On Tuesday the Treasury Department announced that in May the federal government received tax revenues of $180.7 billion, the second highest for the month of May in history. Unfortunately, the government spent $305.3 billion, leaving a deficit of $124.6 billion. So far this year, deficits are at $844.5 billion and are on track to exceed $1 trillion for the fiscal year, the fourth year in a row.
Doing the math, the national debt is growing at a rate of more than $3 billion per day, or about $565 per household every month. At that rate the national debt will hit the debt ceiling of $16.4 trillion just a few days after the November election.
The release last week of the Federal Reserve’s much-anticipated three-year study of America’s finances, its Survey of Consumer Finances, confirmed what many families already know: Between 2007 and 2010 the average family’s net worth declined by nearly 40 percent, mostly because of the decline in housing prices. The Fed study also confirmed that their incomes also fell significantly in real terms, by nearly eight percent.
President Obama’s assertion last Friday that “the private sector is doing fine” has drawn heated criticism from his opponents, as media outlets and the Romney campaign have pounced at the opportunity to exploit the President’s “out-of-touch” view toward the U.S. economy.
The “Catching Up to 1968 Act of 2012,” announced Wednesday by three Democratic lawmakers — Reps. John Conyers, Jr. (D-Mich.), Dennis Kucinich (D-Ohio), and Jesse Jackson, Jr. (D-Ill.) — would spike the minimum wage from $7.25 an hour to $10 while mandating that future increases be tied to inflation.
But leaders in the business community say increases in the minimum wage only exacerbate unemployment, as companies must cut their payroll, especially when dealing with a stagnant economy.
As the Greek economy descends into political and economic chaos, it's only natural for Americans to wonder how the United States can avoid such a catastrophe. Greece is descending into a debt vortex from borrowing too much, and can no longer keep up with domestic demands for social welfare payments.
The debt abyss is an economic reality already known to millions of American families who made risky bets on the housing market just before the economic crash, or racked up massive credit card debt. Those families know that the solution to restoring a sustainable and prosperous future is not to keep on spending wantonly, but to make painful lifestyle adjustments that cut spending drastically and begin to pay off the debt. A nation, like a family, that lives above its means for a time must eventually live beneath its means to pay off the debts.