I’ve said this before, but it can’t be said enough that the federal government really could learn a lesson or two (or fifty!) from the American people. Today, the Wall Street Journal has posted an article that highlights the dramatic spending cuts by middle-class families in 2009. Here’s an excerpt:
“Households in the middle fifth of the population sliced their average annual spending to $41,150 in 2009, the Labor Department said Tuesday in its annual spending breakdown. That was down 3.1% from 2007 and 3.5% from 2008, the steepest one-year drop since records began in 1984. The drop came even as those households' after-tax income remained relatively stable over the two years, at an average $45,199.”
Now let’s get specific here. Yes, it’s true that many of the costs associated with fixed expenses like rent and utilities have risen, but it appears individuals have gotten quite good at limiting those discretionary expenses they can do without. Pack your lunch and/or cook dinner at home, and you will be amazed at how much you save. I speak from personal experience. And if your budget allows you to go out to eat every now and then, skip the glass of wine! Americans cut spending 20.1% on alcoholic beverages from 2007 to 2009. Families also cut their clothes budget by 15.2% and started paying less on luxury grocery items such as fresh milk and seafood. I know the fresh milk thing may sound like a stretch, but I promise I'm not making it up! It’s a great example of just one of the many sacrifices taxpayers all across the nation have been willing to make in this economy.
I guess the question is why can’t the federal government slow its own discretionary spending? I know it's hard to compare legislative appropriations with household finances, but there are plenty of parallels and the overall goal of each "budget" is the same. Reducing discretionary spending to, say, FY 2008 levels would save $99 billion and deliver positive, lasting budget restraint. It might take sacrifice and it might not be fun, but American families are doing it – why can’t Congress?