Big Thing To Remember: We’re Broke

As of Saturday, August 20, 2011

Most of us know the difference between not being able to afford something and not having the money at all.

We know how it feels to want something like a new car or a trip to Europe or an expensive piece of clothing and be brought up short by the knowledge that there’s not enough money in our bank account and our credit cards are maxed out. That settles it. That golden goodie we yearn for is put on the back burner — sometimes forever.

Not being able to afford our current heart’s desire is something else. We do have the cash in the bank or enough line of credit to pay for it. However, heavy taxes are soon due or the roof needs to be replaced or big college expenses are on the horizon. We cannot afford that golden goodie, so it resides again on that back burner.

You don’t have to be a CPA or a lawyer or have an MBA or understand calculus or quantitative analysis to get the message. Simple arithmetic will do the trick — 2 plus 2 equals 4, but if you try to take 5 from it, you’re in trouble.

We all understand these principles. Those who choose to ignore them find themselves in real trouble. They may lose their houses or face bankruptcy that, despite the promises of the lawyers on TV, is far from a cure-all. You pay heavily for bankruptcy for years. Better to forgo the golden goodie.

You and I get this. So why is it so unfathomable to people in our government? Why do they persist in thinking that all they have to do is raise taxes and they will suddenly have money to lavish on this welfare state we call America? Don’t they realize we’re broke?

It’s no longer that we cannot afford to support half the world, it is that we just plain don’t have the money, and all the tax increases in the world will not change that. Obama can yammer until 2012 about gridlock, but we’re still broke.

We are inherently a giving people. Immediately after World War II, we were the mightiest nation on earth. We were rich and could afford to spread it around. It was who we were. But it is no longer who we are.

What worries me is not that we are in this predicament, but that too many people don’t believe it. High on that list are the people we hire to run our government. It is why the newly appointed committee to fix things worries me. Republican or Democratic, makes little difference. They will flail around like banshees and stonewall each other until the deadline arrives. An attempt will be made to compromise but it will be too late, and cuts will take place in all the wrong places.

Too many entitlements are strictly “hands-off.” Social Security is an example. Yet when it was passed back in 1935, the age expectancy for the average American was younger than the 65 that qualified you. Extending that age to 68 would go a long way toward saving the program for future generations. In 1935, disability was not a part of Social Security. The heavy advertising that lawyers take out to dip your fingers into that pie suggests that it should also be examined carefully.

Most of us understand that parking our dreams on a back burner may mean they remain fantasies, but at least it keeps the wolf from the front door. It is long past time for Congress and the White House to understand this as well. Deep down, I suspect they really do, but they also know that handing out the golden goodies is an easy way to buy votes. It’s the deficit that sits on the back burner.

One solution to that is to take away the value of the votes. Maybe if they worried less about being re-elected (via term limits), they would pay attention to their jobs. Remember: We are broke.

Allan Jefferys, a former New York theater critic and newsman, lives in Pinehurst. Contact him at oldjeff@nc.rr.com.

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MikeNC 1 year, 9 months ago

Great column and unfortunately, it's a sad and true one. 545 people, control the rest of us and the 545 people that control us, can't control themselves and their thirst to retain their power over us.
We have a President who has been on the campaign trail for almost three years and another year and half to go, and hopefully after that, he will be able to retire in Martha's Vineyards and write his memoirs. A good title for his book might be "Taking us to the Brink" rather than "Saving us from the Brink. Diane

JimHeim 1 year, 9 months ago

We are not broke. We remain the wealthiest country the world has ever known.

Social Security is not a problem. It currently is at 5% of GDP and will in a few years rise to 6% where it will stay for decades. Health care costs will rise to 25% of GDP in the next few years. That's an actual problem.

And life expectancy has only risen significantly for upper income people. Those in the bottom half have seen their lifespans increase by only a couple of years. So our columnist wants to punish the poor by making them wait longer for a smaller slice of the pie. How tea party of him.

honesty2 1 year, 9 months ago

Yes, health care will be a problem. See what Elmendorf of the CBO has to say:

"The reason for the job loss is twofold. First, Obamacare raises costs on businesses with additional mandates and taxes, which will negatively impact hiring. Second, Obamacare increases the social safety net with a massive Medicaid expansion and generous subsidies to purchase insurance. This increases implicit marginal tax rates and discourages work.

