Greek Tragedy to be Played Out in U.S.

When even the New York Times is beginning to wake up to the coming “Greek Tragedy” in America, you know it’s too big to ignore. Our debt ratios are similar to theirs now, and growing larger. We have TRILLIONS of dollars in unfunded liability for social programs JUST LIKE GREECE. Our spending problem is getting worse instead of better. The point will come in the not too distant future when all the freebies the government has promised to gain power can no longer be funded. Then all the welfare babies are going to scream bloody murder when the nipple of the “free stuff” teet is popped from their mouths, and the apron string of laziness is yanked from their hand. The riots in the streets will look just like the ones in Greece, only on a much larger scale.


http://dealbook.blogs.nytimes.com/2010/05/12/in-greek-crisis-some-see-parallels-to-u-s-debt/

In Greek Crisis, Some See Parallels to U.S. Debt

May 12, 2010, 2:21 am

<!– — Updated: 8:26 am –>

It’s easy to look at the protesters and the politicians in Greece — and at the other European countries with huge debts — and wonder why they don’t get it. They have been enjoying more generous government benefits than they can afford. No mass rally and no bailout fund will change that. Only benefit cuts or tax increases can.

Yet in the back of your mind comes a nagging question: how different, really, is the United States?

The numbers on our federal debt are becoming frighteningly familiar, David Leonhardt writes in The New York Times. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.

The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.

We, the people, are.

We have not figured out the kind of government we want. We’re in favor of Medicare, Social Security, good schools, wide highways, a strong military — and low taxes. Dealing with this disconnect will be the central economic issue of the next decade, in Europe, Japan and this country.

Many people, including some who claim to be outraged by the deficit, still haven’t acknowledged the disconnect. Just last weekend, Tea Party members helped deny Senator Robert Bennett, the Utah Republican, his party’s nomination for his re-election campaign, in part because he had co-sponsored a health reform plan with a Democratic senator. (Yep. The rest of you who supported or support liberal, anti-constitutional, anti-American policies that steal our liberty and bankrupt our country are on notice. Your political careers are over.) Economists generally think the plan would have done more to reduce Medicare spending than the bill that passed. So, whatever its intentions, the Tea Party effectively punished Mr. Bennett for not being a big enough fan of big government. (This is where the NYT sinks back into usual form and misses the boat again. Americans want SMALLER government.)

Or consider the different fates of two parts of President Obama’s agenda. Mr. Obama has unrealistically said that taxes do not need to rise on households making less than $250,000, and this position has come to be seen as an ironclad vow. (It’s not unrealistic. It’s just that the government WON’T STOP SPENDING!) He has also called for billions of dollars in sensible cuts to agribusiness subsidies, tax loopholes and the like. The news media and Congress have largely ignored these proposals.

The message seems clear: woe unto the politician — in Washington, Athens or London — who tries to go beyond platitudes and show some actual fiscal restraint. (Because the welfare babies that you have created, just like ours, will scream bloody murder when the teet of “free” milk is pulled from their mouths.)

This situation obviously can’t continue, as Robert Greenstein, perhaps the leading liberal budget expert, points out. Mr. Greenstein’s politics make him sympathetic to the worry that all the deficit talk will become an excuse to pull back on stimulus spending while unemployment remains high or to gut social programs. But he also knows the numbers well enough to understand that our Greece moment, whether it takes the form of a crisis or not, is coming.

“Most of the public thinks, ‘If only the darn politicians could get their act together to cut waste, fraud and abuse, and to make tax avoidance go away and so on,’ ” Mr. Greenstein, head of the Center on Budget and Policy Priorities, says. “But the bottom line is, there really is no avoiding the hard choices.”

For Greece and possibly other European countries, change will come from the outside. The countries lending the money for the Greek bailout — chiefly Germany — are demanding big cuts to the welfare state. Greek citizens will soon have a harder time retiring in their 40s. (Now THERE’S your problem! Or at least a good illustration of it. You want to do very little work for a very short time, and get paid for the rest of your life as if you had personally saved the world by working until your very last breath. Sorry, but reality sucks. Especially when it hits you squarely in the face.)

