Stephanie's Political Arena

Critiques and Perspectives on National Politics and More

Hard Economic Lessons from Athens to Washington

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I will be the first to admit that I am not a reliable source at all when it comes to economic policy, financial regulations and the latest activity within the global markets.  Though I have gained some experience in this area through tracking state legislation intended to foster economic development and job creation, I am just as clueless as the next economically illiterate American about how we move our national economy back onto the right track… and soon.

Despite my lack of experience in economic policy, however, I do understand the grave situation in Greece at this time and why it should matter to all Americans.  The land of famous gods and goddesses may need more than the power of Zeus to keep its economy from collapsing as its debt burden continues to climb.  Reuters provides an excellent, detailed timeline of Greece’s sharp economic decline since last October, when Prime Minister George Papandreou of the socialist PASOK party won the national election.  Once taking office, Papandreou immediately pursued an ambitious plan of cutting the nation’s budget deficit of 12.7 percent of its GDP to 8.7 percent while maintaining consistent funding for social welfare programs.  At the same time, however, public debt skyrocketed, hitting 121 percent of GDP this year.   Soon, investors began noticing that something wasn’t right in Greece and began lowering the nation’s credit rating.

So, why should this matter to Americans?

The crisis in Greece essentially began with nearly the same fiscal irresponsibility currently exercised by Washington.  By the end of this year, the U.S. national debt is expected to reach $8.8 trillion, which will be 60 percent of our GDP.  This will continue climbing well into the future given the excessive spending by Washington on corporate bailouts, economic stimulus packages, and healthcare reform, to name only a few initiatives.  Additionally, Medicare and Medicaid combined are projected to be 10 percent of the U.S. GDP by 2035.  According to the Congressional Budget Office long-term budget outlook summary, “The federal budget is on an unsustainable path – meaning that federal debt will continue to grow much faster than the economy over the long run.”

Washington would be wise to take a cue (or 787 billion cues) from the Greeks and consider taking a whole new approach to its traditional spending-beyond-our-means policies, which have been entrenched for far too long (and throughout previous administrations).  The debt crisis that threatens to topple Greece quicker than the Spartans did to Troy could very well reflect the direction in which our nation is headed.

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Written by Stephanie

April 28, 2010 at 3:01 pm

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