family can not print new greenbacks in its basement, or otherwise, as the federal government can.  This capability is only possessed by the federal government (and in conjunction with the Federal Reserve).  The downside to this federal government escape hatch is future inflation.  Future inflation is not necessarily the outcome of additional money supply as one only has to look at Japan 1990 to present.  It is true oil prices have to be dealt with but this can be done by simultaneously unleashing free market forces to go after bountiful remaining domestic conventional energy supplies (Rick Perry is right:  We can’t afford pursuing the unproven, scientific theory of man made global warming).

    Given current recessionary economic conditions the federal government should not be pushed to balance the “budget.”  Additionally, in times when national security is at serious risk, the federal government should be allowed this additional economic tool.  The federal government can help support the economy presently by using the printing of dollars although it has probably run out of the capability of borrowing additional amounts (without risking further downgrade).

    It doesn’t take a rocket scientist to understand the federal government should not immediately remove a trillion dollars or so from the economy by reducing its expenditures or raising taxes to attempt to balance its budget.  There would be catastrophic results for tens of millions of families across the country, with folks literally thrown out on the street and bank-runs not dissimilar to those of the Great Depression.  In fact, it is quite possible Americans would lose many individual freedoms because of a reversion to communism.

    Dear Tea Party, when it comes to the balance budget amendment concept, you know what you ask.

    • David Appell

      > Rick Perry is right:  We can’t afford pursuing the unproven, scientific > theory of man made global warming

      Rick Perry averaged a D+ in the basic sciences in college — he is clearly too stupid to understand the evidence supporting climate science.

      We will pay for climate change now, or we will pay much more later. No surprise that another politician wants to put it off until later.

      • Anonymous

        So David, what did your boy Barry get in science? Oh yeah,he refuses to release his transcripts. He probably failed it,and many other classes, and is too embarrassed to let the public know how poorly he did.

        Mr, I got an A in science…including a course in climate science…and I don’t see any truth about MMGW coming from the left wing of the world, led by demi-God Al Gore. That’s the same Al Gore who likes to fly around in private jet airplanes that guzzle fossil fuel as if it comes out of the ground or something. 

        • Anonymous

          It’s doubtful Obama’s grades were poor considering he got into Harvard Law (even with a quota). Even more compelling is that he got on the school’s law review and became its editor [generally members of law compete by writing a paper and names are replaced with a number so the review committee doesn’t know who they belong to].

          It’s fine to dislike his policies but commentary about his grades is idiotic.  

          • Anonymous

            It’s called ironic humor. Now, take your thumb out of your butt and go back to watching something funny like Conan O’Brien. (Tongue deeply planted in check for humor impaired liberals.)

        • Anonymous

          Joel, I have a lot more education and experience in science than you do, and in climate science in particular, and I know that there is plenty of evidence for anthropogenic climate change and even better reason to be very concerned about the long-term future. You either do not understand the science or have not looked for it — both, I suspect. 

          • Devin

            Perhaps in all that education and experience, you would like to explain how you know more than this climatologist and Principle Research Scientist, as well as the U.S. Science Team Leader for the NASA AQUA satellite for measuring worldwide the temperature of the ocean, in his most recent peer reviewed and published paper in Remote Sensing this year:

          • Anonymous

            Because I know enough about science to realize that one paper
            never proves anything as all results require validation and more validation;
            that several other climate scientists have pointed out serious flaws in this
            particular work; that the lead author is responsible for
            the most serious error in climate science in the last 20 years; and because he admits his prime motivation is not
            science but his ideology.

          • Devin

            Absolutely one paper never proves anything, and we will all wait and see what develops.  I dispute the “flaws”, such as one scientist said that no one including spencer knows for sure why reality didn’t match the models, which although true, doesn’t negate the fact that the current IPCC climate models are not correct as it relates to actual observation observation (and he provided an alternate hypothesis that does match reality).  As to the rest, keep up the ad homonym attacks worked so great against Galileo I am sure it will work this time!

