June 1st, 2011
The Economic Policy Institute published a paper a few weeks ago titled We're Not Broke Nor Will We Be that supports this view.
His conclusion is both clear and actually somewhat entertaining:
"There is an old joke about the Lone Ranger, who turned to Tonto and said, "We’re surrounded by Indians," and Tonto responds, "What do you mean by 'we,' kimosabe?'" That same logic applies to policymakers who claim that "we're broke." It matters who is included in "we." We, collectively, have been gaining income and wealth and will continue to do so. "We," the broad middle class, have not been gaining wealth and have not received much of the income gains of the past 30 years. 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. Are our federal and state governments "broke"? They certainly face deﬁcits. Whether those governments provide the services we need will totally depend upon the political decisions made regarding taxing and spending. Taxation and revenues have diminished, both due to policy choices and the impact of the Great Recession.
So, are we broke? Only if we choose to be."