“[T]he idea that if families are tightening their belts, the government should do the same, is as deeply intuitive as it is deeply wrong.” Paul Krugman

I wasn’t surprised the Albuquerque Journal gave so much space to Mike Frese, “Corrales resident”, to repeat the hoary nonsense about the national debt as a ‘family problem.’ Family is the metaphor for conservatives – especially, Christian conservatives – because father knows best. Feel free to read Frese’s column in its long-drawn-out, ham-handed entirety, if you need your invalid metaphors spelled out in detail.

Be sure to read Winthrop Quigley’s entire column – as usual, he explains things quite clearly.

ABQJournal Online » Flirting With Federal Debt Disaster

By Winthrop Quigley / Journal Staff Writer on Tue, Jul 19, 2011

It is possible some of these politicians really don’t understand what we’re dealing with. Every time one of them compares federal finances with household finances – arguing we should tear up the credit card and balance the checkbook and live within our means, just like families do – the intellectual dead end has been reached.

The federal government is nothing like the family household. It is a very large, poorly run business with a micromanaging board of directors (Congress) and a weak CEO (the president).

The business is failing. Refusing to raise the debt ceiling is the equivalent of pre-bailout General Motors reneging on its commitments to pay its steel suppliers and fund its employees’ retirement plans. …

If the prospect of suddenly unemployed federal workers in every state and unpaid military personnel under fire in Afghanistan doesn’t impress Congress, perhaps this will: In September 2008, the Lehman Brothers’ bankruptcy filing cratered the global economy because suddenly no one knew if the institutions making up the world’s financial systems could or would honor their obligations.

Lehman Bros. had $639 billion in assets, about as much as it takes to run the government for slightly more than two months. It had debts of $619 billion. The failure of a firm that was in the black to the tune of $20 billion nearly destroyed the global financial system. You don’t want to see what happens if Uncle Sam becomes the next Lehman Bros.

ABQJournal Online » Flirting With Federal Debt Disaster


[hat tip to Line of the day | NewMexiKen for the Krugman quote]