April 16th, 2009
12:44 PM ET

What's driving the U.S. over a cliff?

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Editor's note: John Feehery worked as a staffer for former House Speaker Dennis Hastert and other Republicans in Congress. He is president of Feehery Group, a Washington-based advocacy firm that has represented clients including News Corp., Ford Motor Company and the United States Chamber of Commerce. He formerly was a government relations executive vice president for the Motion Picture Association of America.

John Feehery

I was talking to a close family friend during my vacation in Florida, and he was criticizing the governor there for taking the stimulus money that came from the federal government.

"Florida should just cut government spending, and not use the Feds as a crutch," he said with great vehemence.

Now, this family friend is not a wealthy guy, but he lives a comfortable life, made more comfortable by the fact that he gets a nice monthly pension check from the state. I didn't dare suggest to him that perhaps cutting back on his monthly pension might be one way to cut that spending, because if I had, I would have had a seven-iron flying at my head.

But what is most interesting to me about that conversation is how the attitude of this family friend reflects the attitudes of most Americans. Cut government spending, but don't touch my piece of the pie, the many cry out as one.

As federal policy makers grapple with the budget next week when Congress reconvenes, I challenge them to answer four uncomfortable questions that could bankrupt the country if unanswered:

First, why do we let people retire too early and then expect them to live so long without working? In 1910, the average retirement age in the United States was 74. In 2002, however, the average retirement age was 62. Average life expectancy in 1910 was around 55, while in 2002 it was 77.

Throughout most of our nation's history, people were expected to work regardless of their age. Only over the last several decades has that changed.

Now it is assumed even if you are completely able-bodied and able-minded, you don't need to work and indeed you shouldn't be required to do so if you reach a certain age and certain number of years at one job. But that is crazy. We can't afford it. As people live longer, they should work longer, be productive longer, pay taxes longer, and be full participants in our nation's economy longer.

Second, why do most Americans spend so much of their health care expenditures in the last three months of their life? Fully 27 percent of Medicare is devoted to spending on end-of-life health (in other words, health care that doesn't work), according to the Journal of the American Medical Association.

According to a Mayo Clinic study, "Older people with chronic illnesses have the highest rates of intensive-care-unit (ICU) use at the end of their lives. The country's aging population has an increased prevalence of chronic diseases, signaling that ICUs may treat more and more people in the years ahead. Intensive care costs comprise 30 to 40 percent of hospital spending and may continue to grow as the population ages."

In other words, we are paying a lot of money for health care that ends up with the patient dead. If we want to keep from going bankrupt, we have to have a more rational way to look at end-of-life care.

Third, why do so many people pay nothing in federal income taxes? According to the Tax Foundation, fully 32 percent of all Americans pay no federal income taxes while 42 percent of single Americans pay no federal income taxes. With President Obama's aggressive efforts to give more money to more Americans through tax credit refundability, many experts expect that over half of the people will owe nothing or may get back some money from the federal government.

Ironically, this trend started under George W. Bush, the president who supposedly ignored the poor. But taking so many people off the income tax rolls has two unfortunate consequences. First, it brings less revenue in to pay for a government that is already teetering on bankruptcy.

Second, it makes wholesale tax reform more difficult. Hey, if I ain't paying any taxes under the current system, why should I want to change it? But at some point in time, squeezing the so-called rich will become counterproductive to economic growth, and the pie will start to shrink. It is not fair that so many Americans pay nothing in income taxes to their government.

Fourth, why is it more profitable to work in the government than to work in the private sector? According to one study, public employees earned benefits worth an average of $13.38 an hour in December 2008, while private-sector workers got benefits worth $7.98 an hour. Overall, total compensation for state and local workers was $39.25 an hour, $11.90 more than in the private sector.

Democrats will argue this calls for more mandates from the government to increase the minimum wage. What it actually means is that government workers, who are paid by the taxpayers, are vastly overpaid, and with their benefits and their pensions, are risking the financial health of this country.

