School Me in Economics

Let’s say I have business. And let’s say I know with the economic downturn, I can tell I’m going to lose money. Let’s say, for easy math (and I like easy math!), I’m planning on losing $100,000 this year. Now let’s say business isn’t as bad as I thought. It’s still bad, and I’m still losing money, but let’s say now I’m only going to lose $25,000. Here’s the question: Who in their right mind thinks “Woo hoo! I’m not losing as much as I thought! I think I’ll go out and spend $75,000 since I’d already planned on losing $100,000 anyway!”

Does that not sound ridiculous? Wouldn’t most of us say “I’m glad I’m not losing as much, but I still need to buckle down and at least try to make a profit. Now is not the time to be spending money–spending money I actually don’t have!”

Yet, the former seems to be the attitude of some of our legislators. The TARP bailout isn’t LOSING as much as they thought. So what do we do with the “leftover” money? (As if you can have leftover negative somethings!) Spend it! Hey, we’d already planned on it losing, so let’s spend it so we can meet our budgeted loss!

I’m not an economist. I was an English major; I don’t even particularly care for numbers at all. Yet I’m involved with budgets for my church, my household, and for two other organizations on whose boards I serve. What would they say if I proposed spending money in a budget deficit year, using the math theory “We’re not losing as much as we planned, so let’s spend!” They’d clonk me! It doesn’t make sense.  Or does it, somehow? If so, please school me how.

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