Here in the United States, we’re likely to have the chance to solve our problems before our lenders demand it. Those lenders continue see the American economy as a safe haven, thanks to our history of strong economic growth and political flexibility. (This window of opportunity is closing RAPIDLY.)

It is even possible that future growth will make the current deficit projections look too pessimistic. That sometimes happens when the economy is weak. In the wake of the early 1990s recession, for example, almost no one imagined that the budget would show a surplus by the end of the decade.

But the main issue isn’t the near-term deficit — the one created by the recession, the wars in Iraq and Afghanistan, the Bush tax cuts and the Obama stimulus. The main issue is the long-term deficit. (The last part of this statement is accurate.)

As societies become richer, citizens tend to want better schools, better medical care and other government services. This country is following that pattern, but without paying the necessary taxes. That combination has us on a course to Greece-like debt. (We’ve ALWAYS followed that course, but we used to handle those things at the LOCAL and STATE level, where our dollars were much more efficient and were spent on priorities of the states and cities that those dollars actually came from. Sending our money to Washington and losing 70% of it in the inefficiency, graft, and corruption of government will NEVER work in the long term.)

As a rough estimate, the government will need to find spending cuts and tax increases equal to 7 to 10 percent of G.D.P. The longer we wait, the bigger the cuts will need to be (because of the accumulating interest costs). (OK, here’s your starting point. Revoke/cancel the rest of the unspent “stimulus,” and REPEAL THE HEALTH CARE TAKE OVER.)

Seven percent of G.D.P. is about $1 trillion today. In concrete terms, Medicare’s entire budget is about $450 billion. The combined budgets of the Education, Energy, Homeland Security, Justice, Labor, State, Transportation and Veterans Affairs Departments are less than $600 billion.

This is why fixing the budget through spending cuts alone, as Congressional Republicans say they favor, would be so hard. Representative Paul Ryan of Wisconsin has a plan for doing so, and it includes big cuts to Social Security and the end of Medicare for anyone now under 55 years old. (Those are GREAT ideas. They are programs that have morphed far beyond what they were originally sold to be.)Other Republicans have generally refused to endorse the Ryan plan. Until that changes or until the party becomes open to new taxes, its deficit strategy will remain unclear.

Democrats have more of a strategy — raising taxes on the rich and using health reform to reduce the growth of Medicare spending — but it is not nearly sufficient. (Oh, those are great ideas (NOT!). Let’s penalize the people who actually create jobs and real wealth in this country, and replace one inefficient government program with one that will not only be orders of magnitude more wasteful, but destroy liberty and personal freedom as a side benefit. Sounds like a great plan. Remember this plan in November.)

What would be? A plan that included a little bit of everything, and then some: say, raising the retirement age; reducing the huge deductions for mortgage interest and health insurance; closing corporate tax loopholes; cutting pensions of some public workers, as Republican governors favor; scrapping wasteful military and space projects; doing more to hold down Medicare spending growth.

Much of this may be unpleasant. But by no means will it doom us to reduced living standards or even slow economic growth. We can still afford to spend more on Medicare — even more per person — than we do today, and more on education, the military and other areas, too. We just can’t afford the unrealistic promises that the government has made. We need to make choices. (Like social security, Medicare, benefits for illegal aliens,…

“It’s not a matter of whether we have the resources to solve our problems,” as Alan Krueger, the chief economist at the Treasury Department, says. “It’s a matter of political will.”

For now at least, our elected officials are hardly the only ones who lack that will. (Again, I appreciate that this NYT writer awakened enough to even get part of the story correct, but here is where he shows his liberal brain damage. The elected officials are EXACTLY the ones who lack the will to make the changes. They will only do what buys them votes and keeps them in power.)

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