When Congress reconvenes next week, the talk will center on President Obama's budget, his plans to increase taxes on the wealthy and his ambition to spend more money on bigger government on programs that we can't afford. Let's hope that some courageous politicians somewhere will have the wherewithal to ask these kinds of uncomfortable questions so we can have an honest debate about what is really driving our nation over the cliff, fiscally speaking.

Filed under: Economy • John Feehery • Raw Politics
soundoff (24 Responses)
  1. JW2759

    As it appears, seems like so many variables are involved in our "societal Crash." Overpopulation to name one potential cause. The US now seems like one small blowup raft trying to float 1000s of people for a day trip; sure to sink. The demand has far exceeded the supply. Our resources seem totally exhausted.

    Not to forget about the gluttonous mentality we have nurtured. And lets make sure we are politically correct long before we uphold values that form the basis of a strong foundation to grow upon! Are people surprised? Hope not. Maybe in shock, yes. But no one should be surprised. Our societal foundation has been crumbling for quite sometime now. Under pressure.....isn't that a song? So much more, so little time.

    April 16, 2009 at 9:39 pm |
  2. mack

    Nice piece...With the Prez going South of the border for the big meet....Just one questions...

    So all Iraq,Iran,N,Korena,and Mexico have to say is jump and this Prez wizkid ...Askes how high.....The countries have been shut of the world because of a reason....

    So the American mouth piece...Prez obama....is just that a mouth piece spend like crazy and give away the store......Remember For the millioins that voted for him ...You got change come'n and a big tax bill to boot.....Hope you like crow....taste good with DAAAAA....

    April 16, 2009 at 9:38 pm |
  3. Annie Kate

    I'm glad your views are not the accepted views of the current government. First off, government workers don't make more than workers in the private sector; yes, their benefits are better but their salary is lousy and stays that way. I worked in the government for a while and when I took a job in the private sector literally doing the same work as I did in the gov't job, my benefits declined a little but my salary almost doubled. Good benefits are about the only way the government has to attract good qualified workers.

    So we live longer, we work longer. Some that live longer do not live longer with all their cognitive abilities intact. I doubt you want your work force steeped in senility so perhaps the work until you check out with a toe tag can be shelved as well. Those who are still able bodied and able to work at retirement age continue to work – those who don't usually have health reasons for not doing so.

    As for those who are not paying taxes – the people who don't pay are not making enough to pay taxes. It would be nice if they did; I'm sure they would prefer to make more so they can support themselves and their families better and wouldn't mind the taxes so much but a large number of jobs pay minimum wage and thats it – to tax someone making so little will not garner much in taxes and will make the lives of these people that much harder. .

    As for the health care being higher at the end of life what should we do with the elderly with chronic conditions? Euthanize them? Last time I checked that was against the law.

    Us baby boomers will be gone soon and the issues you mention will probably resolve themselves as we die off.

    April 16, 2009 at 6:09 pm |
  4. Michel

    Let Obama save America!
    Americans didn’t want to keep sliding into the hell, that the Bush,Cheney ,Rumsfelt and others in the republican government had brought them to;so they voted for the democrats in an extraordinary manner.
    Now the die hard edeologist on the right,including the many republican senators,members of the house and last but not least;the most important leaders of this movement,those so called charismatic religious leaders and talk show hosts who all make their fortunes by creating controversies and media interest etc.
    Theses guys want to continue with the society which created the Madoffs and thoses GEO’s who’s main interests are to obtain large bonuses.Americans voted for a country that would be ruled with objectivity and not by a gang that wants to run the country with a self serving ideology

    April 16, 2009 at 6:06 pm |
  5. Matthew

    I disagree, I don' t think that anyone wants to take on the issue, including John McCain, because raising taxes on those not paying (even if they should be I'm not saying we should tax the poor) and decreasing or stabilizing the pay of public workers because while it is financially a great move, it is, politically, a disaster, also I think government employees such as police and fireman, from my own experience, support McCain and he wouldn't want to lose that support.

