It’s one of the most persistent and yet one of the most inaccurate and useless comparisons in politics, the declaration that the government should act like families and spend only the money it has available to it.
Here’s a Texas variation, from Chuck DeVore, vice president for policy at the conservative Texas Public Policy Foundation, speaking Monday after the apparent death, by parliamentary point of order, of a proposal to create a loan program to help finance water projects by withdrawing $2 billion from the rainy day fund: “The Texas Legislature should live within its means just like every Texan must. And so it should only spend the general revenue it has available.”
DeVore’s foundation opposes spending money from the rainy day fund on water. I’m sympathetic to the argument that big infrastructure projects should come from general revenue, but the money in the rainy day fund is not borrowed money. The fund, which is projected to reach $12 billion in 2015, holds revenue stashed away in a savings account of sorts, and just as families dip into their savings — those that have savings — to help pay for the occasional big-ticket item, so too should the state occasionally use its emergency cash to meet major needs. Whether legislators stick to general revenue or take money from the rainy day fund to pay for water, they will be living within the state’s means either way.
Unlike the rest of us, who, with our mortgages, car loans and credit cards, live our lives in debt.
Debt is necessary — some debt anyway. American household debt in 2011 was 112 percent of disposable household income, which is annual income after taxes. This percentage compares with 49 percent in 1955 — a time when Americans were more frugal. Then again, Americans 60 years ago were satisfied with much smaller houses, and credit cards barely existed.
We have money to pay for food, clothing and entertainment only because we stretch paying off our houses and cars over years and decades and adjust credit card payments depending on a month’s various expenses. In this way we manage our debt burden and limit the hit to our paychecks. Only by juggling debt do we stay within our means.
