#RoryCooperLogic: Rory Cooper (whoever HE is) announced on Twitter that he and his wife have decided to pay off their mortgage and pay their own or their kids’ entire college debt, NOW!*
I have no idea who Rory Cooper is. But in light of Matthew Yglesias’s quoting of three Twitter comments by Cooper today, I can sort of guess:
Rory Cooper @rorycooper
You don’t want to reduce the debt just for the sake of reducing the debt. #WhiteHouseLogic
Rory Cooper @rorycooper
You don’t want to balance your checkbook just for the sake of balancing your checkbook.
Rory Cooper @rorycooper
WH advisor @pfieffer this morning: “You don’t want to balance the budget for the purposes of simply balancing the budget.” Um…
No, what you do want is to take the word “balance” and pretend that as long as you use that word twice in sentences purporting to draw an analogy, you can fool at least some of the people all the time, however patent the idiocy of the claim. If you’re a Republican, that is.
An imperfect, but at least more factually accurate, analogy to balancing the federal budget is balancing your (or your family’s) overall finances. Balancing your checkbook? What does balancing your checkbook even have to DO with ANYTHING other than making sure you have enough money into your CHECKING ACCOUNT to cover the purchases and bills you’re CURRENTLY using that checking account to pay?
So I have a suggestion for the White House, and specifically for @pfeiffer: Why not ask @rorycooper whether he thinks paying his entire mortgage, any car loans he has, and any college-loan debt he and his wife have, NOW? Or maybe, whether his kids should refrain from taking out college loans and forgo college unless their mom and dad can pay their college expenses, NOW? Or unless their job at McDonalds takes care of it.
Pay up NOW, kids! Or parents! And pay off that mortgage now, Mr. and Mrs. Cooper!
And, yes, you do want to balance your checkbook, but not just for the sake of balancing your checkbook. More like, for the sake of not having to pay a late payment on your mortgage or car loan, and not having your utilities cut off. What this has to do with balancing the federal budget, I wouldn’t know.
But next time the congressional Republicans refuse to agree to a debt ceiling hike, which in fact is like overdrafting on your checking account, Rory Cooper will surely tweet about the analogy.
Check in then at @rorycooper. The hashtag will be #RoryCooperLogic.
*Post and title edited for typos and clarity , 4/4.
And that is the key – the Federal budget is the exact opposite of a household budget or checking account.
Now, Rory needs to ask why he has so much debt? The answer is that the government has been running deficits that are too small, driving the public sector into debt to buy goods and services. More government subsidies to college education means less debt for Rory (assuming colleges can meet demand), thus this is why government deficit spending equals the public’s savings.
If the government balanced itself right now Rory would go further into debt.
The wife and and I are about to sell our home and pay off everything and then rent for a while. It turns out that with our first and second mortgages plus interest on a student loan we took out for our daughter, we are paying north of 2500 a month in interest alone. When you add up the amount of interest a normal family pays it can get a bit shocking. But micro econ is not the same as macro econ and what may work for a family is not sound advice for a nation.
but of course, everyone knows that businesses never borrow money.
Don’t be ridiculous, Dale. Of course, businesses borrow money. But they use only their non-revolving American Express cards, which they have to pay off in full every 30 days. Just ask Mitt Romney, who financed all those Bain Capital buyouts in this way.
What Corporations and States and Housholds call “balancing their budgets” mostly means “paying your debt service” so as to not have your credit cut off or your utilities turned off.
Without totally conceding to the MMT/sovereign currency folks, the U.S. government is in a slightly different position vis a vis creditors even in year’s that rates on inflation protected TIPS are not literally negative. In nominal terms.
If we wanted to get really nerdy we could ask for numbers outlining the implications of the Fed gobbling up what higher yield instruments actually still exist, I mean has anyone even theoretically modeled conditions that have $10 trillion in Debt Held by the Public on net paying negative interest rates? Yeah we might never actually get there, on the other hand the Confidence Fairies and the Invisible Bond Vigilantes seem in a deeper and longer sleep than Rip Van Winkle.
Now the economic Right simply asserts that Rip will wake up in horror, but the original story doesn’t play out that way. Assume a tweak or two in Health Care cost trends between Rip falling asleep and Van Winkle waking up and Meinheer Van Winkle might find his mortgage paid off.
And not owing to any traditional Dutch household thrift.
If a household budget really was like a government budget (as it is being managed right now, in the Austeritian Epoch) then when a family’s income was too low, they would disinherit a couple of the kids, boot out grandma, and the breadwinner would voluntarily reduce his wages — to encourage his employer to give him more hours, maybe? And if the Austeritian strategy worked, poor families who have ditched the relatives and lowered their wages ought to be rolling in cash about now. Yep.
They would also buy that one more gun because they would not want to show weakness to their neighbors.
What, Noni? Are you saying that that voluntary wage reduction doesn’t help them balance the federal budget–er, er, their checkbooks?