Comparing the federal budget to the household budget

The sky changes color over the U.S. Capito in Washington, DC. 

Most individuals face a challenge in managing the money they make and the money they spend. The solution, of course, is making a budget. When it comes to talking about government spending and debt, a lot of politicians and talking heads like to compare the spending of the entire country to spending at an individual level -- saying if families can manage to stick to a budget, so can the government.

The analogy makes some sense:  it's easy to get our heads around.


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But Marketplace’s David Gura says the government is huge with a lot of complicated expenses. For the individual, or the family, they really only have to worry about housing, food, transportation, and a few other categories. But government spending priorities are very different: take the example of defense spending, which isn't exactly on the family balance sheet, but takes up about 20 percent of the national budget. Plus, a big chunk of the budget goes to social welfare programs, which isn't the same for families.

On the other side of the balance sheet, the government can also tax people and print money. They can also borrow at much lower rates than the average person.

 

About the author

David Gura is a reporter for Marketplace, based in the Washington, D.C. bureau.

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