CNN business correspondent Ali Velshi slammed Gov. Bobby Jindal (R-LA) for likening the federal budget to family spending and suggesting that the Obama administration should not spend more than the government takes in.
“Every family has to balance their budget, isn’t allowed to spend more than they need, every business is more efficient, tighten their belt. The reality is it can be done,” Jindal said in remarks outside of the White House on Monday, following a meeting between the National Governor’s Association and President Obama. He added that the administration can implement the automatic across-the-borad sequestration cuts that are likely to go into effect on March 1 “without jeopardizing the economy” or “critical services” by focusing on “wasteful spending.”
Velshi rejected Jindal’s comparison as “misleading” “nonsense” and pointed out that businesses and families routinely borrow money to invest in their futures, reasoning that an investment made today in college education or a new equipment can lead to greater returns down the road:
VELSHI: It’s 3% of a small part of the federal budget which makes it a very big part of some major agencies. It’s misleading stuff Bobby Jindal is saying, number one. Number two when he says families understand they have to live within their budget. I don’t know a lot of families who buy a house with cash. Buying a house on a mortgage, is that living within your budget or not living within your budget? You would have to be 80 years old to be able to buy a house with cash. We have an understanding in our society, it may be flawed, that we borrow money based on our future earnings potential. All people do that, companies do that and governments do that. There’s a point at which you can say, we’ve gone too far with that or we’re too much of a risk of not paying back so we’ll end up paying a higher interest rate. When you borrow too much money, your personal interest rate goes up, credit cards go up. But to suggest within your means and balanced budget nonsense is just misleading. That is not how families live. It’s not how businesses conduct themselves. It is certainly not since the history of time the way governments run themselves. Bobby Jindal is a smart guy. He runs a state. He needs to not talk like this and it’s become common to hear this stuff coming out in these press conferences.
The federal economy is fundamentally different from household budgets and economic data and history suggest that the government should be spending more, not less given the current economic circumstances. After all, overall government spending has plateaued under Obama after rising sharply under George W. Bush and the resulting fiscal contraction has resulted in a lower recovery.
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