Can Government's Finances Be Compared to a Household's?
Politicians often try to empathize with struggling Americans by
promising to cut government spending, "just like regular
households in tough times." This simile evokes different
reactions depending on one's economic views. Keynesians think
it's reckless, proponents of Modern Monetary Theory (MMT) think
it's absurd, and Rothbardians think it's correct as far as it
goes, but it falsely equates tax revenues to an honest living.
In this context, I was amazed to read a CNBC article earlier
this week arguing that households were no role models for the
politicians! It's worth going through a comparison to clarify
the important issues. Households a Bad Role Model for
Government? The article (which originally ran on Reuters) sets
the stage: Republicans, claiming revulsion over the U.S.
government's $14.3 trillion in debt, say Washington needs to
take a hard look at its finances and balance the books like the
typical American family. "It's simple. Spend what you t