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Meme Killer Episode 5: Why the Hell Would You Think Of America's Debt As Your Family Budget?


Think of America's Debt As Your Family Budget
I don’t know about you, but my household carries a lot of debt.
Credit card debt, student loans, a car loan, and–the big one–a mortgage. All told, our debts are currently over 200% of our yearly income. Why do we do this? Because we believe that our future economic outlook is better than our past economic outlook. We spent our 20s and early 30s running up debt because we believe–and our creditors believe–we’ll spend the next 30-odd years paying it all down, before retiring and living off our savings for a time, before our inevitable deaths.
Government debts are nothing like a household’s debts. A government never dies. A government never grows old and retires. A government was never a bright high school student with a world of potential and a family of simple means. The government was never one person with one life to live, it is a side-effect of 300 million lives and climbing, spread across the years, and it will last (we like to think) forever.
Still, a government has debts, and for much the same reason: because we believe that our future economic outlook is better than our past economic outlook. The population will rise. Technologies will improve. Real per-person wealth will increase. In short, the future will be better (if a bit more crowded) than the past. As long as that’s true, the government will have more revenue in the future than it does today. And unlike you and me, who have to plan for retirement, that’s not going to change for the government anytime in the foreseeable future.
I have about 30 years of prime income-earning time ahead of me, and so debt around 200% of my yearly income is considered a very safe amount. As time goes on and I have fewer years of work left in me, that percentage will need to move lower. Conversely, if I had more working years in me, it could safely be higher. But what if I could work… forever?
Economists tell us is that the best way for the government to answer that question is to aim for a stable ratio of debt to GDP (Gross Domestic Product, the total value of all the goods and services produced by the nation in a year.) Since we expect GDP to always increase (over the long run) that means the debt should also always increase (over the long run). Which means the government should (almost) always run a deficit, year after year, forever. Arguing the contrary–that the government should have a balanced budget every year, or that it shouldn’t have any debt–is equivalent to arguing that a 35-year-old should never buy a house unless they can pay for it in cash.
So please, don’t compare the U.S. federal government’s debt to a household’s debt. Not unless you plan to live forever or kill the government. Then, by all means, carry on.


  1. When you make a deposit at a bank, you increase the bank’s debt to you. Government debt is comparable to bank debt, except it’s 100% insured. Federal debt has nothing to do with borrowing, but rather saving the banking demand for secure savings.

  2. The author is correct. The federal gov’ts debt is not like a family’s debt because usually a family has the intention of paying it off.
    Which is a good reason why we should cut spending. Medicare/aid should be cut by 50% and so should the DoD. Living in debt is fine if you intend to pay it back. Not if you just unload the debt on future generations.

  3. You’re sort of missing the point, Left Field. Governments are perpetual (at least, compared to human lifetimes; geologically they don’t last very long); no one generation of citizens suffers more from national debt than another.