    April 16, 2009 at 5:24 pm |
  6. Bill Bear

    What's driving the USA over a cliff? Pandering to the lazy while punishing performance and all for the raw exercise of power by the Democrat party.

    April 16, 2009 at 5:15 pm |
  7. Teri Nolan

    Great viewpoint...but tell me– you seemed to offer solutions for all of your points except the elderly patient care we seem to be dumping money into. Are you inferring we should just let our elderly loved ones go?...perhaps because they have had a long life we should not try and sustain life? If so I disagree.

    April 16, 2009 at 4:52 pm |
  8. Lisa hayes

    John mc cain has been busy lately. Maybe he'll take them on. If any one can effectively, he could 🙂

    April 16, 2009 at 4:22 pm |
  9. Lamont Austin

    I am so tired of rich people complaining about a couple of more dollars they can easily afford 10x over but people, kids, and families are starving or losing a home or die-ing because they have no healthcare. I thoiught as a kid (35yrs ago) by the time 1999 gets here we will be in the future with floating cars reduced work week time to work on improving self but no, still the same struggles the same poverty and the same primitive outlook. Yes gov. should conduct this country in a way where we create funds through our taxes that would create businesses that would in a exponitial way create more funds that can be distributed back to the people. I just remeber hearing someone say if they gave the money they used in some of these bailouts back to the working people in this nation we wouldve recieved
    each about 60.000 dollars, if working americans had 60k every 5yrs things would be fururistic and less poverty and less crime...

    lamont austin

    April 16, 2009 at 4:13 pm |
  10. Don

    What's driving us over the cliff? What say, the short answer or the long one? The short one is simply trade imbalance over many years. The long answer, well, I'll give it a shot in a few paragraphs.

    Money comes from loans we all make to buy cars, houses, or anything else. When we borrow a lot, we inject lots of money into circulation when we pay for the stuff we buy. When we pay off our loan
    the money is taken back out of the economy and taken out of circulation. Money comes from the printing press, circulates through loans, and goes back to the printing press when repaid, in effect burned. Money comes from nothing and goes back to nothing. Pretty simple but most don't know it. So while our borrowed money is out there in circulation it leaks out to foreign countrys through trade imbalance. So how do we pay back that money when we lost it? Humm.....well the government takes our place by borrowing money from the printer and spending it by buying all sorts of stuff like solar panels, windmills, and insulation. This puts money into circulation just like we did and it gives us money to repay our loans with different dollars. So, this works fine until the government repays its loan by taxing us. Well, where does that money come from??? Game over!
    Eliminate trade imbalance, we all be happy. That wasn't so bad, was it?

    April 16, 2009 at 3:11 pm |
  11. Linda Streat

    It's probably a little late to enter comments, but here goes. On retirement age, etc. In 1910 both the job market and the employee pool was very different. In general women were not a large part of the employee pool and men became part of the "pool" either at a young age (primarily in agriculture) or at an older age (late 20s in industry, commerce and finance) and it was simply a different cultural environment. It wasn't until the 1930s that the actual concept of "retirement" as we know it entered the picture. Most working people didn't retire, they "quite work" and a predetermined younger member of the family assumed responsibility for the welfare of the family unit OR they keeled over dead (not exactly retirement in my book). It was not until the depression when virtually no one had a job with any stability (regardless of which segment of the economy you consider) that the concept of some type of backstop for being unemployed (both involuntary and voluntary unemployment) entered the political picture. From that came "unemployment compensation/benefits" and "retirement plans" which snowballed over the years as it became more politically expediate to take an active part in the development of "something" that benefits the politicians constitutents. And that expediency coupled with an ever-growing employee pool has led to the "early" retirement plans. It pleases early retirees by giving them a chance to do what they have "dreamed of" while still in good health and it gives a job market to younger people trying to enter an ever decreasing job market. At least, that's how I see it. Enough of my opinions...my time is up.

