Understand why S& P would think to downgrade the US’s AAA credit rating.

I saw this posted on ZH. I am reposting it here. HT BoNeSxxx

This simplistic analogy makes it a little easier to understand why Standard & Poor’s would think to downgrade the US’s AAA credit rating.

U.S. income: $2,170,000,000,000

• Federal budget: $3,820,000,000,000
• New debt: $ 1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)

Now think about these numbers in terms that we can relate to. Remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family:

• Total annual income for the Jones family: $21,700
• Amount of money the Jones family spent: $38,200
• Amount of new debt added to the credit card: $16,500
• Outstanding balance on the credit card: $142,710

Amount cut from the budget: $385