No, Eric Cantor, American families aren’t living within their means

Supposed opponents of big government, unbalanced budgets and enormous debt loads tend to argue that Washington has to act like a regular household and establish a balanced budget each month and live within their means. Although the rhetoric is indeed correct – every politician has to learn to handle whatever revenues they receive and not spend more than they take in – the problem with the argument is that the average American household is living beyond their means.

Virginia Republican Congressman and House Majority leader Eric Cantor posted a tweet on April Fools’ Day: “Working middle class families live within their means, and they should expect nothing less from their government.”

 

Cantor himself isn’t one to shy away from big government. During the Bush administration, the Virginia representative voted to raise the debt ceiling on several occasions and advocated for the Troubled Asset Relief Program (TARP). He also also supported the authorization of the war in Iraq and to spend billions of dollars to rebuild schools in Iraq.

Anyway, that’s besides the issue.

It’s quite apparent that families all across the country are trying to keep up with the Joneses: total personal debt is nearly $16.5 trillion, mortgage debt is more than $13 trillion, student loan debt has surpassed $1 trillion and credit card debt has slowed down to $855 billion. This is certainly not balancing the household books.

Of course, households aren’t saving either. According to the U.S. Bureau of Economic Analysis, the personal savings rate is a little more than four percent, a very low number when most finance experts suggest workers should be putting aside at least 10 percent of their incomes.

Indeed, the economic collapse can be attributed to a paucity of savings, but even during the happy days people weren’t really saving much: between 1990 and 2006, the personal savings rate never reached double digits – the highest was nine percent at the beginning of the Clinton administration in 1993.

There’s certainly not an argument that the Federal Reserve is devaluing the wealth of American households or that the federal and state governments are heavily taxing its citizens. However, households have to adapt or die and not keep waiting for the government to do something or improve because the truth is Capitol Hill will never get better.

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