Greek crisis raises concerns with U.S. deficit
There's no E.U. for the United States.
The Greek financial crisis, born of debt-financed spending, has economists and deficit hawks warning of parallels with the United States' long-term budget problems. But there's one key difference, said Dana Martin, of a Washington-based policy group.
"The E.U. has been able to step in and provide a bailout package" of about $1 trillion to keep Greece solvent, said Martin, chief of staff at the Center for the Study of the Presidency and Congress. "Who can possibly provide the magnitude of a package that the U.S. would need to have a similar type of rescue• You're talking about a global problem that is going to be incredibly difficult to stem."
The nonpartisan, nonprofit center issued dire warnings about the country's structural deficits -- rooted in Medicaid and Social Security -- that dwarf things such as the federal stimulus bill and foreign aid. Closing the gap will require politically poisonous decisions such as slashing entitlement benefits and raising taxes.
Federal lawmakers have had little serious public discussion about how to fix the problem, the center's senior fellow on leadership ethics and integrity, Egil "Bud" Krogh, said in an interview with the Tribune-Review.
A bill that would have created a bipartisan commission to come up with a plan fell prey to a Republican filibuster in January amid partisan wrangling over the health care bill. Six GOP co-sponsors of the bill voted against it.
"It's very hard in that town because it's always about 'this morning, this afternoon,' " Krogh said.
Add up the country's projected deficit spending over the next 40 years, and it amounts to about $62 trillion, said John Boyer, the center's director of congressional relations. That's about $3 trillion more than the combined gross domestic product of every country in the world in 2008. It works out to $200,000 for every citizen. Spread over 40 years, it's as if Americans are born with a mortgage "and no house," Boyer said.
After the Senate bill failed, President Obama appointed a commission charged with devising long-term budget recommendations by Dec. 1. Alan Simpson, a former Republican senator, and Erskin Bowles, former President Clinton's chief of staff, lead the 18-member panel. Several members of the commission declined to comment.
Simpson of Wyoming told the Tribune-Review in a recent interview that every line item in the federal budget is up for scrutiny. Speaker Nancy Pelosi and Senate Majority Leader Harry Reid promised to let the commission's proposal come to the floor for a vote.
"When we submit our report, there will be shrieking, crying, the moaning wail of coyotes coming from the hills. They can ignore it totally if they wish, but they'll know a hell of a lot more on Dec. 1 than they know now," Simpson said in March.
Tax increases -- or at least radical changes to the tax code -- and entitlement cuts likely are the only way out, Boyer said.
Carnegie Mellon University economist Allan Meltzer said the Obama administration is likely to address the problem after November's elections, but before Congress convenes in January.
The administration will "attempt to get the new Congress to pass a value-added tax, with some exemptions for lower incomes," he predicted. "If that fails, Congress will be back to decide on spending reductions and tax increases."
About half of U.S. debt is financed by foreign governments, including China, Saudi Arabia and Japan. As debt grows, economists are warning of the country's credit rating being cut -- as Pittsburgh's was after it entered state receivership in 2003.
"They're not talking about 10 to 20 years out. They're talking five to 10 years," Martin said.
With the country's reliance on countries such as China, which could decide at any time to stop financing U.S. debt, "there's a sovereignty and national security issue here, too," Boyer said.
The debt is growing, and the changes needed, though painful, will only get worse with time, Martin said.
"The costs of acting later are so much higher than they are of addressing it now," Martin said.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- NFL finds Patriots employees probably deflated balls
- Steelers’ fourth-round pick Grant relies on smarts to get job done
- Bus drivers strike deal with company that transports North Hills, Shaler students
- Uber, Pennsylvania regulators debate proposed $19 million fine in Pittsburgh
- Ligonier Township mourns K-9 officer killed in wrong-way crash
- Rossi: Not too early to go with Kang
- Undercover meth buy in Monroeville leads to arrest
- Highmark to pay disputed claims filed by rival UPMC
- EDMC to close quarter of its Art Institutes campuses
- Vacant seat attracts crowd to district judge race in Hampton, Richland, West Deer
- Former House Speaker Jim Wright dies at age 92