We're Not Broke
Chuck Sheketoff
Claims that as a nation ‘we’ are broke have taken enough space in recent public discourse to seem beyond question, although the facts prove the opposite. In a new briefing paper, We’re Not Broke Nor Will We Be, Larry Mishel of the Economic Policy Institute (EPI) debunks the assertion that our nation is going broke.
In contrast, Mishel's paper shows the economy has seen steady growth in income and wealth over the past 30 years and will see similar growth in the next 30. Nevertheless, while these claims have little in the way of truth, politicians and pundits have successfully used them to justify efforts to scale back government programs and public-sector and private-sector workers’ wages and benefits (we've seen similar false claims here in Oregon).
We're Not Broke also points out how wealth and wage disparities have widened significantly. The middle class as a whole has not gained wealth or received much of the income gains of the past 30 years. Between 1980 and 2009 the typical (median) worker saw hourly wages grow by just 11.2% while income per worker grew by 59%. Since 1979, the top 10% of households have received almost two-third of all the income gains, with the top 1% claiming 38.7% of all the gains.
If the cries to lower public investments and halt employee wage increases are heeded, the middle class will surely be left further behind even as our nation enjoys substantial income growth in the years ahead.
As Mishel has noted, "whether the broad middle class prospers in the next 30 years does not hinge on whether there will be substantial income growth; there most definitely will be. The future prosperity of the broad middle class hinges on the economic policies and structures that determine how that income is generated and shared."
Read We’re Not Broke Nor Will We Be (PDF version here ) and discuss.
Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.
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9:57 a.m.
May 27, '11
OK, we're not broke. But Oregon's government and the Feds continue to increase spending at a much higher rate than the revenue increases. So far, any attempt to bring the growth of government down is met with Democratic demagoguery.
A good example is medicare. From what I have seen, the Democrat's plan is to punt the problem down the road until they aren't the ones running for office.
And by the way, increased Government spending isn't what creates the middle class. The key to economic growth is not putting more and more people on the public payroll. If our country was a business, public employees represent overhead expense. They are necessary, but must be kept to the bare minimum.
12:26 p.m.
May 27, '11
Investments in education, public safety, health and human services are key to building the middle class, and they are not the same thing as adding people to the public payroll. Your simplistic response shows the need for a better education on the role of public structures on your daily life.
4:23 p.m.
May 27, '11
Your perception of my "education" is not fact. It is just that my reading of economics isn't confined to Paul Krugman's Keynesian utopia opinion columns or AFCSME talking points.
But I am used to the arrogance of liberals who assume that anyone who disagrees with them is stupid.
We "invest" over half of the tax revenue, both state and property tax, that comes in to the state in education, for example. Yet states such as Utah that have much lower spending per pupil consistently outperform Oregon students in the vast majority of empirical testing. So, it isn't always how big the ledger is that creates results. I know you aren't going to say your brand of Kool-AID is poison for this state, but spending cannot continue to increase over 10% a year. The middle class thrives when they have jobs. Jobs come when this state decides to reward people who create jobs. That won't happen as long as the aggregate of taxes continue to go up, regulation becomes more onerous, land use gets more restrictive and our state's leaders continue to ignore free-market solutions to education or human services.
Will Rogers said: "we are lucky we don't get as much Government as we pay for."
I am well aware of the role of public structures in my daily life. 20% are beneficial, 30% are useless and 50% degrade liberty, opportunity, and are a hindrance to the freedom that is our birthright.
“Political tags - such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth - are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire.” Robert Anson Heinlein (1907-1988) American author
12:30 p.m.
May 28, '11
This is where many 'fiscal conservatives' fail to understand issues. They DO benefit from all social structures.
Schools give us educated (and therefore less likely to commit crime, and have higher incomes) Police, fire, and EMT services protect us all. You shouldn't have to explain this. A medical system, ESPECIALLY in the poorest populations protects us all. The Influenza of 1918 killed 50 million (some estimate 100 million). And there is nothing that won't make next year's flu even worse. Except with our greater population, it'll likely kill 10 times as many. Roads, bridges, and rails help us all, not only to drive our stupidly large cars everywhere, but to bring supplies to the stores, get us to work, and yes, let emergency workers get to us when we need them.
So, would I rather live in a low-tax place with lepers in the street, areas of the city where people just don't go if they have a choice, and where you have to pay waivers to get firefighters to your house? Or would I be willing to pay a bit more to live in a 'nice' place?
8:10 p.m.
