Every time I hear my Congressman Lynn Westmoreland make the "government as household" analogy I cringe. During my state senate race I heard all of my 4 of opponents (Democratic and Republican) make this analogy on many occasions. I blame Fox...
Auerback and Wray via Naked Capitalism:
The “government as household” analogy, which persistently interposes itself on the deficit dove or hawk paradigm, is fundamentally flawed because no household (or firm) is able to spend by crediting bank deposits and reserves, or by issuing currency. Households and firms can spend by going into debt, but the debt must be serviced with the debt of another—usually a bank debt. Sovereign government only makes payments—including interest payments on its debt—by issuing its own IOU. This is why it is ludicrous to speak of Social Security as some sort of “Ponzi scheme”, because unlike private debtors the sovereign government can always make payments and service debt by crediting bank accounts.
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