Elmendorf’s recent remarks focus on the impact Obamacare will have on lowering the amount of unnecessary spending on health care. The answer appears to be no as CBO projects that health care spending will be at least 25 percent of GDP by 2035, up from 17 percent today.

CBO projects that health care spending will increase by around $800 billion between 2014 and 2019 because of Obamacare. He expresses doubt that the new health care law can drive efficiency improvements and reduce wasteful spending.

Elmendorf’s skepticism is based in sound reasoning. It is very difficult for government to enact regulatory changes in order to drive efficiency improvements." Healthcare reform- sure but not this way.

JimHeim 1 year, 8 months ago

Really? The value of all of our property and businesses doesn't add up to a huge number? Our economy is three times bigger than our nearest competitor. We are financially huge.

geoffcutler 1 year, 8 months ago

Jim, nice to have a chance to agree with you. There's a first time for everything, and this is it. That comment above....? Real head scratcher. Anyway, you caught it.

JimHeim 1 year, 8 months ago

Thanks. Credit where due.

RobPit 1 year, 9 months ago

If you REALLY want to know what happened...and what is going to happen in the future, as viewed by two economists who predicted this mess back in 2005, then buy the books "America's Bubble Economy, Profit When It Pops", and their latest book "Aftershock" by David and Robert Wiedemer I have absolutely nothing to gain by making you aware of these books, and only offer them because they MAKE SENSE and have been extremely accurate. You can also view a video here: link text. Sure, they are selling their books and advice, but who cares...they need to eat too!

dustyrhoades 1 year, 9 months ago

We used to be a great country, because we used to imagine and do great things. Now thanks to people like Jeffreys it's all about what we can't afford to do, rather than what we can accomplish. As Mr. Heim points out, we're still the richest country in the world.

dustyrhoades 1 year, 9 months ago

Rebuilding Europe after World War II. Going to the Moon. Creating the Internet (go ahead, get the Al Gore jokes out of your system, but the fact is, the basic research and infrastructure were funded by the U.S. government). If someone was to propose a system like ARPANET now, the Teahadists would try to kill it. And as for the Marshall Plan, they'd have apoplexy if anyone tried to suggest something that gave money to furriners.

We're becoming a second rate power because we're so intent on letting the wealthy keep their tax breaks for corporate jets. If the government is broke, it's because the Right is refusing to allow it to raise revenue.

concerned 1 year, 9 months ago

Just wondering dusty, how much more of your money would you be willing to give the government so they could raise revenue?

nothingspecial 1 year, 9 months ago

Thanks, Mr. Jeffrys. The Democrats picked the wrong time to finally realize all of their long wished for healthcare, regulatory, labor, and green dreams because that caused them to ignore what you do during a recession to get out of the recession (and also royally pissed off their opponents by offering zero compromise).

After his vacation, perhaps low poll numbers and the prospect of a double dip will finally cause the President to realize he must focus on what the real problems were facing him 3 years ago.

Roorke 1 year, 9 months ago

''Social Security is not a problem'' says Moore County top democrat. ''Social Security disability on verge of insolvency''

By STEPHEN OHLEMACHER Associated Press The Associated Press

Sunday, August 21, 2011 2:36 PM EDT

honesty2 1 year, 9 months ago

Beat me to it:)

JimHeim 1 year, 8 months ago

Are you speaking of Social Security the retirement system (as I was) or SSI, another part of the system? There's a difference.

JimHeim 1 year, 8 months ago

Well, I'm asking: Do you mean the retirement system I was talking about or the disability system which has a completely different funding mechanism and would be totally unaffected by changes in retirement age or CPI calculation?