May 31, '11
Yes everyone benefits from social structures, but the problem is you don't want just the social structures, you want it all, and when we give you that, you want more. don't hide behind roads and fire and police services, you know you want more than that. There is nothing wrong with paying for services you use at the time you use them, for example the fuel tax for roads, or public insurance for fire or police, the problem is when others are empowered to force you to pay for systems that actually work against you. That is what this is really about. You want to block charter schools which we will pay for because they won't teach the principles you want to impart. You want us to pay for other peoples failure to plan. You don't want to pay for it, you want to raise taxes on those who have more and knock them from wealthy to middle class overnight. Stop this nonsense regarding basic services. The government is far beyond the basic services argument. It is broke because it tries to be all things to all people.
2:19 a.m.
Jun 5, '11
I actually want to block Charter schools because they get to cherry pick students. There is really nothing stopping them from choosing all white, protestant, wealthy students. I want to block police and fire insurance for the same reason as the recent sadness in Tennessee, when firefighters HAD to stand aside and let a man who didn't pay the fee's house burn down. We tried privatized fire and police back in the 19th century, and it lead to corruption, sabotage, and literal fistfights between teams while houses burned. I want to be able to walk out on the street with the basic assurance that I will not be assaulted by the homeless. Or that the next Spanish Influenza is not brewing in their midst. I want an America where people actually do have a chance to become anything. Not one where people say that, but the truth is far from it. I don't claim to know what you want, though I have suspicions it is a return to the feudal system.
8:02 p.m.
May 31, '11
It is not the roll of government to build the middle class, but to leave them alone. The elimination of the income tax would be a great start or at least a deduction for your first 30k would not be bad. I don't see the left trying to free themselves with these intelligent ideas of economic self ownership, but really just wanting to enslave others because they think somehow they will benefit. They do this all the while speaking hubris as if they are intelligent. The fact is social engineers are no more noble than the corporatists in Washington. They are just businessmen of a different sort, but still wanting to take from others and give to themselves and not willing to let others be free so they themselves may one day be free. They call it social debt, just more double speak in their childlike attempt to get their way. What will it take to convince you the government is broke? Again more double speak to keep spending. Halliburton would offer a similar principled argument in if they needed the money for themselves. You scratch your head now and go huh? Then talk about how we are not educated.
1:32 p.m.
May 27, '11
Revenue has not kept pace with overall income growth because of the regressive taxation policies begun by Ronald Reagan and advanced by virtually all Republicans and (unfortunately) many Democrats. If marginal tax rates on the highest incomes and the most successful businesses were where they were in the 1950s and 60s, there would be government surpluses as far as the eye could see. Greater income equality (from maintaining a progressive tax policy) would mean that the bottom 90% of households would have received a larger share of the wealth which they themselves generated, reducing poverty (which creates immense costs, almost all of which are born by government) and further increasing tax revenues.
In short, if we didn't have a revenue problem, we wouldn't have a spending problem.
10:41 a.m.
May 28, '11
No, Ken, the Democrats aren't punting on Medicare. The Democrats have a specific and comprehensive plan to actually reign in the cost of health care - rather than merely cutting funding to the existing dysfunctional system.
Where is that plan, you might ask? It's called the Affordable Health Care Act -- and it was signed into law last year.
The Democrats have already crafted a meaningful solution. We're just waiting for it to kick in. (Delays demanded by Republicans who then refused to support it anyway.)
12:45 p.m.
May 28, '11
Ken Ray provides us with a perfect example of why we now see headlines like this one from the L.A. times:“The U.S.: Where Europe Comes to Slum.”
The right-wing idiocracy fails to see the connection between good schools, safe streets, universal healthcare, i.e., a healthy, happy and secure population.
1:40 p.m.
May 28, '11
Portugal Ireland Greece Spain
6:30 p.m.
May 28, '11
News flash: the happiest and healthiest societies on Earth are progressive socialist democracies like Germany, Denmark, and Sweden. Not surprisingly, they also happen to be the least religious.
2:01 p.m.
May 29, '11
that's hilarious!
10:37 p.m.
May 29, '11
Also true!
3:27 p.m.
