Be careful not to oversimplify

A friend of mine recently posted this on her Facebook page:

It’s funny (apparently, it’s going viral), and it may be useful as a way to put budget numbers into some perspective… but it’s also an oversimplification that does not help students come to a thoughtful understanding of how the federal budget works and how countries operate.

Here’s a columnist named Dave Ramsey who wrote in April of this year about the same thing — he compares the federal budget to a household budget and comes to this conclusion:

If I ever got a call from a family that was spending $41,500 more than they made every year, you would definitely expect me to yell at them for their dumb behavior, right? Kids, no more McDonald’s four times a week. Snacks come from the grocery store now. And we’re not going to the movies for a while, so break out the board games and TV Guide. This family has a problem, so it’s time to amputate the lifestyle!

It works the same way for the government. You can’t borrow your way out of debt, whether you’re a typical American family or the entire U.S. government. At some point, you’ve got to say, “Enough is enough!” and make the hard cuts necessary to win over the long haul.

I’m not arguing that the federal government does not need to make budget cuts. I think it does. But it’s not terribly helpful to compare the federal budget to a household budget.

Indeed, that would be a great project for students to explore for a month or so — is the US budget comparable to a family’s budget?

If so, why, and if not, why not?

Here’s the basic research I did for this blog post — I ran the following Google search, which led me to Dave Ramsey’s column (the first result, circled in red below):

The three search results that follow that column are, IMHO, far sounder arguments that it’s not useful to make that analogy.

Below, in orange, are some highlights from the second search result, which I think is worth clicking on as a starting point if you do want to research this question in more depth…

With one brief exception, the federal government has been in debt every year since 1776.

The federal government is the issuer of our currency. Its IOUs are always accepted in payment. 

… since this analogy is invoked so often, I hope that the next time you hear it used you will challenge the speaker to explain exactly why a government’s budget is like a household’s budget. If the speaker claims that government budget deficits are unsustainable, that government must eventually pay back all that debt, ask him or her why we have managed to avoid retiring debt since 1837-is 173 years long enough to establish a “sustainable” pattern?

The point of this post is that we should be careful not to oversimplify the world. According to the US Census Bureau, there are about seven billion people on the planet. There’s a lot of complexity. And it’s worth noting that the US represents less than 4.5% of the world’s population — do most middle school students have that context?

For a big topic, such as the U.S. federal budget, it would take longer than one or two class periods to even begin to understand its complexity. That would be like teaching all about Islam in less than a week (oh, wait — we do that in World History surveys, don’t we? — that’s another topic…)

But the budget is unquestionably an important topic for citizens to think deeply about, and I believe that middle school students are capable of grasping the basics of the budget. They can’t do that in two or even three classes; but if they are given sufficient time and if they invest the effort, they could become financially literate enough to explain how the federal budget differs from and/or is similar to a family’s budget. That would be quite an accomplishment.

I don’t know enough about the topic right now to teach a month-long unit on it, but I do know how to do more involved research, and I know how to ask questions. And I happen to have a close friend who works for the Federal Reserve. If students at my school got “into” this topic and we decided to do a unit on the budget, we could learn a lot by making a website and some short videos that explain why the federal budget is not like a household budget.

In the process, we’d learn a ton about math and statistics and politics and communication skills. We’d also come to a better understanding of the government’s priorities by taking a close look at the budget.

For instance, this chart from Wikipedia shows that in 2010’s budget of $3,456,000,000,000 (that’s 3.456 trillion), only $660 billion was discretionary spending — what does that mean? And why are Social Security, Medicare/Medicaid, and Defense such a big chunk of the budget? Who says those are mandatory rather than discretionary?

Once students start appreciating the budget (or any big topic) in its full complexity, they can start asking insightful questions, which will lead us to articles and books and sophisticated research. We might visit with professors of economics at local universities such as Duke, NCCU, UNC, and NC State. And we could Skype or email with other professors around the world who might be willing to share some time to help us learn.

That’s the kind of meaty topic that citizens in a Republic should be investigating in a thoughtful way.

So while this sort of thing is fun to look at…

… we have to be more thoughtful. We need to slow down, THINK, and then communicate our thinking to others. That’s the sort of project work we will do on a regular basis at Triangle Learning Community, the school I’m opening in August, 2013.

Oh, and by the way — one of the first units we will do at my school is to lay a solid foundation for big and small (nano) numbers, so that students’ eyes do not glaze over when they read something like “in 2010’s budget of $3,456,000,000,000 (that’s 3.456 trillion), only $660 billion was discretionary spending.”

Big numbers are understandable — we just have to take time to think about them in a thoughtful way.

UPDATE on 1/2/12 — Paul Krugman just wrote a column in the New York Times, titled Nobody Understands Debt, in which he notes that some people “see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.”

He goes on to note that:

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.


About Steve Goldberg

I teach students at Research Triangle High School (RTHS) about US History. RTHS is a public charter school in Durham, NC, whose mission is to incubate, prove and scale innovative models of teaching and learning. The blog posts here reflect my own personal views and not those of my employer.
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