          • Anonymous

            It is not an ad hominem to directly quote what Spencer himself has written, or to point out the fact that the modeling error made by Spencer and Christy was large, significant, and (curiously) in a direction that minimized warming.

          • Devin

            I am well aware of the GSICS and the error in the having to do with the diurnal drift correction, but it is hardly a case of Spencer purposefully messing with the data.  All his calculations were totally public and available, and once the error was shown in Mears, it was corrected.  And while the UAH data did have a cooling bias, the RSS data had a warming bias.  I don’t agree with your statement that it is the “most serious error in climate science in the last 20 years”.

          • Rupert in Springfield

            Oh please, you thought a cars fuel usage went as the square of its speed. You also thought burning gasoline created more CO2 than the mass of the gasoline itself.

            We all know you maintain that you have some expertise in science, but in my opinion you have demonstrated little of this other than to make collasal mistakes no first year physics student would ever make.

            It’s getting old. Calling people stupid and uneducated in science when you confused momentum with energy consumption is a little ridiculous.

          • Anonymous

            Burning 1 gallon of gasoline does produce more than its weight in CO2. (The added mass comes from air.) In fact, it produces 19.4 lbs CO2.

            Also, I never claimed that fuel usage is proportional to v^2.

          • Anonymous

            Nor did I confuse momentum with energy. I do, though, understand the chemistry of combustion.

          • noibn

            Suggest Goreon DA take his noise and go nose to knows with Chuck Wiese. 

  • the real valley person

    When the US printed 750 billion overnight to bail out the banks, it showed that government finances are nothing like family finances. When the Fed printed about 3 trillion in new money and shoved it out to banks to loan to businesses, that reinforced this fact. What is silly is comparing government finances to family finances. It mixes up micro economics with macro economics. Its like trying to understand French by reading Japanese.

    Much of the deficit is new money we are creating to keep things afloat until the private sector recovers its footing. We have done this in the past, and will again in the future. The only thing we have to fear is the tea party’s ignorance of economics itself. 

    • Anonymous

      RVP,you obviously need a refresher course in economics. You think macro-economics is just large scale, that is government, economics vs. micro-econimics, which you believe is household economics…small scale. You need to learn the true meanings of micro and macro economics. Then, and only then will you be competent to say why the government should not emulate family economics.

      As you point out, the major difference here is that the government runs a printing press while families don’t. Liberalthink says it’s okay for the government to print money to get itself out of trouble, even though families don’t have that option. The point of the essay is that the government should try to be more like the family when it comes to budgeting…the government shouldn’t say,”Oh, what the Hell, we can always print more money.”

      • the real valley person

        I don’t need a refresher course, but you might benefit by auditing a 101. Macro economics says its not only ok for the government to print more money in down times, its essential if you want to recover. Government doesn’t print money to get itself out of trouble, it does so to get us out of trouble. TARP was not done for the government, it was done to prop up the banking system, without which we would all have suffered.

        I get the point of the essay. It is nonsense economics. The government should exactly say “print more money” and should continue doing so until the economy is clearly getting better.  What do you think Monetarism is? Its simply printing more money by lowering interest rates. Fiscal policy is printing more money by direct spending. Tax cuts are printing more money by running deficits. It all adds up to the same thing.

        • Anonymous

          Well,now you are beginning to understand.

          What it all adds up to is inflation. Obozo would have caused massive inflation with his stimulus if he wasn’t at the same time causing a massive loss of jobs and high unemployment.

          Yes, I suppose from the liberal p-o-v the essay did amount to nonsense economics but then that is the problem you liberals face everyday…good sense to you is nonsense. Really, such a pity.

          • Lulz

            dude.  funny.  u r just the jokemeister!  ur the only reason i come here.   keep ’em coming. 

          • the real valley person

            I am beginning to understand what?

            When Obama came into office we were losing 750,000 jobs a month. If you take the time to look this up, you may discover that this economic implosion happened the last year of the Bush Administration, following 7 years of very slow growth, which followed his huge tax cuts, 2 unfunded wars, and an unfunded expansion of Medicare.  