Jun 1, '11
News flash ...WRONG! I would stick to topics you know about Joshua: Like hate speech directed towards Christians. Germany is currently controlled by the CDU (CHRISTIAN Democrats) Nationally, Merkel's conservatives are at about 36%. The SPD (22%) the Greens (20%), and the FDP(5%) If they are such happy socialist, non Christian Atheists then why do they keep someone like Merkel in charge ...let's see these happy socialists proposed flat tax, they are all about ridding their world of excessive regulations, they are anti labor (but then who with a working brain isn't) her govt is pro israel, merkel personally was in favor of the US cleaning house in Iraq, She is from the north and is a Christian (albeit a protestant). Do you just make these things up as you go Joshua? You are equally wrong on Sweden and Denmark but your not worth my time to explain it to you ... stick to your hateful anti christian schtick because when you veer off into area reliant on facts you look like a simple minded troll
9:53 a.m.
May 28, '11
If the state of Oregon isn't broke, why then is there an approximate $3.5 billion shortfall between projected shortfall and projected spending? Why is the state of Oregon's bonding capacity (credit card almost maxed out? Why is public infrastructure spending being put off to the future?
Oregon, like most households, is broke. Unlike most households, Oregon democrat elected officials refuse to face reality and reign in spending, slice up the credit card.
10:43 a.m.
May 28, '11
I suggest reading the post before commenting, rather than reacting to the headline.
12:39 p.m.
May 28, '11
Kari, I did read both the post and the alleged supporting documents. It is the same old tired Chuck Sheketoff diatribe that the big bad rich and corporations need to pay more in taxes.
It might ring a little truer if just once he would advocate for ALL of us to temporarily pay additional taxes. But then I'm not holding my breath.
11:06 a.m.
May 29, '11
Kurt - it is a revenue shortfall, not caused by spending that needs to be "reign[ed] in." With a tax system where the lowest income households are paying a larger share of their income than the higher income households toward state and local taxes, first we need to fix that before raising taxes on those struggling. You may be comfortable with Intel and other profitable corporations getting away with paying almost nothing in taxes, but I want Intel to once again be our best taxpayer before I ask more from low- and middle-income households.
10:38 p.m.
May 29, '11
My point, Kurt, was that Chuck's post wasn't about Oregon -- and yet your comment acted as if it was.
12:43 p.m.
May 28, '11
I've never understood this viewpoint.
If my household were starting to run up debt and trying to make ends meet, sure, there is some cutting back to do. I'd go out to eat less, buy generic instead of brand name, and look into coupons.
However, I would not, for example, sell off my car, cut all services (water, electricity, phone) completely, and basically sit in my box and wait for something to somehow improve. Even should 'the market' somehow improve, that will not improve situation at all. You need to increase revenue, which governments do by taxing. And you do not attract people to move in by living in an industrial wasteland.
Taxes do not kill jobs. Oppertunities make jobs. You make opportunities by improving your population, and their condition. Having a large number of moderately affluent people will make jobs as people find ways to get their money, and find their businesses supported by a steady flow of income.
Right now, our tax structure is not making a large number of affluent people, it is making a very small number of extremely wealthy individuals. And there is only so many toothpaste tubes and TVs that Bill Gates and Phil Knight needs. Which leads to fewer businesses competing for fewer and fewer resources. We need to tax more so that we can make things better for everyone, you, me, everyone.
3:50 p.m.
Jun 1, '11
As you go into debt Jason the first areas of your budget that may be affected would be the things you mentioned ...meals out, 5 dollar coffees etc. Then your thinking leaves the track ... if things get worse Jason you don't have to sell your car ... the bank comes and gets it, you don't cut your utility services, you don't have too because the utility companies turn them off for you. If you don't make your house payment then guess what...the bank throws you out and sells it. Todays culture is built on debt and in the real world Jason, the decisions you make believe are yours to make really aren't. You don't sit at home in your bo ...you it under bridge in your cardboard box. If the "market improves" then YES the situation does improve ...thats what the word improves means! When you say: "Improving your population and their condition" I am assuming you mean the government does something to make this happen, wrong. The popultion has to improve themselves and finally "our tax structure IS NOT making anyone wealthy! They are making themselves wealthy and if anything the tax structure keeps them from being able to continue to create wealth creating opportunities. Whether or not Bill Gates has 1 tube or toothpaste of 14 trillion of them isn't any of our business. it's their money to do with as they please right? They earned it! raising tax rates on the productive mmbers of society to give to the unproductive doesn't make anyone better off....it makes everyone worse off. Why do you think that someone else owes you anything? Why do people think that they have no responsibility to themselves and the rest of us to work and pay their on way? I am all for a safety net but what you describe is the same lifestyle choice that has created an entire class of entitlement dependant people (and their children after them) Here is an idea ... why shouldn't we enforce the laws we have in place and put our own people who are here legally and who want to take responsibility for themselves by working into the jobs we already have?
