In my Facebook feed the other morning, I saw someone sharing one of these notions that seems like basic common sense, until you start thinking about it and realize that common sense is often more common than sense. The claim was that you can put the fiscal cliff—the federal budget, really—in better perspective by taking eight zeroes off the end of a series of numbers and thinking of it as a family budget. Now, families and governments actually aren't a good comparison, as economists (and common sense, if that's your speed) would tell you. But since a lot of people find this basic idea a powerful comparison, let's think about what if the United Statesa big extended family living under one roof with one budget.

What happened in this Facebook share once those zeroes were gone?



Annual family income: $21,700

Money the family spent: $38,200

New debt on the credit card: $16,500

Outstanding balance on the credit card: $142,710

Budget cuts so far: $38.50

First off, this set of numbers tips its hand by only talk about cutting budgets, not increasing income for this fictional family. Which is interesting, because one of the big problems the America-family has is that a bunch of rich relatives are living in the house not doing their fair share to cover expenses. We've got an uncle who's down in the kitchen all the time telling the rest of us to eat nothing but beans and rice because we can't afford fresh vegetables and meat, and telling us to turn down the heat in the house if we're having trouble covering the power bill. And no, he's not going to share his giant steak because it's his and he bought it with his own money. But meanwhile, we're paying the electric bill for that space heater he's always running inroom, because he's not gonna be cold even if the rest of us are. And we're paying the gas bill for cooking that steak he didn't share. So a big part of that spending problem we allegedly have is that some people aren't acting like we're a family where everyone contributes to the income side.

Another part of why our family budget is hurting is that the factory in town that a couple family members made a good living working at for years or even decades closed down. Now sister's still unemployed and the best job dad could find was working at Staples for $9 an hour. And since when the factory closed, he lost his pension, he may never able to retire. As a matter of fact, it was friends of rich space heater uncle who closed the factory, and we're pretty sure he made some money in the deal himself. Doesn't stop him lecturing us about why we're struggling, though.

Next, a bunch of the debt we took on last year was investing in our future. One of the kids is college age and we thought it was worth taking on some student loans to invest in her future. We feel sure when she graduates, she'll do her best to contribute to the family budget. We think in the long run she'll be able to contribute more to the family's bottom line with a college degree than if she just started working at Walmart right now, but, well, right now that investment is debt on our balance sheet. But that's what families do—they invest for the future and try to ensure that the kids have the brightest possible future.

We also took out a small-business loan to expand a little furniture-making business one of the brothers started out of the garage. With better equipment and a small advertising budget, we're hopeful he'll be able to grow the business and provide jobs for a couple other family members who've only been able to get part-time work.

We've also been having a family debate about whether to put a little more money into the house, actually. See, there was a big storm and a tree fell through the roof. Most of the bedrooms are fine, but two of them are really badly damaged. Some of us think all the members of the family deserve to have mold-free walls and roofs without gaping holes, but others aren't so sure and think maybe the people in those rooms ought to be on their own to recover from a tree coming through their roofs and crushing their stuff. We're hoping to win this one by reminding everyone that the people in those rooms have good jobs and pay more than their share of the bills most of the time. If they get too sick to work or have to take time off work to figure out how to fix things, the whole family will be financially weaker for it. We'll see how that one goes, but I sure think the whole house and the whole family will be weaker if we don't try to shore up after a disaster.

So, yeah, it's been a tough year what with the storm and all the rich relatives living in our house, running up the bills, but only contributing like 13 percent of their money to the family budget while a lot of us with much less money are contributing more like 30 percent. We're trying to invest for the future, though, and fighting to get those rich relatives to contribute a little more to the family budget. We'll see how things go with that, but meanwhile, it's not helpful to just strip the numbers down without any context for why we took in so little, or why we spent what we did.