            About 6 months after Obama took office the economy started gaining jobs, and has been ever since. The reason for this has been massive deficit spending and tax cutting. In other words, the very policies you say don’t work. And all of this with near zero inflation. Get yourself a search engine or go to the public library and you can look this all up.

            Any economic textbook other than a fringe libertarian one will tell you that  macro economics isn’t just a larger version of micro economics because each looks at different aspects of the economy. The same book will tell you that government borrowing and spending is not like household or business borrowing or spending, and in fact the latter depend on the former during economic downturns. So cutting deficits during downturns is exactly the wrong thing to do, which is the opposite for households or businesses, where retrenching makes perfect sense. Mixing up these is either ignorant or deliberately obtuse, yet this is what the tea party is forcing the nation to do. Its a recipe for further decline.  

          • Anonymous

            > Obama would have caused massive inflation with his > stimulus if he wasn’t at the same time causing a massive 
            > loss of jobs and high unemployment.

            This is completely false. The ARRA consisted of $288 B in tax incentives and $608 B in spending. That amount of spending in an economy where the money supply is about $14 T is certainly not going to cause “massive inflation.” In fact, the biggest worry in 2009-2010 was deflation.  

          • Anonymous

            Obama wants to print even more money than we are…why he didn’t use his majority last term to go for it I don’t know. But I do know he thinks printing fiat currency is the answer to our financial problems. Obama can print phony money but it is still the American family that has to deal with inflation.

            BTW, we would be talking a lot more about inflation if the Obama administration were not playing around with the numbers and calling everything inflationary non-countable. Gasoline has doubled in price since Obama became president, groceries are out of sight but for some reason the inflation numbers coming out of the Obama administration are low. Hmmmm???

          • Lulz

            woot!   better thn the last.   ur jokes get better and better.  u da funny man!

          • the real valley person

            Technically he isn’t printing it. Its mostly electronic at this point. He went as far as he thought was needed, but that turned out to be not far enough.

            If you think it is “phony money” Joel, why don’t you send me an electronic transfer? I’ll give it a test drive and get back to you.

            Gasoline is a volatile  commodity that goes up and down like a yoyo, which is why it isn’t used in the CPI. And Obama doesn’t just decide what goes into the CPI. They use the same basket of stuff used under Bush.

            By the way, the price of gasoline has been going down for 4 months, and is currently lower than it was in the fall of 2008, well before Obama took office. Gas prices basically follow economic growth.

          • Anonymous

            Well gee, I guess so long as he isn’t actually printing the money then it’s probably okay. Obozo is a spendthrift…just try and deny that. The trouble is it’s our money he’s spending. Like most of the Washington, DC, crowd he seems to think it isn’t real money. Of course a lot of it isn’t real money…it’s fiat money.

            What atypical liberal idea. You want me to give you free money. That would be just like Obozo spending our tax dollars.

            Gasoline is dropping in price because of a very basic economic principle called supply and demand. When gasoline got up to four dollars a gallon people stopped using it…demand decreased, supply increased, the price dropped. Basic economics…micro economics, for the record. 

          • the real valley person

            Obama is spending less than is needed at the moment, so no, unfortunately he isn’t a spendthrift. I wish he was. And its not “our money” that he is spending, since we are being taxed only 60 cents on the dollar.

            I asked you for something you claimed was worthless. Apparently you are having 2nd thoughts about the value of fiat electronic currency.

            Yep, gas prices go up and down rapidly. That is why they aren’t factored into the CPI.

            In your detailed study of economics, did you ever come across the “paradox of thrift?”

          • Devin

            “we are being taxed only 60 cents on the dollar”. LOL 60% isn’t enough for you?  You want more than that?  At what point to you think people are punished for working that they stop doing it?
            As for the paradox of thrift, that’s why we have this thing called the fractional reserve banking system.

          • the real valley person

            Its math Devin. If we are paying 60 cents for 1 dollar in services, then the government isn’t spending our money. Its providing a lot of free services.