1:32 p.m.
May 29, '11
Hey, smart guy!
http://usdebtclock.org/
Check out the bottom right ... Liability per tax payer $1,022,914
Assets per: $253,863
Ever read a balance sheet?
Assets = Liabilities + Equity
Each person is in fact, on the hook for $1,022,914 - $253,863 = $769,051.
Your source is wrong.
Are your embarrassed yet?
10:44 p.m.
May 29, '11
Again, did you read the post?
9:16 a.m.
Jun 2, '11
Yep, did you?
8:01 a.m.
May 30, '11
Ne'er the twain shall meet. I believe in Liberty and limited Government. You believe in high taxation and limited freedom.
Yes the "so-called" comprehensive health care reform that was based on wishful thinking figures and from which companies who contribute to Democrat members of Congress get waivers and exemptions. Great example of the antithesis of a free-market solution. The savings were based on reducing Medicare costs in a way that will never pass Congress. I know you will never admit that the original figures were rigged and this program will consume the entire budget decades earlier than projected. But the American people see the truth. So much the worse for you.
2:39 p.m.
May 31, '11
When people say things like "You believe in high taxation and limited freedom." Do they actually think that that is what liberals believe in? I have to wonder. It seems so obvious that liberals and conservatives believe they are advancing freedom with their ideas, and that it is the definition of freedom that differs, but I'm starting to wonder if the simplistic and obviously false conservative mime has actually taken root to that degree. I have never understood why conservatives fear consolidated gov power, but not corporate or private power as threats to democracy. If we could have a conversation about the definition of "freedom" we might actually get somewhere, but that hope presupposes at least enough cognitive power on both sides to understand that no one is championing "limited freedom" as an end.
8:37 p.m.
May 31, '11
Brian, Individual Freedom didn't need advancing. It was already codified in our U.S. Constitution and the Bill of Rights. It needs adherence to. And Conservatives don't believe you "believe" in limited freedom, we know the reality of your beliefs lead you unknowingly to a reduction of your liberties, and ours. We think you- ignorant, otherwise we would have to believe all of human history, advancement, reality, and our successes escape you, in favor of this imaginary world you and every other socialist in history has spoke of, which always ends over time, in something abhorrent to the concepts of liberty and freedom. That same subject, freedom, you said you wish you could have a dialog with on the conservative side of the aisle. Here it is......socialism is a failure, under any name, every time it's tried. Progressive democracy, liberalism, The National Socialist Workers Party, Communism, Fascism,unabashed socialism, even progressive Republicanism.......they are all part of a failed ideology that is repeated by politically motivated aggressive individuals, who pander to the lowest instincts of society,like "someone else is to blame", and "you better get yours too or you'll get the short end"- and that eventually becomes all of us. The other side of the equation is the side I never hear spoke of fairly or in earnest here on BlueOregon. It's the case for limited Constitutional government and maximum individual freedom and economic liberty.....the successful experiment we only partially implemented for over 200 years. No one thinks you're championing limited freedom, we just know that's the result of your beliefs in "Consolidate Government Power".....as if that's what all of America is looking for,lol "CONSOLIDATED GOVERNMENT POWER". God, could ya pick a more scary name for your benevolent big government while trying to remove all notion that it's not? Brian, it begs the question, why? Why do you believe in central planning when ALL of history shows central planning a massive failure in the aggregate, and always corresponds to a loss of individual rights and freedoms? Why? and it begs the question, who? Who gets to make the decisions under which all our lives are affected, if not you and me as individuals, under your benevolent CONSOLIDATED GOVERNMENT POWER, and why? By what right?
11:39 a.m.
Jun 1, '11
Smack down time by John. Way to go. No use repeating what you just said. It is time the progressives in this state and nation wake up to reality and stop making excuses for their short comings.
2:34 a.m.
Jun 5, '11
...because a government is the only balance to big corporate interests?
Let's put it another way. Let's say that you are having a nice picnic on a sunny hillside. To your left is an anthill. To your right is Godzilla. Now, which do you think needs more watching? The tons of small people who might steal some of your food, or the giant monster who can atomize your hillside in a single breath?
How many times do you have to see that large corporate interests are not in your favor? How many examples of money buying interest do you have to see? We need a government that is big enough to hold the Godzillas at bay.
...But again, we are arguing religion here. And there is no arguing with a fanatic.