Why Are We Broke?

To listen to the discord, contention and nastiness about taxes, the economy and government you would think the country is in dire economic straits and about to collapse. You would think that we can't afford to have a government, that we can't afford guns or butter, our old folks or healthcare, our children or our own security. That simply is not true. We are still the richest country in the world and it is high time we acknowledged that.

Someone with an agenda is trying to scare us into accepting their political agenda on the grounds that we cannot afford freedom and security.

The commonly accepted political narrative features Tea Party complaints about the heavy burden of taxation and the size and cost of government, which then segues to corrupt public service unions and state and local communities facing bankruptcy. On the national scene, the fear mongers rail that the federal deficit and national debt are so burdensome that the dollar is about to collapse. Again, none of it is true.

At the end of 2008, we did have a serious crisis in our financial sector but those problems were related to the financial bubble and besides the financial sector got bailed out. Of course, we are still in the Great Recession, at least in regard to unemployment. But the stimulus package worked, new jobs are being created and the economy is growing again. I repeat, there is no reason to panic over our financial situation. All of the financial and economic problems are manageable. There is no need for any drastic benefit cuts and so-called austerity programs.

Let's put things in perspective. In earlier times, we faced similar difficulty but with a whole lot more confidence. For instance, in National Security Council Memorandum 68 of April 14, 1950 the United States took a serious look at what we could or could not afford as an economy. That document specifically stated that "the necessary (defense) build up could be accomplished without a decrease in the national standard of living." The United States officially decided that it could afford guns and butter. We did that with an output of about one quarter per capita of what we have now.

The GDP-to-debt ratio is exactly the same now as was in 1950 when we could not only afford to maintain a rising standard of living but at the same time we could face-off with the Soviet Union. At that time national defense was about 4.5 percent of GDP, almost exactly what it is now. Defense spending is not the problem.

Nor is the burden of taxation the problem. Federal government tax receipts amount to 14.5 percent of GDP. This is the lowest level in 50 years. Tax receipts for 2009 for all federal, state and local governments are only 17.1 percent of GDP, down from the normal 20 to 22 percent because of those tax cuts for the rich. The burden of taxes in the United States of America is now lower than they have been in 50 years. Those who claim they are "Taxed Enough Already," are either misinformed about taxes or don't want to pay their fair share.

The federal deficit and national debt are similarly not a serious problem. We are fed very large numbers, which are essentially meaningless, in order to panic us into accepting someone else's political agenda, mainly cutting Social Security, Medicaid and Medicare. Privatizing Social Security merely hands overpaid New York bankers part of your retirement.

So if there isn't a problem, why is everyone complaining and feeling so hard up? Well, actually two real problems exist and converge: the lack of income and the increased cost of health care. The working class has not had a pay raise since 1980 and does not have the money to maintain its standard of living. Our economy in 2010 is producing more than twice as much as it was in 1980 but all of that increase went to the richest 10 percent of the people. The rich took all the money and now they want to cut Social Security, Medicare and Medicaid as un-affordable.

The other and related problem arises from a profit-bloated health care system. The pharmaceutical companies charge monopoly prices and make monopoly profits. The health insurance companies charge $300 billion a year for which they contribute nothing to health care. They, in fact, make the "death panel" decisions when they refuse coverage.

Gov. Thomas Corbett will take the $1 million from the gas companies and not tax Marcellus Shale. President Barack Obama will take his payment from Goldman Sachs who then become too big to fail.

Maybe the blatant effort to destroy the public service employees unions will raise the political temperature and we will start fighting for what has been stolen from us.