Smoke, Flames, Greece, and the United States
Mona Charen has a column at National Review Online in which she says Greece’s “national meltdown” provides lessons for the United States. As the column’s sub-title puts it: “In Athens or in Washington, it’s the size of government that matters.” She writes that Greece is not just “a financial crisis,” but rather “a national meltdown.”
She points out it’s not just the differences in size between Greece and the U.S. Rather, there’s a tradition of tax avoidance and endemic corruption. However, there are similarities that are worrisome. Things like the amount of debt, and while the federal workforce in the U.S. isn’t as large as that in Greece, she does point out:
“President Obama’s new spending will result in a 14.5 percent increase in the number of federal employees in just two years. And he has looked after union interests with particular zeal — at General Motors and Chrysler, by funneling one-third of stimulus spending to state and local governments, and by repealing the rule that required unions to disclose their spending, to name three examples.”
Charen concludes by writing:
“It’s no coincidence that the states with the most powerful public-sector unions — New Jersey, California, and New York — are facing the most severe budget crises.
“Greece is in flames, but if you look around, you can smell the smoke here as well.”
Mohamed El-Erian, CEO of investment firm Pimco is quoted with a similar warning at CNBC:
"We are not Greece. We have more time. But what the Greek crisis tells you is debt and deficits matter . . . "The structure of your deficits matter and the US doesn't have much flexibility . . . Don't underestimate how quickly this can happen . . . There are structural headwinds out there and we better get our act together before those structural headwinds become overwhelming."
Other views at National Review Online include comments by James Capretta on Greece being a warning sign for the rest of Europe, Andrew Stuttaford on IMF, Rep. Cathy McMorris Rodgers (R-Wash) asking why American taxpayers should bailout Greece, and Marco Rubio who also suggests Americans should see Greece as a wake-up call. In addition, an article in the Financial Times (requires free registration) on Tuesday includes several useful charts.