Economics: Is the U.S. the next Greece?

“Greece is in flames,” said Mona Charen in National Review Online, but “you can smell the smoke here as well.” The financial crisis that brought that nation to its knees and sparked riots in the streets of Athens does, it’s true, owe itself partly to Greece’s quirky culture of corruption and guaranteed leisure. (Civil servants receive bonuses for arriving at work on time, and can retire in their 50s at 80 percent of salary.) But Greece’s broken balance sheet looks a lot like our own. The Greek deficit is 14 percent of its gross domestic product; the U.S. deficit is 10 percent of GDP. Greek total debt is 124 percent of GDP; ours, by the end of this decade, will be 100 percent. In both nations, said Robert Samuelson in The Washington Post, “aging populations have been promised huge health and retirement benefits” that taxpayers can’t afford. Unless we trim back our burgeoning “welfare state,” Greece’s fate may soon be our own.

“We’re not Greece,” said Paul Krugman in The New York Times. Jubilant right-wingers are using the Greek crisis to warn Americans of what will happen “unless we abandon all that nonsense about taking care of those in need.” But the comparison simply doesn’t hold. Greece’s problem is that it has no prospect of paying back its debt, because of larger, structural problems with its economy. The U.S. economy, by contrast, is already on an upswing, with even brighter days ahead of us. Don’t get me wrong. We do indeed face a “long-run budget problem,” and a serious one. But if we restrain health-care spending, increase taxes, and grow the economy, we’ll eventually bring the deficit back down to sustainable levels.

We may not be Greece, said David Walker in USA Today, “but are we still America?” This nation was founded on hard work, thrift, and self-reliance, but in recent decades, Americans “have become addicted to consumption and debt.” If we don’t regain our values, bankruptcy could await. Our biggest fiscal problem, said David Leonhardt in The New York Times, is that we have yet to figure out what “kind of government we want.” We want the state to provide us with generous Medicare and Social Security benefits, to do a better job educating our children, to defend us with a strong military—and yet we want our taxes cut. Addressing “this disconnect,” one way or another, “will be the central economic issue of the next decade.”

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