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America’s Permanent Greece Vacation
Posted By Daniel Flynn On July 19, 2011 @ 12:24 am In Daily Mailer,FrontPage | 9 Comments
“We stand by the people and the government of Greece as you put your country back on a path to economic stability and prosperity,” Secretary of State Hillary Clinton announced Sunday in Athens. “We have a lot riding on our relationship together.”
Like Charlie Sheen winning a vote of confidence from Lindsay Lohan, the encouraging words of one spending addict for another undermined rather than inspired confidence. The United States, like Greece, has damaged its credibility in the process of jeopardizing its credit. Spending vaults of other people’s money will have that effect on a nation.
Following a week in which Fitch became the third major credit agency to bestow a “C” rating upon Greece, and Standard and Poor’s estimated a greater than fifty percent chance that the United States would lose its “AAA” rating in the next three months, the secretary of state’s trip to Athens was a case of bad timing. Clinton’s appearance in Athens did more to highlight the U.S.’s debt crisis than it did to help Greece get through theirs. Greece could use our money. America could profit from Greece’s example. But neither party is getting much of what they truly need from the other.
Stateside, politicians and pundits contrast the ancient nation betwixt the Ionian and Aegean Seas with the newer power on the North American continent. Columnist Pat Buchanan says that the West’s aging demographic dependent on government pensions makes us “all Greeks now.” Responding to the administration’s contention that GOP spending cuts would be calamitous, South Carolina Senator Lindsey Graham told CNN, “What is calamitous is the path we’re on as a nation. We’re becoming Greece.” Economist Paul Krugman calls Graham’s Greek comparison a “fallacy” and “nonsense.” The former Enron advisor notes that “the U.S. has much less debt than Greece.”
It’s chic to invoke Greece. But is the Hellenization of America real or just rhetoric?
At nearly $14.3 trillion, the U.S. government’s debt is almost the size of this year’s gross domestic product. It would require the product of about a year’s labor from every American to pay off the national debt. At $470 billion, Greece’s debt is much smaller than the U.S.’s debt. But Greece is a much smaller nation (about 11 million people) that has a much smaller economy ($310 billion estimated 2011 GDP) than the United States. The all-important debt-to-GDP ratio is about 143 percent, with the International Monetary Fund predicting it will climb to 172 percent next year. Compounding the problem, Greece’s economy is contracting (whereas the U.S. merely experiences slow growth).
Juxtaposing the more crushing Greek debt with the U.S. debt reveals disturbing trend lines, albeit trend lines apart chronologically. Greek debt just seven years ago stood at 98.6 percent of GDP. That is almost exactly where the U.S. debt-to-GDP ratio stands now. The message? Iceberg ahead! Change course.
One powerful politician isn’t buying the U.S.-Greece comparisons. “But contrary to what people are saying, we are not Greece, we are not Portugal,” insisted President Obama in his Friday press conference. Perhaps the president envisions America as too big to fail, AIG to Greece’s Lehman Brothers. Perhaps he believes in American exceptionalism when it comes to debt. Whatever the basis of Obama’s declarative, it provides insight into his recalcitrance on meaningful spending cuts. It can’t happen here, he seems to believe, so why bother with the painful austerity measures causing so much controversy in Greece?
The president is right in one sense. America is not Greece—not yet, at least. But one is struck by the similarities both in Greece and America’s onerous debt-to-GDP ratios and the what-me-worry disposition of profligate politicians imagining that the crisis is about future obstacles to further borrowing rather than the accumulated weight of past borrowing.
The recent Greek past offers America an important cautionary tale. A more profound lesson can be gleaned from ancient Greek history. Greece once led the world in architecture, philosophy, sport, drama, conquest, and much else. Ancient Greeks probably thought that the world would always be the way it was. But change is the only constant. One era’s beacon becomes another’s basketcase. Dominant cultures become history when they don’t learn from it.
The Parthenon-inspired Lincoln Memorial isn’t the only part of Washington that resembles Athens.
Daniel J. Flynn is the author of Blue Collar Intellectuals: When the Enlightened and the Everyman Elevated America, forthcoming this fall from ISI Books. He writes a Monday column for Human Events and blogs at www.flynnfiles.com .
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