            We have a fractional reserve banking system so that the banks can’t over lend. Its government regulation to protect the banks from themselves.  It has nothing to do with the paradox of thrift. The latter is about people and businesses holding back on spending during down times, which only increases the depth of a recession, and further decreases  the willingness of people to spend, resulting in less and less money circulating.

          • Devin

            Ok so these people and businesses are holding back in spending, what form are they keeping their money in?  Maybe a bank account?  Or a Money Market Account?  I mean maybe its just straight stock/bonds, but regardless the money will get re-invested (either from the banks they are holding the money in because of fractional reserve banking), or because they invested it themselves.  And thereby the paradox of thrift is a fallacy as long as the money stays in a bank account/bonds/stocks ect.  When was the last time you saw a business with a lot of money under its mattress?

          • the real valley person

            Yes, bank accounts. Stocks or bonds for the more well off. Also under the mattress.  Savings rates have increased since the recession started, a classic paradox of thrift response to scary times.

            You say the money will be reinvested. Perhaps eventually, but corporations are sitting on trillion in cash right now, not investing in anything productive. They are either hedging bets or they just don’t have enough customers to justify expansion. You can dismiss the paradox of thrift, that too much saving results in less aggregate saving because consumption is too low, but non-libertarian economists wouldn’t agree with you.

            I don’t “see” businesses with money under their mattress. Statistically, they are sitting on cash, which costs them little when our inflation rate is near zero. The cash they are collectively sitting on is helping to stall a recovery. Its basic macro economics. Buy a textbook.

          • Anonymous

            VP, for a long time you’d often hear that ‘Americans don’t save enough,’ with comparisons to the Japanese, etc. Was that coming from people other than macroeconomists? Or is there always an inherent tension between personally saving enough (for retirement, for down payment on a house, a rainy day, etc) and the problem of reduced demand per the paradox of thrift? 

          • Anonymous

            What liberalthink. Do you really think the government is providing services for free?

          • the real valley person

            Obama is spending less than is needed at the moment, so no, unfortunately he isn’t a spendthrift. I wish he was. And its not “our money” that he is spending, since we are being taxed only 60 cents on the dollar.

            I asked you for something you claimed was worthless. Apparently you are having 2nd thoughts about the value of fiat electronic currency.

            Yep, gas prices go up and down rapidly. That is why they aren’t factored into the CPI.

            In your detailed study of economics, did you ever come across the “paradox of thrift?”

          • Anonymous

            There are independent measures of inflation, such as the MIT Billion Prices Project. It tracks the CPI quite closely.

          • Anonymous

            What’s the old saying…uh…oh yeah…Figures lie and liars figure. Personally, I have trouble believing any number that comes out of Boston.

          • Anonymous

            >> What’s the old saying…uh…oh yeah…Figures lie and liars figure.
            Personally, I have trouble believing any number that comes out of

            How convenient — that must save you a lot of hard work of actually thinking.

          • Anonymous

            I’m sure you look just as askance at figures coming out of…say..Kansas State University. MIT…along with the rest of the Boston schools…doesn’t exactly have a middle of the road reputation. I choose to consider their figures cum grano salis (how’s your Latin? Oh, what the heck, you’ll just look it up anyway.)

          • Anonymous

            You’re wrong: I’d look upon figures from KSU as I would any academic institution, that is, as some of the most trustworthy around. All data needs to be scrutinized for possible bias, but academics have fairly high standards, and its individuals are usually are not overly biased by the political leanings of their state.

            MIT, of course, has a sterling reputation for research, among the best in the world (and probably the absolute best anywhere).

            Eliminating data because of your perceived biases from the surrounding community only ensures you will turn to sources that are biased in a direction you likely approve of, politically. That’s a good way to fool yourself. 

          • Anonymous

            >>”I’d look upon figures from KSU as I would any academic institution, that is, as some of the most trustworthy around.”

            Well then David, would you like to buy a bridge? Fremont, Marquam, Morrison, or maybe a classic like the Hawthorne or the Broadway, or how about the St. Johns. For you, I’ll let any of them go and at very attractive prices.

