The 2012 Federal Budget Compared to What

The dimensions of United States Federal Budget for 2012 are hard to fathom. Aside from complexity and dimension, is federal budgeting really any different than household budgeting?  Not really.

Let’s remove some zeros and imagine the federal budget is a household budget.

Okay, instead let’s compare this to the 2012 City of Gig Harbor budget.

($23,248,000 utility revenue bond debt plus $12,380,369 non-voted and voted debt)

Let’s remove some zeros and halve the amount for the sake of comparison to a 2012 household budget.

Of course, credit card interest rates are high and government borrowing is at low rates, and that makes a significant difference.  The Federal budget shows no indication that the future amount of federal debt will be reduced.  In fact, the U.S. Official Budget published by the White House anticipates continuous yearly increases in total debt and ever larger deficits. 

In 2012, the United States already holds total debt that outstrips its yearly resources by 452%.  The City of Gig Harbor budget, however, holds total debt at about 65% of its annual resources.  City operations are sustainable.  The local good news is that City of Gig Harbor debt should decline in the next few years, and all current debt should be paid by the end of 2026.

Last year, despite hard times, the City of Gig Harbor developed a strategic reserve (a rainy day fund) and an equipment replacement reserve.  These reserves help local government acquisitions, purchases and project costs be managed as part of a sustainable system.  The Federal government should do likewise, and must take steps to reduce our debt.