We’re Not Greece
By PAUL KRUGMAN
It’s an ill wind that blows nobody good, and the crisis in Greece is making some people — people who opposed health care reform and are itching for an excuse to dismantle Social Security — very, very happy. Everywhere you look there are editorials and commentaries, some posing as objective reporting, asserting that Greece today will be America tomorrow unless we abandon all that nonsense about taking care of those in need. The truth, however, is that America isn’t Greece — and, in any case, the message from Greece isn’t what these people would have you believe.
So, how do America and Greece compare? Both nations have lately been running large budget deficits, roughly comparable as a percentage of G.D.P. Markets, however, treat them very differently: The interest rate on Greek government bonds is more than twice the rate on U.S. bonds, because investors see a high risk that Greece will eventually default on its debt, while seeing virtually no risk that America will do the same. Why?
One answer is that we have a much lower level of debt — the amount we already owe, as opposed to new borrowing — relative to G.D.P. True, our debt should have been even lower. We’d be better positioned to deal with the current emergency if so much money hadn’t been squandered on tax cuts for the rich and an unfunded war. But we still entered the crisis in much better shape than the Greeks. Even more important, however, is the fact that we have a clear path to economic recovery, while Greece doesn’t.
The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. Put those projections together with the Obama administration’s policies, and they imply a sharp fall in the budget deficit over the next few years.
Gosh Paul, don't you think it is just a little concerning how we managed to set the largest monthly April budget deficit ever in an economy that has been "recovering" since last summer? Perhaps the rebound is...false, mostly in government and the true achievers and job creators are sitting on their hands? Wonder why Paul? Let's read on.
Greece, on the other hand, is caught in a trap. During the good years, when capital was flooding in, Greek costs and prices got far out of line with the rest of Europe. If Greece still had its own currency, it could restore competitiveness through devaluation. But since it doesn’t, and since leaving the euro is still considered unthinkable, Greece faces years of grinding deflation and low or zero economic growth. So the only way to reduce deficits is through savage budget cuts
(Savage Paul? a country where 40% of the work force are government employees and pensions are too generous, so any budget cuts are "Savage"? Just wondering Paul, does this remind you of any other countries, perhaps in the not too distant future? To be clear, what budget cuts have you ever described as not "savage"?) and investors are skeptical about whether those cuts will actually happen.
No S--t, just like here in the good old USA of Obama.
It’s worth noting, by the way, that Britain — which is in worse fiscal shape than we are, but which, unlike Greece, hasn’t adopted the euro — remains able to borrow at fairly low interest rates. Having your own currency, it seems, makes a big difference. In short, we’re not Greece. We may currently be running deficits of comparable size, but our economic position — and, as a result, our fiscal outlook — is vastly better.
That said, we do have a long-run budget problem. But what’s the root of that problem? “We demand more than we’re willing to pay for,” is the usual line. Yet that line is deeply misleading.
Paul, you are so funny. Misleading? We? We means the elderly, the unemployed, and mostly, those with too generous pensions, who are demanding huge resources from a small portion of the current population and resources from ALL of future generations. That's the we..Paul. You knew that and you were just kidding, right?
First of all, who is this “we” of whom people speak? Bear in mind that the drive to cut taxes largely benefited a small minority of Americans: 39 percent of the benefits of making the Bush tax cuts permanent would go to the richest 1 percent of the population.
When you say stupid thing like this Paul, do you not sleep well? Now Paul, let's be honest, the top one percent pay more than 39% of income taxes, right? And if there is a tax cut, who is going to get the benefit, those paying taxes right? What? Oh, so when taxes are cut you want them to go to folks not paying taxes. I get it, I don't understand it and think it is unjust, counterproductive and well...kind of Communism, but I get how you could think it, since you are stupid beyond belief. And Paul remember when we discussed above about how the deficit remains huge because tax receipts are low and spending remains high, remember? Think any of that conundrum might be from the successful sitting on their hands as they wait for a huge increase in taxes and watch this administration attack industry after industry? What do ya think?
And bear in mind, also, that taxes have lagged behind spending partly thanks to a deliberate political strategy, that of “starve the beast”: conservatives have deliberately deprived the government of revenue in an attempt to force the spending cuts they now insist are necessary.
So no spending cuts are necessary? Think the folks in Utah, W. VA, MA and all these states having elections where spend-a-holics are getting their asses kicked would agree with you Paul? Think the governor of New Jersey would agree with you?
Meanwhile, when you look under the hood of those troubling long-run budget projections, you discover that they’re not driven by some generalized problem of overspending. Instead, they largely reflect just one thing: the assumption that health care costs will rise in the future as they have in the past. This tells us that the key to our fiscal future is improving the efficiency of our health care system — which is, you may recall, something the Obama administration has been trying to do, even as many of the same people now warning about the evils of deficits cried “Death panels!”
Paul, isn't it kind of embarrassing to publish such drivel on the day when the CBO redid the health care numbers finding them off by $100B+ ? And that is before it is implemented, unless God help us it is repealed, and spending goes from hyper into warp drive. And Paul, there will be death panels, has to be, when the consumer of a service is no longer responsible for the service, someone else will need to limit access and ergo, death panels.
So here’s the reality: America’s fiscal outlook over the next few years isn’t bad. We do have a serious long-run budget problem, which will have to be resolved with a combination of health care reform and other measures, probably including a moderate rise in taxes.
But no spending cuts, right? None? Not ear marks, the remainder of TARP, left over stimulus, nothing? Buddy, lots of other folks, sane folks, think you are wrong and in fact stupid beyond belief and soon we are going to have an election to sort out this little issue, wanna bet how it goes? And moderate...you used moderate, now you won the Nobel Prize and everything, but does that give you the right to just out and out lie? Moderate? There is this guy, Baxter, who makes the same argument, says that there are not enough budget cuts to to make a difference, but-and you know this-there are not enough tax increases to cover planned spending unless it is addressed...now! But we should ignore those who pretend to be concerned with fiscal responsibility, but whose real goal is to dismantle the welfare state — and are trying to use crises elsewhere to frighten us into giving them what they want.
So, for example, when in the past the Republicans proposed lowering the yearly increases (now...don't lie Paul, that is what they said) you and your kind called them Draconian cuts, lowering the growth, not shrinking, not, not growing, but just not growing as much, that is what you called dismantling the welfare state? Paul, you are not only stupid beyond belief, but you are a liar, a big fat liar who is hell bent on destroying our country. Any fool with open eyes would see where we are heading. Folks have had enough with you and your doublespeak. Not to worry, the NYT is going out of business.