Or did you just rattle your keyboard before you knew the facts?

fugitiveguy 1 year, 9 months ago

"We're becoming a second rate power because we're so intent on letting the wealthy keep their tax breaks for corporate jets."

My guess is that those who make their living building, maintaining, fueling and piloting corporate jets are glad to be "earning" a living. Further I would surmise that cumulatively they pay a fair amount of income taxes. Notice I said "fair amount" not "fair share" because I have never gotten anyone on the left to say exactly what amount they would consider fair. Except if you are in the income bracket that votes Democrat 90% of the time then it is 0%. That is what as known as "vote buying".

teufelhunden 1 year, 9 months ago

SNAP! That was brilliant!

TreadLightly 1 year, 8 months ago

Unless you have a child or two, and then maybe you can get a couple thousand dollars back, even though you never paid any tax. (Earned Income Credit?)

JimHeim 1 year, 8 months ago

You know how you can get around having to pay federal income tax? Make so little money in a year that when you subtract the standard deduction and the individual exemptions for your family members, the result is zero or less.

Are you suggesting that the poor not be allowed the same deductions to which you're entitled? That would be pretty cruel. And you'd have a tough time justifying it.

fugitiveguy 1 year, 8 months ago

Spin it as you wish. A refund is when you get back all or part of what you paid. To get back more than you paid is something else entirely.

native 1 year, 9 months ago

Your Social Security may be an entitlement, but I worked but I worked for 48 years paying into Social Security...Mine is drawing out what I and my employers paid into the government, who borrowed it and now they are paying me back........

JER 1 year, 9 months ago

SNAP!! That was even more brilliant (as well as being a whole lot more accurate).

JER 1 year, 9 months ago

Jefferys will have to explain the "we" in "we're broke". As best as I can determine, destitution has not hit anywhere I've been lately. The highways are filled with cars, restaurants are still selling pricey meals, concerts are well attended, we're still paying athletes hundreds of millions of dollars to do something with a ball...life goes on with no noticeable changes to spending habits. The people who were poor five years ago are still poor, the people who were well off five years ago are still well off. Maybe this whole "broke" thing is just a right wing plot to "buy" votes in the next election.

JER 1 year, 9 months ago

The embarrassing part is how those on the right can argue both sides of an argument, depending on what serves their needs the best. What they were promoting prior to 2008 is now the poison killing our country. The purpose of my comment was to illuminate the fact that you have not changed your lifestyle one iota in the last two years. Wars, gas prices, unemployment, taxes and the status of the financial institutions have had no effect on YOU. Psst..it must be those pesky poor people causing all the problems (sorry...issues, we don't have problems anymore).

honesty2 1 year, 8 months ago

Speak for yourself. I know plenty of people who have cut back. And I will say, I have cut back on my spending.

dustyrhoades 1 year, 9 months ago

Ask me again if a stable one is ever established.

Courseaire 1 year, 9 months ago

Better a stable dictatorship then an unstable democracy.

JimHeim 1 year, 8 months ago

To whom?

MikeNC 1 year, 9 months ago

Jim Heim, Just wait until the death panel of 15 kicks in, the mortality rate will go up even more for everyone and the poor will bear the brunt of it. Wait until the middle class who do not buy health insurance, go to jail or pay hefty fines.

Social Security is going to be BROKE within the next 15 years and the box is still wide open for the government to siphen from it, as we speak.

$14 Trillion dollars of debt, doesn't seem to bother either Dusty or Jim. The fact that the dollar has shrunk by almost 30 cents this past year with Bernake putting the printing machine in 5 th gear, doesn't seem to bother him either. Question: Where did you two buy your rose coloerd glasses , as I want a pair, too.

JER 1 year, 9 months ago

Mike, rose colored glasses should be a part of your government benefit package, check your fine print and have uncle sam send you a pair.

JimHeim 1 year, 8 months ago

The death panel was lie made up by Betsy McCaughey. It never existed and it never will exist. Mentioning it suggests a lack of education bout health care in the US.

The Social Security actuaries would be quite surprised at your assertion that the system will be broke in 15 years. You should give them a call and set them straight.

