The frustration
Imagine the richest family in town. Among other things, they own the bank. They collect fees. Their lifestyle is luxurious: the best technology, private security, imported food. Over many generations, they have developed what one might call, “soft hands”.
The family’s income comes primarily from the $1,000,000 in fees they earn from delivering banking services to local families and businesses each year. From this, they spend about $600k supporting their aging parents, paying medical bills, and maintaining a state-of-the-art security system that protects their home and surrounding neighborhood. They also give $25k to charity each year. But they’ve grown frustrated with those donations; they suspect that most of it is wasted, or worse, exploited.
But there’s a problem.
They spend more than they make. A lot more. Like, $1,400,000 in total spending, or $400k more than they are bringing in. And while their credit is still the best on the block (local businesses happily extend low-interest loans to them), the family is running an uncomfortable deficit. In fact, part of the $1,400,000 they spend each year is $130k just to service their existing debt!
Eventually, the parents have had enough. For a long time, they have been frustrated by unfair business practices by competitors that forced the family’s ancestors out of their agrarian life. They used to actually grow and make things, but over time the family’s business lines morphed into their current service-oriented businesses (primarily, the bank).
Despite being the wealthiest, they feel broke. And the kids? They see a future burdened by debt they didn’t create.
The family decides to take action.
The Solution?
They start by forcing the local grocery and hardware stores to use more of their bank’s services. Why? Because the family has long paid more for food and supplies than those stores have paid in fees to the family’s bank. The family thinks to themselves, “We are spending more in their stores than they are spending in ours each year; not fair!”
The stores push back: “If we pay you more in fees to the bank, we’ll have to raise our prices or we can no longer stay in business. The grocery store, the hardware store, the furniture store…they’ll all have to shut down. What will you do then?”
Unfazed, the family doubles down. They’ll grow their own food. Smelt their own tools. Build their own goods. “Two hundred years ago, we were an agrarian family,” they say. “We can do it again.”
The neighbors are confused. “Didn’t your ancestors pull yourself out of that lifestyle generations ago?” they ask. “Aren’t you the envy of the block? Why go backward?”
Still, the family persists. They cut charitable donations from $25k to $500*; symbolic, but insignificant in the grand scheme. They bring in accountants to look for fraud and waste, and turn up numerous instances of $10 here, $30 there; in the end, the accountants said they found $250 in waste.
The family feels good about this, but of course this reduction in expenditures from waste and charity do not result in a meaningful reduction to their annual overspending, let alone the debt they’ve accumulated.
Defying logic, the family does not reduce the $600k they spend each year supporting their aging parents, subsidizing medical bills, and/or continuously upgrading the state-of-the-art security system that protects their house (and their neighborhood). The kids, in particular, are perplexed as to why the parents don’t just let the aging parents live out their lives with the care to which they’ve become accustomed, but make concrete plans to reduce the expectations for their own and future generations’ support.
The Results
Their new farming efforts go about as expected. The family’s soft hands are not excited to get back out into the dirt. The time between the first planting and the harvest makes for hangry family members. The kids will bear the brunt of this burden because the grandparents are retired and the parents are too stuck in their old ways of banking to make any meaningful impact on growing crops or producing the goods they need to live their lives.
Meanwhile, in the neighborhood, the local stores raise prices enough to stay in business, but not enough to maintain the same profits. The corresponding reduction in profits mean less money to put in the family-owned bank, which less money for the bank to charge fees. Everybody in the neighborhood spends more of their money on the daily necessities of life, and everybody’s standard of living goes down, including the family’s.
The Family Dynamic
The kids are practical. “We understand that you want us to farm and smelt and build. But it’s going to cost more for the foreseeable future. We don’t have the economies of scale the grocery store had developed over the last four decades. We don’t have the physical buildings and industrial machinery to smelt at scale. We don’t have the willingness to build things at as cheap of prices as we are all used to paying.”
The kids continue, “Also, maybe we should talk about the future. We love grandma and grandpa. We’re not asking to cut their support. But maybe we could agree to receive less support when we get old—for the sake of the family budget? And maybe… could someone audit the security spending? We love our gated community but it seems a bit…expensive.”
The parents scoff. “Why on Earth would we cut the security budget?! And don’t even suggest we reduce current retiree benefits.” The kids remind them that they specifically did not suggest either thing, but the conversation is too intense for reason.
Over time, it’s just more tension for the household. No major budget shifts, only superficial gestures. A costly and inefficient attempt at self-sufficiency. Price increases. Delayed gratification. Confusion.
And no real solution to the family’s original problem; they still spend more than they make.
Conclusion
Our national conversation around tariffs, entitlement programs, defense spending, and debt often plays out like this family’s dynamic. The implications are complex. The motivations vary. Our emotions can make us forget that we are family and we should love one another.
But the core trade-offs between income, spending, priorities, and ideology can be well understood when reduced down to numbers and metaphors that are more easily relatable. The family, and our country, need to both increase income and reduce spending. This requires compromises that are deemed unacceptable by policy makers, but their stances do not change the fact that this is what is needed.
Sources
https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
The dollar figures in this post are generalized based on various datapoints and categorizations across data sources. You get the point.
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