    April 16, 2009 at 3:00 pm |
  12. Liz Silver

    First – Am I hearing you right, John? If the average life expectancy is 77 now and the average retirement age in 1910 was 74 and you want to go back to that, according to your formula, do you wish to see everyone work until they die – or within three years? But the other part of the formula doesn’t work even though you split the juxtaposition. If in 1910, the average retirement age in the United States was 74 and the average life expectancy was around 55, were the deceased still working?

    Second – Is it right to oppose abortion to protect the rights of those never entering the world but OK to kill off the elderly because they’re dying anyway? If money is an issue, which costs more, rearing a child or keeping the elderly alive a little while longer? Are these not moral issues rather than monetary issues?

    Third – Those people who are paying nothing in Federal income taxes are often paying Social Security and Medicare taxes on low wages which have no cap and are at a far greater percentage of their income than the wealthy. They also pay Sales tax on most consumer items and Gasoline tax if they drive a vehicle. They pay Property tax if they own property. All of these taxes have rules. Income tax is based upon taxable income, so would you like to lose your standard or itemized deduction and your exemptions on your income, too?

    Fourth – The Government probably has a lot more skilled and educated labor than the private sector of employment, so naturally wages and benefits would be higher. Also, the Government takes care of its own. But doesn’t the private sector takes care of its own – owners and operators? It is the segment of society no one is taking care of that’s driving your numbers in this particular formula.

    April 16, 2009 at 2:55 pm |
  13. Ken

    Greed, Greed, Greed......

    April 16, 2009 at 2:49 pm |
  14. mark

    All good points but the last one is especially acute right now. Cities, States, etc. are starting to look at the pension bombs they have created. For the last 20 years, they have been hidden behind a rising tide of revenues all around. In concept, everyone sort of knew there was a problem but as long as next years budget looked fine and as long as they could get away with rosy assumptions on returns for their pensions, they could hide the problem.

    Now, revenues are disappearing so everyone is looking at their budgets...and realizing how much of their budgets today and in the future are committed pension and retirements benefits.

    April 16, 2009 at 2:31 pm |
  15. Sharon S

    This was a great article! Now can you send it up to the House and let them read it? I would love to hear the answers to some of your questions which are of course everyone's questions!

    I do wonder why so many are NOT paying taxes! But of course to add to that we have the illegals living here for free and their children going to our schools for free and getting free benefits, lets not leave that out!

    April 16, 2009 at 2:26 pm |
  16. D. VonThaer

    I have been having this same debate with family/friends. people are almost refusing to change their lifestyles, until it is forced upon them, and many of those lifestyles are provided by government dollars. I hear this phrase often: 'I paid into the system, the system needs to pay me back.'

    I feel this is not the time for tallying who gets what from whom and when. Everyone needs to buckle down, and work for our country instead of sitting back and trying to see how the country is going to fix itself.

    PS. Love the article, but the third conditional is missing towards the end.

    April 16, 2009 at 2:16 pm |
  17. zac

    why not point out that the bottom 42% dont pay taxes cause they dont make enough to live on as it is. Accept it not all people have the capacity to earn a 'good' living. Do you really feel people truly wish to live as poor as they are, no they would make 35$ hr but they just dont understand how to really get there. You are correct about the fact that they shouldnt get returns for nothing but they shouldnt be paying in either lets try to help the poor, not bury them. Remember you're only a few paychecks away from being poor yourself.

    April 16, 2009 at 2:15 pm |
  18. Lisa in CA

    Oh gosh, where to begin. I believe it has been discussed to raise the retirement age to 70. I know that I will be working most likely longer than that, and so will most other people. 15 years ago, my boss at the time was 72, working full-time, getting a pension from his previous employer and SS and paying taxes and complaining about it. My feeling is if you're still working, just because you're a certain age, SS should not be paid out until you are actually not working.