            That’s your problem. And don’t talk to me about “perceived biases.” Your reliance on the purity of research from academic institutions is a very major bias.

          • Anonymous

            > Your reliance on the purity of research from academic institutions is 
            > a very major bias.

            I didn’t say I relied on them. I said I generally found them trustworthy, but that one needs to vette all data sources.

            Besides, how would you know? You’ve admitted elsewhere that you don’t read reports and papers because they’re too “dry.” That says all we need to know about your standards and abilities.

          • Anonymous

            You are so full of crap…you change the argument every time I slap you down. You just keep relying on your academic papers and boring the Hell out of everyone. As for me, I’m done with you.

          • Anonymous

            You are so full of crap…you change the argument every time I slap you down. You just keep relying on your academic papers and boring the Hell out of everyone. As for me, I’m done with you.

          • Anonymous

            Yes, I will keep relying on peer-reviewed research. And you, keep relying on right-wing think tanks that are paid handsomely to put out only that data which supports their funders’ politics.

          • Anonymous

            This guy seems to think he knows everything…except the definition of TROLL!!! David, if you want to know what a troll is…and you probably don’t…just look in the mirror. I refuse to respond to anything you write ever again. With you thee is no middle ground. You are like your hero Obozo. You just keep changing the argument to suit your purposes.

            Well frankly, I’m not interested in your one-sided arguments. You get to the finish line and think you have won…because everyone else got tired of your constantly changing the rules and left the race. Goodbye.

          • Anonymous

            There are independent measures of inflation, such as the MIT Billion Prices Project. It tracks the CPI quite closely.

  • David Appell

    Obviously an adult in the family need to get a second job. It’s better than starving the children.

  • Rupert in Springfield

    The comparison here is actually a quite valid one. I am loving how the boobs want to go off on a tangent that the federal budget is not like a family budget because the federal government can print money.

    That’s not at all the point here. The point is no one has any concept of a billion or a trillion. If I had a dump truck full of sand, no one here could tell me off the top of their head if there were closer to a billion grains of sand or a trillion. How many BB’s would fit in a dump truck? A million? A billion? A Trillion? What is the order of magnitude, not the exact count?

    The point here is to get the numbers to comparative scales that most people can comprehend.

    Don’t call it a family, call it a really small country, whatever. The thing being shown here is the scale.

    Got it?

    • Anonymous

      Your example is irrelevant. Any person should know that the federal budget is about $3 trillion/yr, that the US GDP is about $15 trillion/yr, that the richest Americans are worth about $50 billion, that big movie stars and star athletes make about $20 M/yr, and that the average person makes about $50,000/yr. You can compare everything to these. 

      But everyone should be able to do a quick estimate of the questions you ask. Sadly, many American taxpayers value education and teaching so little that they’re not willing to fund them adequately to ensure that students learn these skills. (This lack of education is one reason our country is going downhill.)

      • Devin

        (3.6T federal spending, 1.4T US Deficit, 14.8T GDP last I checked)
        The problem with talking about people that make millions each year, is there isn’t a lot of them (only a bit over 200k or so), so even if we tax them more we don’t get a lot more for it.  For instance if we taxed everyone that makes over 1 million a year 10% more, we would only get 2% more of the federal spending (and this assumes they don’t change their habits so that we get less income) and we are borrowing 42% of our federal spending.
        Its not lack of adequately funded education (we spend a TON per pupil compared to most of the rest of the world), the problem is that money is not well spent in educating our children.  And the primary problem with that is the teacher unions, which resist any attempt to force them to compete to be the best educator for the dollars they get.  When you got a complete monopoly like the teachers unions do, there is no incentive to do better as an organization (some individual teachers want to teach and do better, but other than that).

        • Anonymous

          Actually US public spending on education, as a percentage of GDP, is right at the OECD average. We rank 11th. We are also about average in the percentage of public expenditures that are spend on education.

          I’d post a link but this site always requires that my posts with links be moderated, and they never appear. 

