There is No Deficit

All around the country local governments are saying they have a deficit next year. I want to explain what they are saying in very simple terms. Lets say that I told you that next year I will make $60,000 and I will have a $30,000 deficit. You would assume that it meant that I had debt today that will carry into next year; but, that is not what is going on. What I am saying is that I plan on spending $90,000 even though I only expect to make $60,000. There is no deficit until I run up the debt next year, it doesn't exist today.

Any reasonable person would tell me to not spend more than $30,000. My response would be to say that I am going to call up all of the utility companies, my landlord and the government and explain that they have the problem in that they have to accept me paying them less for more services.

Does that sound absolutely stupid. That is because it is stupid, yet, that is what our governments tell us each year. Think about it.