Comparing Budgets, Apples and Oranges

Politicians often compare a state or federal budget to the budget of a family. They say that just as households can’t spend more than they earn, neither can governments. But really, the comparison is not a good one.

First, look at the income side. A family’s income comes from wages (selling the family members’ labor), from sales of goods or services, and/or from payments provided by some other entity, a trust fund, a Social Security check, or disability insurance check. The sources of family income are limited to earnings, inherited or earned wealth (money-capital that earns money), or payments from other sources, such as government or insurance. Families also pay taxes on their income, at different rates depending on the source and kind of income.

The income of state or federal governments is dissimilar, because they have power to levy taxes to pay for their activities. States and the federal government also receive payment in fees, leases, and some sales.

Now, look at the expenses side. Families spend money on a variety of goods and services to support the lives and values of the family members. Their lives depend on having adequate food, water, shelter, heat, electrical service, clothing, transportation, health and medical care, education, and some forms of financial insurance.

Governments traditionally spend money on infrastructure, schools, roads, bridges, water and sewer, railways and other forms of public transportation, buildings to house their operations, public parks, preservation of natural resources, regulation of various activities, and provision of the common defense. In addition, governments provide social insurance, that is, income and payments for the health and wellbeing of those who are too young, too old or too sick or disabled to provide these for themselves.

A family budget has to balance income and expense, and each family has limited ways of doing this. At times, in order to save the life of a family member, a family incurs debt. The heart bypass operation is a success, or the accident victim is saved, or the cancer is defeated. Yet, the financial cost was horrendous, far outstripping the family’s resources. With good luck, the family is able to pay back the debt. With bad luck, say … the family member died, the debt incurred obviously didn’t just go away. The family has lost an earner, can’t pay the debt, and, eventually the family loses its house, has to try to find rental housing, and cannot even find a bankruptcy lawyer.

Governments on the other hand, have more latitude in balancing income and expenses. While they can incur debt, they also have the option to raise taxes. Government decisions about when to incur debt and when to raise taxes, and in what manner, are a matter of policy, not necessity. When a government leader states that cutting expenses is the only way, the necessary way to balance a budget, he or she is lying or mistaken.

What is often missed in discussions comparing family and governmental budgets is the issue of who provides the necessary finances and who benefits from the spending. In the case of family budgets, who finances the family is a matter of decision by the adults in the family. Such decisions depend on available employment, family circumstances and family values. Children are not expected or able to provide family income, in most instances. On the expenditure side, it is the family members and those others with whom they decide to share who benefit.

In the State of Wisconsin, the governor puts together a budget document that identifies the sources of revenue, and allocates expenditures. This document stipulates who will pay how much in taxes and fees. It also determines who benefits in the form of salaries for state employees, contracts for services with corporations or individuals, transfers of funds to local governments, and/or direct payments to or on the behalf of individuals, corporations and public agencies. The Legislature then considers the budget, holds deliberations on its provisions, makes changes to it, and finally, votes in a state budget.

Government budgets are moral documents. Political decisions guide the allocation of dollars for both taking in revenue and expending state dollars. In our case, these policy decisions are meant to be a reflection of the values, priorities and vision of the people of the State of Wisconsin.

We expect of families that their primary values will be the preservation of the lives of the individual family members and of the family as family. We expect of families that they will do their best to support, raise and educate their children, and care for their elderly, ill, or disabled members. We expect of families that they will do their best to live within their means. Yet we also have embedded in public policy the understanding that no individual and no family can do it alone for a lifetime. Families are bound together in a multitude of relationships with people outside of the family. There is a social dimension beyond that of ‘family.’ Part of that social dimension is that when families are having trouble, we provide them with assistance, support and encouragement.

We expect of our State of Wisconsin government that its primary value will be the preservation of the lives and wellbeing of the citizen residents of the state. Other values include the preservation of the quality of the land, soil, water and air within Wisconsin’s borders, the maintenance and expansion of necessary infrastructure – both physical and social, and the cultural diversity and creativity of communities within the State.

Unremarked in many of the discussions about budget balancing is any discussion of business and financial capital. Businesses are usually established through indebtedness, through borrowing capital owned by others. Businesses earn money through the sale of goods and services to individuals, other businesses and governments. Businesses routinely incur additional debt. Businesses, too, operate on the basis of values and priorities. Their values include: maintaining the existence of the business by making enough income to stay in business and paying back their debt; providing an income to the owners/workers; and making a profit, generating additional money to spend or invest in business expansion, investment in other business, or to lend at interest. Business budgets project earnings and allocate money for business operations, debt repayment, and payments to owners (investors, stockholders).

Many businesses are more like families, small-scale, located in a relatively small geographic area. Some businesses are more like governments, covering large geographic areas and a multitude of activities. Some businesses are beyond governments in scale, having budgets whose income and expenditures are global in scope and that affect the lives of, literally, billions of people.

Local, small businesses are understandable to most of us, simply because they operate more like our family households. However, global corporations that can sway or topple governments are not so understandable. Over the last 40 years corporations have become global in scope, moving much of their manufacturing capacity and operations overseas to use cheap labor. Global corporations have played a huge role in supporting repressive governments around the world to keep a passive and powerless workforce available to them. They have also swayed the United States government through lobbying and other uses of influence to engage in economic destruction of the financial viability of governments in Latin America, Africa and Asia by convincing those governments they needed huge projects funded by loans. The loan money was then spent to hire U.S. based companies such as Bechtel, Halliburton, Xe, and so forth. The people of those countries lost land, community cohesiveness and traditional freedoms. (Documented in David Korten’s book When Corporations Rule the World, and John Perkins’ Confessions of an Economic Hit Man.)

In addition, there has been a massive redistribution of wealth in the United States, as global corporations moved away from “expensive” U.S. unionized labor to areas where unions are prohibited and labor is cheap. One result of this is that in the United States, the wealthiest one percent owns/controls more than one-third of the total wealth of the United States. In the last 15 years, the upper five percent increased its income, while the lower 95% saw its income decline relative to the upper five percent. (See the website, http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph)

What is happening in Wisconsin is that global corporate enterprises are swaying our State government, through their contributions to politician who will act in their interest and not in the interest of the resident citizens of the state. In addition, lobbyists for such corporations are constantly at work, not to mention social contacts, on golf courses, in clubs and at parties where no lobbying reports need be made. Global corporate money is endangering Wisconsin families for their own corporate profit and purposes, not for the public values we hold, the life, safety, health and wellbeing of our citizens. Global corporate money has written the proposed State budgets, put right wing legislators in power, and threatens our democracy.

Political Struggles

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The political situation in Wisconsin continues to intensify as Governor Walker and the Republican leadership in the State Senate and Assembly dig in. They now have passed what are surely unconstitutional measures to compel the 14 Democratic State Senators to return to the Senate so there will be a quorum and their pro-business, pro-wealthy budgets can be passed at the expense of people on Medical Assistance, the public employees, and the environment. This situation is brought to us by the U.S. Supreme Court's decision to equate money with free speech and corporations as people. Thus, the image above. Corporations are not people, and money is not speech.


I am increasingly concerned about my State and my nation. Real living people are being harmed by governmental decisions taken by Republicans in Congress and in the states. Decisions about cutting services to people who are poor, the ill and the disabled, in order to protect the already massive incomes and wealth of the top 1% are just plain wrong. Our governments should be by the PEOPLE, for the PEOPLE, and of the PEOPLE. The PEOPLE are the point, not the corporations or only a tiny percentage of the people.