        • Anonymous

          > if we taxed everyone that makes over 1 million a year 10% > more, we would only get 2% more of the federal spending

          That doesn’t seem correct, so I would need a source. Because if we only taxed hedge fund managers at the fair, proper rate it would raise $6 B/yr, which itself is 2% of federal spending. 

          • Rupert in Springfield

            For $6B to be two percent of federal spending that would mean 1% of federal spending would be $3B

            You see where this is going David? That’s right. It’s uh oh time.

            If 1% of Federal spending is $3B then that would mean total federal spending (100%)  would be $300B

            That’s not even close. That’s not even believable at a glance.

            Do you seriously think total federal spending is $300B? Big hint David, just the deficit, which is a big story in the news, is over $1T. Total Federal spending is right about $3.4T

            Any scientist would have been able to just glance at that 2% number and realize it is ridiculous.

            I’m not a scientist, but I do have a science degree, and I caught it.

            Please, if you can’t even run simple numbers like this, don’t berate people about global warming and tout your own knowledge when you can’t even spot a glaringly bogus stat like this one.


          • Anonymous

            Yes, in my haste I stupidly misplaced a decimal point. My bad.

            (The hedge fund manager tax loophole is still odiously unfair, though.)

          • Anonymous

            Yes, in my haste I stupidly misplaced a decimal point. My bad.

            (The hedge fund manager tax loophole is still odiously unfair, though.)

          • Devin

            As a source how about the IRS
            Page 36, of the people with adjusted gross income over $1 Million, the total taxable income is $623 Billion, 10% of that is $62.3 Billion.  Our current national federal spending is $3616 Billion.  62.3/3616 = 1.7%

          • Rupert in Springfield

            OK, so if you take different numbers you can come up with a 2% figure. That’s one way to look at it.

          • Devin

            Are you objecting to my use of current spending vs older tax returns?  I can use 2009 spending if you want, we had a total outlays of 3517 Billion that year for 62.3/3517=1.77%  (so its 1.77% of government at the time not 1.72% which would be current spending).

          • Devin

            Oh, I think you maybe thinking I was replying to you.  No I was replying to DavidAppell which was asking me for my source.  I have no problem with what you said.

        • the real valley person

          Warren Buffett provided some number in a recent op ed in the NY times, in which he called for tax hikes on the richest Americans, including himself. 

          Buffett himself paid only 17% of his $50 million in earnings in federal taxes. That rate is much less than what I pay, factoring SSI and income tax. In fact every salaried person in Buffetts office paid a higher percent of their income to the feds than Buffett did, averaging more than twice as much.

          The mega rich pay only 15% on investment earnings, which is most or all of their income and a pittance in other federal taxes.

          The 400 riches Americans earned 90 billion in 2008, and paid 21% of that in taxes. That comes to $19B. If you simply taxed them at the top income tax rate for working people, you would increase the take by about $12 billion. And that is just the 400 richest.

           About 237,000 Americans make more than 1 million a year. 8200 make more than 10 million a year. Nearly all of these people pay a lower percent of their income in federal taxes than I do, for the simple reason that much or most of their income is from capital gains, taxed at only 15%, and only the first $100K or so of what they earn (if they even get a salary) is subject to the SSI tax.

          Its a myth that we can’t get a lot more out of the rich.


          • Devin

            Warren Buffet is free to send as much as he wants to the government if he thinks he doesn’t pay enough taxes  (they accept donations from anyone).
            Yes capital gain taxes is 15%.  However lets consider a case of capital gains.  Lets say you buy 100 Million in gold and hold it for a year and then sells it.  And during that year the government inflates its currency by 4%.   So you sell it for 104 Million (lets assume the gold doesn’t change value, just inflation changes) . Well now you have a “capital gain” of 4 Million, of which is taxed at 15% (or 600k in taxes) .  Have you actually earned any money? NO!  The gold that you bought at the beginning of the year still has the same value at the end of the year (if you were to barter for anything with that gold it would still hold the same intrinsic value).  A significant part of capital gains taxes is a tax on inflation.
            Now lets talk about the other reason that capital gains is so low at 15%.  Its because raising it, LOWERS the amount of tax income you get from that tax.  Time and time again it has been shown that as we raise capital gains taxes, we lower the tax receipts (the income to the government from taxes) for capital gains.  So much so, that Obama was actually asked about that in the last presidential debate, and he agreed that it happened, and said that he would raise it any way “for fairness”.
            The last reason for a low capital gains taxes, is that by lowering capital gains taxes, you increase investment in small businesses and through that create new jobs.