Do you want to cut the deficit or have a healthy economy. It's not a trick question and you can't have both in the near term. What's it to be?

fugitiveguy 1 year, 8 months ago

We will never have a healthy economy by printing money or spending 1.5x what we take in. To support such is lunacy.

TreadLightly 1 year, 9 months ago

We had some in-laws that went the "max out credit cards" and go bankrupt route 20 or 30 years ago. Widow is still suffering the effects. How will it be any easier for the country?

JER 1 year, 9 months ago

I would say that preventing a total collapse of the economy through government stimulus and spending IS an accomplishment. Much more could have been accomplished had there been any cooperation from the other side of the isle. The wound can't begin to heal until you stabilize it. That was done by the Obama administration. Are you so far from reality to not be able to see that low taxes and no taxes have not created jobs but have created wealth for a few? Could you explain the principle of how reducing jobs (by making government smaller) creates jobs? How cutting back spending creates jobs? This country has sold out all but medical jobs and jobs centered around financial planning for the wealthy to the point that all we have left are minimum wage service jobs and jobs in government. You should thank whatever entity you worship that the current administration kept us from going all the way over the edge. We have reached the point, however, where we are so divided ideologically we will never again be able to function as a united country. We will simply have giant swings to the right and left every four years and nothing will get resolved. For that, we are all to blame.

Thank you for your comments. Of course the causes are more complex than what I outlined but they highlight some of the main causes for our jobs leaving the country. The government is complicit to the extent that they were encouraging foreign trade, which, as I stated, we are incapable of doing successfully. A few questions for you: Explain how Obama and the democrats proved they were more interested in their own legacies than the good of the country. Next, explain how, when a company fails, it is because of excessive government regulations but when a company (or a whole industry) screws the public, it is because there were not enough government regulations. Could you also explain the comment "with the way our government is being run now" by listing the differences in how the current administration operates vs previous administrations.

moonchild7 1 year, 8 months ago

President Obama really doesn't need to do anything except keep fighting against the Dogma'd Teapots. They are dinosaurs who want to destroy what has made our country great. To those of you who've NEVER worked in the "Welfare System" of our country, you need to stop talking about it until you learn more about it. The majority of people who apply for services are there only for emergency or temporary help. Those who receive what used to be AFDC(Work First)have to look for and eventually obtain a job. The benefits are limited NOW, where before they weren't. I was a Social Worker and helped those in the program to obtain training, education and eventually employment. Do you know what I found to be the biggest problem with these clients? They weren't taught to be INDEPENDENT. They were scared and very often uneducated. How did I help them? I taught them to be free thinkers, to value hard work and to further their educations. A lot of them couldn't imagine having to "leave" the confines of their town to look for work. It wasn't always easy but I tried to help them be more confident about themselves and the world. These were people who weren't taught any such things. And sad to say, this DEPENDENCE is still being taught by the crazy talk coming from the TEAPOTS when it comes to Evolution, Global Warming, Education and the Law. We are not broke but we do need to cut spending starting with DEFENSE. We were told in the 60's and 70's to get an education or we'd be left behind, so those who didn't take that advice are being left behind since the low-wage, manual labor jobs are going overseas. This DID NOT just happen, people ignored the warning. Currently those with a college education have only a 4.3% unemploment rate but those with only High School have a 15%(US Labor Statistics)unemployment rate. Those are the FACTS.

honesty2 1 year, 8 months ago

MC, there you go again with the name calling. It does nothing to promote rational discussion when you keep calling names. Re: the problem with your clients not being "taught to be independent"- that's precisely the problem with the entitlement cycle! They are so used to a hand out instead of a hand up. Our government has staunched their independence! It is certainly not the Tea Party who taught these people this. I mean, the Tea Party has only been in existence for 2 years! You were dealing with these clients years ago!

nothingspecial 1 year, 8 months ago

MC7, little typo there, a social worker has either a BSW or an MSW

Roorke 1 year, 8 months ago

CBS News reported: July 12, 2011 6:43 PM Obama: No guarantee for Social Security checks ByScott Pelley . Why would the President of the USA want to instill fear amoung the population of the nation he is to lead? Maybe he is just lying as usual, since according to the democrat party the country is not broke. If the social system sytem is solvent, hey, no problem.

