A friend tells me he is sick and tired of living by a strict budget. So, he’s decided to model his family’s budget on the federal budget format.
He explained to me how simple the transition would be. First, he develops a budget with line-items that cover the essentials -- mortgage payments, routine household expenses, car payments, real estate taxes, college tuition, and so on.
But, the family’s real overall budget folds in additional spending for the household equivalent of “earmarks,” those special line items lobbied for by family members without which family harmony would be a mere pipe dream. For example, his wife’s earmark for a 10-day Caribbean cruise, the 2013 model SUV, and 30-foot sailboat he wants to buy, and the kids’ demand for a premiere, week-long visit to Disney World, as well as a dedicated, “kids only” 42-inch flat screen TV for their playroom.
My friend knows full well that the family’s combined income won’t come close to covering all the expenditures. And, he knows that whatever raises and year-end bonus he might receive won’t possibly cover the yawning deficit spending gap.
Sure, his wife works part-time, but her meager contribution to the family income won’t be enough to keep their finances in the black. Nonetheless, he is still confident that he can manage the family’s bloated budget… with a little Washington-style gimmickry.
So, every year he rolls out what he calls the Family Budget Sequester Plan, deep, automatic, across-the-board cuts in discretionary spending. These cuts can’t be avoided. All discretionary spending line items are on the table and subject to deep cuts. The overall goal is to rein in spending and reduce the family’s overall debt from prior years of budgetary excesses.
This year the automatic sequester will eliminate spending on the Caribbean cruise, the Disney World vacation, and the kids’ new 42-inch flat screen. Meanwhile, the 2013 SUV and 30-foot sailboat have been reclassified as “essential expenditures,” designed to help relieve the oppressive job stress my friend faces.
My friend has also determined that the Disney trip and 42-inch flat screen would undermine the children’s attention to their studies and therefore should continue to be classified as discretionary expenditures, ripe for elimination. As for his wife’s argument that the Caribbean cruise should be spared from the sequester axe on the same “relief from job stress” theory, my friend contends that homemaking isn’t stressful, but rather “a life-changing experience filled with complexity and opportunity.” The jury’s still out on his family harmony in the wake of that rather risky assertion.
My friend’s wife says his “sequestration” plan is nonsense. She calls his plan “smoke and mirrors” budget gimmickry and warns that the cold realities of household finances will catch up with them eventually and may even put them into bankruptcy. She argues that to “live within their means,” the family budget should simply cover all expenses if they are reasonably foreseeable, without resorting to the painful sequestration exercise imposing automatic, across-the-board cuts with a budgetary meat axe.
He responds that, in the event of a “revenue shortfall,” the family could always borrow or simply rely on the time-honored government artifice of “deficit spending” by maxing out on all their credit cards. In response to his argument that they could get a “bridge loan” or a “debt consolidation loan” to cover those discretionary items on the sequestration hit list, his wife forcefully reminds him that they have already taken out a home equity loan to cover college tuition and emergency roof repairs.
“We have mortgaged our entire future already,” she grumbles. “Why, I may have to exercise my line-item veto once again to restore some fiscal responsibility around here.” She pauses, and then adds with a twinkle in her eye, “Of course, that veto will only apply to the boat and the SUV. The Caribbean cruise and Disney World trip clearly are essential family expenditures.”
All in all, it seems budgetary arguments always to boil down to whose special family interest “pork” is getting whacked in the sequester process.