Thursday, February 28, 2013

To Understand the Macro, Study the Micro


You can't get your mind around $17Tril of national debt.  You can only try.  Make it the equivalent of something you do understand.  Say, a new Lexus LS.  Starts at $72K but you probably want some frills, so make it $80K.  The debt would be 212,500,000 new Lexus LSs.  At last year's production numbers, that would be more than 25,000 years of production.  See?  Told you.  You just can't make these numbers real.

But you can understand a new chair.  If you knew you could buy a nice chair for $400 but your local dealer wanted $1,450 for one in inventory, you probably wouldn't buy it.  If you did buy the more expensive one, a consequence would be that you wouldn't have as much money for the rest of the stuff you want to buy, assuming a finite budget.

Segue to the national debt.  If it matters to you, you might ask "How the heck did we get there?"  We can't quite explain it.  There are all kinds of anomalies, like missing and misappropriated funds in the many billions of dollars and programs that do absolutely nothing, plus the ordinary cost of running the gummint.  Too much, too much, too darn much.

But remember that chair?  

The VA maintains a Vets Center in Eugene, Oregon.  (Full disclosure: I receive excellent PTSD counseling there for which I am grateful.)  They are a microcosm of why we are in $17Tril in debt.

Three years ago the Clinic had a year-end budget surplus, something common to many gummint agencies.  Stim money, maybe;  I don't know.  True to the maxim, they had to "use it or lose it."  So what did they do with part of it?  They bought some chairs.  

18 chairs, to be exact.  Individual chairs, black leather and brass-button-tufted.  At a cost of $1,450 each.  

That's $26,100 of your tax money for new chairs at the Vets Center.  Since the gummint borrows about 42% of what it spends, that translates to borrowing about $11,382 to buy those chairs.

And where did the new chairs go?  Prior to their recent move, some of the chairs were in employee offices and some were in a group counseling room, where the chairs they replaced were shoved to the back of the room.  

In the new location, all of the new chairs are in employee offices.  Not for the employees to sit in, mind you.  They've already got nice desk chairs and besides, the new chairs are kind of uncomfortable and they don't have casters.  No, they're in those offices for clients like me to sit in when we visit.  None of the new chairs are in the new group counseling room.

And where did the old, but perfectly good, chairs go?  Here and there, I suppose.  Some remain.  Things can get lost in a move, y'know. 

One small office in one small city;  $26,100 for new chairs that they had to buy or reduce their next year's funding.  Now multiply that kind of waste and abuse by all the budget items in all our gummint offices and installations in the world plus all our aid and give-away programs.  It's a lot of money that we didn't have to spend.  Your money.

No, you really can't grasp $17Tril of debt.  That's the macro.  But you can understand spending money on chairs.  That's the micro.  Imagine that the macro is made of a gazillion overpriced chairs that you partly paid for and partly borrowed for.  If you can understand that, you're on the way to understanding the macro, and that's what this post is all about.  

No one is minding your money.

* * * * *

"What did the taxpayers get out of the Obama stimulus?  More debt.  That money wasn't just spent and wasted - it was borrowed, spent, and wasted."
--Paul Ryan

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure.  America has a debt problem and a failure of leadership.  Americans deserve better.  I, therefore, intend to oppose the effort to increase America's debt."
--Barack Obama

"You know those movies where the people in the audience are screaming, 'Don't go in that door!' because you know the killer is in there?  Well, it is the same thing with this debt.  We know how this ends."
--Marco Rubio


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