          • the real valley person

            And the last year we had 4% annual inflation was 1991. So your hypothetical  bears no relation to reality.

            Changing capital gains rates has a 1 year positive impact on tax receipts. It reflects investors taking profits in advance of a knowable tax rise. Over the longer term, lower rates yield lower amounts of taxes.  This has been documented to death.

            Read Buffetts article. He says that a lower capital gains rate has no impact at all on investments, which means it has no impact on jobs. Investors seek profits whether or not those are taxed at 15% or substantially higher. And he should know.

        • Anonymous

          And if we increased taxes on everyone who benefited from the Bush tax cuts, which includes lots of people who make less than $1M/yr, we’d raise even more.

          By the way, notice that those who make more than $10M/yr pay a *lower* rate than those above them. That’s not fair either.

          The other area where a lot of federal revenue has disappeared is corporate taxes, which are down from about 6% of GDP in 1950 to about 1% now. That difference now costs about $750 billion/yr. That’s a huge part of the deficit right there. See

          Thanks for the IRS data source.

    • the real valley person

      No Rupert, the chart makes a direct comparison of a family budget with the national budget. It assumes that the two are just different scale versions of economics. It makes no attempt to point out that the differences are not simply scale, but also of kind.  A government can create money to pay its bills. A household can’t. Even robbing a bank takes work.

      Who cares about the order of magnitude of government money? Someday, if the economy grows along at 2 or 3% a year for another few hundred years, a trillion will seem like nothing as compared to today, just like a billion today seems like nothing even though it was a lot of money 50 years ago. You conservatives, and you yourself have demonstrated this time and again, seem to think that money is a fixed object sitting in a vault somewhere. It isn’t. It is just a way we account for value. A dollar by itself, whether paper, gold or a data bit,  has zero or near zero value (yes, even including gold, which is basically a baubble).   

      The scale is not relevant. What is relevant is what government spending buys, and what government policy does for or against us. If the family in question has a member who works directly or indirectly for the government, or gets Social Security, or drives on a deteriorating bridge, or will someday need government help, then they have an interest in maintaining government spending, not decreasing it.

      • Rupert in Springfield

        >Who cares about the order of magnitude of government money?

        Quite a few people. In case you haven’t realized government spending is something of an election year issue.

        >The scale is not relevant.

        Please, stop being an idiot. Yes I know you have maintained we have plenty of money to spend. Obviously you believed 180 degrees the opposite when Bush was in charge but now we have plenty of money to spend. Of course you are one of very few in the world who believes this but thats ok. Keep twiddling away!

        • the real valley person

          Yes, it certainly is an issue. And there is nothing like economic ignorance to make an issue out of counter cyclical government tax and spend policies.

          Its not that we have plenty of money to spend Rupert. We don’t have to reach into a vault and pull out money to spend. The government has the ability to create new money to spend, and this is the only reasonably quick way out of a very bad recession. I may be among the few who grasps this. But I keep good company with actual economists.

          Bush blew the surplus we once had. Thanks for reminding us. 

  • Anonymous

    sorry but how can some of you say this comparison isn’t on point just because the gov. can print more money?? they’re not suppose to be  printing the fucking money anyway! the fact they’re able to do that is completely irrelevant to this comparison and whoever started that debate was just looking for an argument. this helped me understand alot more.

    • David Appell

      Who says the government isn’t supposed to print more money? The money supply is a tool, just like many other features of government and central banking….

      • Anonymous

        the less money they print the better.

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