Let’s say you made 10 million dollars this year, you’re driving a Lamborghini, living in a mansion, and wearing a Rolex.
Are you in financial trouble? Are you broke?
The knee jerk response to that question is, “Broke? Are you crazy? You’re describing someone who’s filthy rich!”‘
This is the same reaction a lot of people have when they’re told that the United States is broke. How can that be when we have so much money?
Well, let’s color in the rest of the picture (Numbers extrapolated from here).
The guy who made 10 million dollars this year? He’s 65 million dollars in debt, he spent 17.6 million dollars over the last 12 months, and he’s projected to spend more than he takes in for the next decade at least, with very little chance that he’s going to make significantly more than he takes in for decades.
Does this guy have money? Yes, but it’s not his money, it’s borrowed money.
Is he living a lavish lifestyle? Yes, but it’s a lavish lifestyle paid for with other people’s money.
Is he rich? Yes, as long as other people keep giving him money that eventually, he will be unable to pay back. The moment people stop giving him money, whether it’s next week, next month, or next year, he goes beyond broke to a hole so big he will have to file bankruptcy to get out of it.
Getting beyond the whole semantics debate about whether this guy is broke or not, perhaps we should ask another question: Does this guy have an ENORMOUS problem that requires drastic and immediate action if he wants to save himself from a real disaster down the road?
You betcha he does.
America has the same problem. If you think we can tinker around the edges or fix things with the relatively small amount of money we’d take in from raising taxes on the rich, you are deluding yourself. If you think we can ignore this problem and let someone else deal with it, you are just as delusional unless you’re planning on dying in the next few years.