Most people face a challenge in managing the money they earn and the money they spend. The solution, of course, is to budget. When it comes to talking about government spending and debt, many politicians and talking heads like to compare spending across the country to individual spending – saying that if families can be successful on a budget, the government can too.
The analogy makes sense: it’s easy to get an idea.
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But Marketplace’s David Gura says the government is huge with a lot of complicated spending. For the individual, or the family, they really only have to worry about accommodation, food, transportation and a few other categories. But the spending priorities of the government are very different: take the example of defense spending, which does not appear exactly in the family balance sheet, but represents about 20% of the national budget. In addition, a large part of the budget goes to social assistance programs, which is not the case for families.
On the other side of the balance sheet, the government can also tax people and print money. They can also borrow at rates well below the average.