Then I thought what would it look like if broken down into chewable bites. So I did a little research and this is what I can up with:
- 2009 (projected) Number of US Households - 113,568,000
- 2008 Median US Household Income - $50,233
- 2008 Median US Household size - 2.6 people
So, if I look at the stimulus cost of $800 billion and break it down it may not look so bad.
- The stimulus cost each US Household $7,044.24
- The stimulus cost each person in the US Household $2,709.32
- Based on the median income of US Households the stimulus cost for each person in the US Household amounted to 7.29 weeks of earnings.
So, now that we have broken it down into more chewable bites we can say that it cost a little less than 8 weeks of earnings to bring us back from the brink of a depression. The likes of which would most likely make "The Great Depression" pale in comparison.
Considering it takes the average employee a little more than 5 months to satisfy all federal, state and local taxes what's another 7 1/3 weeks added to the mix?
A friend of mine, who is not a big supporter of the current policy, said we are going the wrong way. I believe, when looked at it from this perspective, that such may not be the case.
While I agree that the amount of increase per person isn't that significant, I see other problems. As a nation, we are in serious debt right now already: $57 Trillion+. That means we owe about 1/2 a mil per household.
ReplyDeleteGranted, there are those among us that can handle that kind of debt - but the majority can't. While we're only paying 5 months in taxes, we're not paying down the balance because a lot of those taxes are just to keep the government running.
My concern is that we aren't even considering our personal debt into this equation. According to the numbers, it's somewhere around $18,654 per household (without the mortgage).
You start adding up these numbers and it becomes apparent that adding on another 7K, while not a large % of the whole - is still scary when it seems to be the only response we have to the current economic crisis.
I can't imagine how we're going to pay this all off and what happens to the world economy...and ourselves...if we can't. The recession we're in right now would seem like peanuts compared to what happens if we keep pushing the pay-it-tomorrow strategy.
Nice post by the way, I haven't seen someone break down the current increase in debt before this and compare it to taxes. It certainly made me think about things a little differently.
- Ryan H.
From my perspective, this economic crash is predicated on Petroleum Energy... of all of the producing oil/natural gas wells out in the world, roughly 45% are going dry and therefore affecting the economy in ways not seen in modern times.
ReplyDeleteHang on for a very rough ride for everyone.
This is a very good point, anonymous. I have been watching this trend for a long time. For anyone who is interested, look up 'Peak Oil' on Wikipedia. There are several different calculations for when we start running out of oil and some of them suggest it will happen around 2020. Considering that the Chinese and Indian economies are just trying to hit their stride, this would create a demand that couldn't be maintained, pushing the price of oil to $6+, if not more. Cheap energy for cars would pretty much dry up.
ReplyDeleteAnother thing to consider is the retirement of the baby boomers. When they retire, we are bound to start seeing a rise in health care costs well beyond what is current. The real concern is where the baby boomers are going to get the money. I think we're going to see them selling their 401Ks and then after that's gone, selling their homes. Also not a pretty picture.
Ironically, this will happen about the same time as one of the peak oil calculations - 2020.
Hard to imagine what that will mean...