Lessons from Greece

The deepening financial crisis in Greece has officially gone global, sending stocks plummeting on Wall Street and around the world. Economists fear that neither the riot-inducing tax hikes and spending cuts nor the $146 billion in rescue funds from other European nations will be enough to prevent Greece from undergoing an economic collapse with worldwide repercussions.

But the Greek debt crisis has far more serious implications for the United States than just stock market fluctuations. It is not at all far-fetched to consider that America could face the same dire prospects now confronting Athens -- and much sooner than many may think.

The economic factors that brought Greece to the brink of bankruptcy seem astonishing: a $413.6 billion national debt that is 115 percent of GDP and a deficit that constitutes 14 percent of GDP. The alarming truth is that the United States isn't that far behind. Runaway government spending and massive entitlement obligations will push our debt to a record 90 percent of GDP by 2020, according to the Congressional Budget Office (CBO).

Rather than take the decisive action urgently needed to avert fiscal disaster, the Obama administration is heading in the wrong direction. Although the CBO's projections in January 2007 anticipated an $800 billion budget surplus over 2008-2017, new estimates based on Obama's latest budget proposals forecast a $9.7 trillion debt over the same period. That's a turnaround of $10.5 trillion. The past three years have seen congressional liberals create one record-setting deficit after another. Even Treasury Secretary Timothy Geithner admits that "We're living with unsustainable deficits."

Yet the majority party has thus far failed to take even the most basic steps to get spending under control. Weeks after the April 15 deadline for passage, Democratic leaders have yet to even schedule a floor vote or committee consideration for the yearly budget resolution. Mandated by the 1974 Congressional Budget Act, the budget resolution was instituted to set spending limits to guide the yearly congressional appropriations process.

What is the sticking point preventing the House from passing a routine budget blueprint for the first time in 35 years? A proposal to cut a mere 2 percent from the federal budget over the next three years. Even with a 9.9 percent unemployment rate and a $1.5 trillion deficit looming in fiscal year 2011, congressional Democrats can't bring themselves to agree to even a temporary 2 percent spending cut. House Majority Leader Steny Hoyer openly stated that "It's difficult to pass budgets in election years because they reflect what the [fiscal] status is."

Despite what the Obama administration and its allies may hope, no amount of legislative dodging or budget gimmicks can hide the magnitude of our national debt or the grim economic prospects on the horizon. Forced into action by a fiscal emergency, Greece is only now enacting so-called austerity measures to rein in excessive spending. Washington has the opportunity now to implement budget cuts and entitlement reform before our own debt crisis becomes a catastrophe. We need only look to Greece to see the consequences of inaction.

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