Thursday, March 13, 2014

We’re Broke

You’ve heard this before.  “We’re broke.”  You’ve heard it many, many times.  You’ve heard it so many times that you probably believe it, because in many ways it seems true.

But it is not true.

First, some context.  When a politician says “we’re broke,” he is always arguing to cut government spending and/or arguing against tax increases or for tax cuts, usually for the wealthy.  If “we’re broke,” we surely cannot get blood from the stone of people’s incomes.

Admittedly, there are ways in which we are broke.  The number of American households living in poverty keeps increasing, the number of households on food stamps, on unemployment insurance, beyond unemployment insurance – all keep increasing.  The number of people working two or more jobs, working part-time when they’d rather work full-time, keeps increasing.  The number of people working for less pay than last year or even five years ago keeps increasing.  When we look at the economy this way – for many if not most Americans – we are indeed broke.

But look at the stockmarket.    No matter what time frame you look at, investors don’t think we are broke.  CEO’s and Hedge Fund managers have never done better; they don’t think we are broke.  The numbers of American billionaires and millionaires keeps increasing (if you can find better sources, please let me know), and they don’t think we are broke.  Not only is the top 1% doing better than ever before taxes, their tax rates are at historically low levels.  The money that no longer finds its way into your pockets and mine has not disappeared; it is flying into the already full-to-overflowing pockets of the rich and (not-so) famous.

Warren Buffett has said: “When a country needs more income, they should get it from the people that have it.”  If Buffett, a supremely rich man, thinks that he and his moneyed class should pay much more in taxes than they do, why would you argue with him?

You and I may be broke, but the country is not broke, and all our money is just going to fewer and fewer pockets; and those who are doing more than OK should be footing more of the bill.  As they used to.  Without complaining about it.