Courseaire 1 year, 8 months ago

So he can say " Here I've come to save the day, Obamaman is on the way!!"

moonchild7 1 year, 8 months ago

I have to say, that's a Good One Courseaire. President Obama isn't instilling fear but the TEAPOTS are NOTNING but......The Republicans shut the government down with President Clinton and they're up to the same FEAR-MONGERING tactics. Surely everyone KNOWS that by now.

moonchild7 1 year, 8 months ago

Of course TEAPOTS have been around for longer than 2 yrs., they used to be called ULTRA-CONSERVATIVES. I guess they got tired of it and "created" the NEW title to try to make it seem like they are relevant and "revolutionary"(?!). The independence I was talking about was the independence that the caseworkers should have been teaching clients from the first time they had to apply for assistance. It's difficult to teach Independence to someone who's always been dependent but to NOT help these people and have them "fend for themselves" is unrealistic and chaotic. The caseworkers could have done a little "educating and mentoring". The problem has NOT been the "government" per se, but rather a lot of the "mindsets" of the people who worked at DSS. There are people at the DSS's who HATE poor people! I'm sure that's NOT a surprise but it really opened my eyes after my first few years. The behind the back name-calling and let's say the overall deceptive nature's that many of the people who worked there had. In between all the paperwork a good social worker/case worker had the opportunity to give the client a few important lessons. Later on those "lessons" could become more involved but again, there were so many people working there who HATED their jobs that it became one of those vivious cycles. That's the GOVERNMENT honesty2...everyday people trying to get by the best they can but instead of trying to truely make a difference to people who needed good advice all they were worried about was their paycheck. AMERICAN VALUES have tanked and it's not because of so-called "SOCIALISTS" like me.

honesty2 1 year, 8 months ago

See, we have to break the dependency cycle! Parents did not use to teach their children how to be dependent- they taught independence. Now we have parents modeling tricks to stay in the system and the kids see this. It's sad. Do we have to help those who truly need help? Of course, but we cannot continue to give everything to them. All people feel better when they EARN their way. To me, American values include independence, hard work leading to opportunity, being educated which leads to opportunity and success, honesty, integrity, helping your neighbor, teaching your children right from wrong. There has to be a better way than our current welfare/food stamp/entitlement system. I see, you have finally admitted to being a socialist, something which I do not believe has ever been the American way and something that has never been successful. Just take a look at Europe.

moonchild7 1 year, 8 months ago

Of course it's been successful! Look at our Social Security, Medicare, Medicaid, and Food Stamp programs. Those programs helped to close ALL of the POOR HOUSES in America by the 1950's. Want them back honesty2? There are now over 47 million AMERICANS receiving Food Stamps(SNAP). Would you rather have them ALL in the streets with signs saying "Will Work 4 Food"? And a lot of them are the WORKING POOR. You repeated what I just said. People have to be TAUGHT to be Independent. It's not happening, at Home, at School, at DSS's, at churches, in sports. in the military, on and on. Well, of course I'm a SOCIALIST. I was a career SOCIAL WORKER and I helped to improve the lives of many, many, people who in turn helped make me a better person.

honesty2 1 year, 8 months ago

I would say that when you have so many people on these programs, something is very, very wrong. You will have to admit, too, that fraud is rampant- particularly with Medicaid, Disability soc. sec. and SNAP. So, how do we stop the cycle? The current system certainly is not working. Typically children would be learning this at home. It's unfortunate that this president is not using his office to promote self-reliance/independence/responsibility and jobs in which to do so (I mean it's 2&1/2 years in and he's finally got a plan, er, outline coming out after his vacay?). Glad you have been able to help people. I am in a helping profession also (healthcare professional and I've seen a lot over several settings) but certainly not a political socialist.

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Big Thing To Remember: We’re Broke

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