    As to health care, we have system designed for catastrophic – rather than preventative – healthcare. We also have many who believe in the right to life above all else. Look at the states who have had to pass laws allowing "suicide". Heck, look only to Florida and Terry Schiavo for an example. Once we decide to change the paradigm of healthcare (from catastrophic to preventative) and make it affordable, especially for seniors – how many doctors won't accept MediCare patients because the reimbursement is so little? – maybe they will see the doctor earlier and get whatever it is dealth with earlier. Add to that that most of us really don't want to die and are afraid of the diagnosis at those older ages and well, again, we need to change a whole lot of outlooks on how we do things.

    As for paying no income tax - if people are working, they are paying. Now if you are referring to paying on April 15, maybe they had enough, or more than enough, withheld throughout the course of the year that they don't have to pay anymore. Regardless, people are still paying taxes – various excise taxes, sales taxes, use taxes, etc.

    As to the fourth point, the government isn't really paying the bill as a private sector employer would. We, the taxpayers, pay for those benefits and salaries. Oh, and does your benefits figure include such items as fully paid health care for our elected representatives for themselves and their families for what amounts to life?

    April 16, 2009 at 2:07 pm |
  19. Deborah

    I want to retire now at 54; I certainly don't want to be working past 65 unless I am CEO of my own company. I find that a lot of people older than 65–not all, but many, are resistant to change, afraid of technology and have less energy. They really would rather be on the golf course or watching Law & Order than to be in the workplace. I believe entrepenuers do better past 65 than regular employees. Why? idk.

    April 16, 2009 at 2:07 pm |
  20. alex

    All the points above are yet another proof that the US cannot see fit to put its citizens and their quality of life first. None of this stuff is even a slight question in several countries in Europe and Canada where everyone can afford health insurance and use PREVENTIVE MEDICINE versus here where people go to doctors when its too late and have to use the most expensive of what modern medicine has to offer. It seems as though people in the US will not have the opportunity to enjoy their lives while their still alive!!!!

    April 16, 2009 at 2:05 pm |
  21. Michelle Johnson, Lomita, CA

    While I don't agree with the 2nd and 4th points of your article–elderly should receive care to extend their lives and keep them healthy, and private sector benefits should be raised to equal public sector, (I'm ambivalent about your third point), I totally agree with your first point. I work for the Los Angeles Unified School District, and over 13 years have seen perfectly healthy, youthful men and women retire at age 55 to live the rest of their lives at 100% salary and benefits off taxpayers' money, without working. They may live another fifty years, and the money they actually invested in their pensions soon runs out. This is a drain on the country's resources, and unfair to everyone else. I've complained about this for years, and am glad to see it mentioned.

    April 16, 2009 at 1:56 pm |
  22. Michael "C" Lorton, Virginia

    Your article presents complex issues with no simple answers-–penalizing individuals for getting older--and that is when most of your serious illness occurs--that is a slander against the elderly--you must remember--they were young once--and you are going to reach that point also. It is not how long we live, but the quality of life--we add years to our life-–but not life to our years-–and as far as working and retiring eariler--it is a right of passage that they have earned. The answers lie with who pays taxes and who doesn't pay taxes--government spending-–bailing out financial institutions and auto indusrtries that became Czars of Greed--so if you are going to point the finger of blame-–please point it in the right direction.

    April 16, 2009 at 1:33 pm |
  23. Cindy

    What's driving the US over a cliff...all the money that the government is spending willy nilly like it's no big deal and still plans on spending in the future! Plus all of the ridiculous pork that they ask for and get...both sides I mean too! There will come a time that this will backfire and bite us all in the rears! But hey..they don't care...we, the citizens will pay the price. Cause let's face it, they all are rich and don't have to worry about it. Plus they don't pay their taxes anyways it seems! It always falls back on us and will this time too.


    April 16, 2009 at 12:56 pm |
  24. Melissa

    The Republican fantatical right who can't back off.

    April 16, 2009 at 12:49 pm |