Earlier today I got into a discussion about the rapidly growing US debt and the comparison of our economic situation here in America to that of the recently bankrupted Greece.
Certainly, such comparisons make a fantastic media narrative and comparisons of worst case calamities are always made to one’s own situation; it’s human nature. However, while there are indeed some similarities between our economic trend in America to that of Greece, there are also glaring differences that would likely prevent us from ever suffering the Greek tragedy.
For one, the Greek debt was substantially higher than ours. Our public debt in America is roughly 58% of our economy. Greece’s public debt was well over 100% of their economy. That, of course, is not to say our debt cannot reach such a level if it continues growing. In fact, economists predict we will reach 140% by 2040 at our current rate of increase and interest accruement. While by no means imminent, such a potential grim scenario should be a wake-up call.
Another major difference between the Greek and US circumstances is the size of the government. Greek government represents nearly half of their economy while the US government is approximately 20% of our economy. The enormous body of government employees in Greece, further received considerably greater compensation and benefits than their US equivalents. Again, I do not dismiss the fact that we could become like Greece in that regard, but we also could become like Nazi Germany or Theocratic Iran; possible but unlikely.
Perhaps the two most important differences separating the American economic situation from the Greek is the fact that Greece was receiving extremely little revenue in taxes due to massive scale tax evasion across all facets of its population and the inability of the Greek government to print money because of their shared currency, the Euro.
Nonetheless, while saying our situation is identical to the Greeks and we are imminently going to suffer the exact same fate as Greece is reserved for Chicken Little and political fear-mongerers, there is no denying the fact that our debt is reaching unsustainable levels.
Many like to blame the debt problem on Obama or the Democrats. Many others like to blame it on George W. Bush and the Republicans. Some will say the problem stems from Ronald Reagan and the failed trickle down theory of economics. I say there is some truth in all of the above but the heart of the problem lies with you and with me.
In the modern era, deficit hawking and fear mongering over the debt has become nothing more than a political game played by the minority party. During the presidency of W. Bush, the Democrats relentlessly condemned out of control spending by the Republicans and the ever-growing national debt. Now, with Democrats in power, the GOP is back to criticizing the Democrats for unsustainable spending and assuming the role of deficit hawk. Trace back to Clinton, Reagan, Carter, and beyond to see the exact same see-saw scenario.
So how is this our fault? Because we want everything we have: roads, schools, an enormous military, unemployment insurance, Medicare, Social Security, etc. and yet demand constantly lower taxes. It is quite the paradox.
But we can all agree that any politician that promises to raise taxes will have as much chance of getting elected as Charles Manson. Any politician that promises more pot holes and to get rid of Medicare may as well not even put his name on the ballot.
So what are the options? The GOP has little to offer on the problem. Their solution of lowering taxes is insanely counter-intuitive and equally as counter productive. Far right conservatives preach cutting government programs, but that too is senseless toward solving the problem. Analysts say we need to produce about 8.5% GDP in tax increases and/or spending cuts to reduce our debt. That is equal to over $1 trillion.
But if we completely eliminated Medicare, Education, Homeland Security, Energy, Justice, labor, State, Transportation, and Veterans Affairs—we still haven’t shaved off 8.5% GDP. Even if the GOP were ever politically suicidal enough to eliminate all of the above departments, they have resurrected all of the underlying problems those departments were created to address. Those problems will then need to be re-addressed in a manner that will require additional spending. Problem far from solved.
Democrats, on the other hand, have a more fruitful strategy of raising taxes on the upper income classes and reforming programs such as health care and Medicare to reduce costs. While these strategies are effective, they are far from effective enough.
Until we the people are willing to make the necessary implementations to our lives, the debt will loom on. Until we are willing to elect politicians that will make the necessary changes that go beyond the rhetoric of the GOP and the small change solutions of the Democrats, we will not have any change.
Are you willing to elect the representatives that wish to dramatically reduce military spending; those who wish to extend the retirement age; to raise your taxes and eliminate frivolous deductions; to hold corporations accountable by closing tax loop holes and havens; make cuts to Medicare coverage?
We can point fingers at the politicians or the parties, but until we are willing to accept the reality of what needs to be done, until we are willing to elect the guy that promises to raise our taxes and give us less, until we are willing to assume responsibility for our economy we may as well turn that finger around and point it at ourselves. If we becme Greece, it will not be the fault of the other guy. I will not be the fault of the liberal democrats. It will not be the fault of the conservative republicans. It will be the fault of the American people. The fault lies solely with you and with me.
