Submitted by John Gabriel via Ricochet.com,
Financial experts in New York, London, and Brussels have tut-tutted Greece’s economic travails as Athens considers its future with the European Union. Why did they borrow so much money? How can they ever pay it back? Do they think that much debt is sustainable?
Instead of pointing fingers at the innumerates running Athens, they should consider our own situation. Jason Russell of the Washington Examiner shows how America’s debt projections look suspiciously like Greece’s recent history.
With all the chaos unravelling in Greece, Congress would be wise to do what it takes to avoid reaching Greek debt levels. But it’s not a matter of sticking to the status quo and avoiding bad decisions that would put the budget on a Greek-like path, because the budget is on that path already.
A quarter-century ago, Greek debt levels were roughly 75 percent of Greece’s economy — about equal to what the U.S. has now. As of 2014, Greek debt levels are about 177 percent of national GDP. Now, the country is considering defaulting on its loans and uncertainty is gripping the economy.
In 25 years, U.S. debt levels are projected to reach 156 percent of the economy, which Greece had in 2012. That projection comes from the Congressional Budget Office’s alternative scenario, which is more realistic than its standard fiscal projection about which spending programs Congress will extend into the future.
If Congress leaves the federal budget on autopilot, debt levels will soar. Instead, spending must be reined in to avoid a Greek-style meltdown.
While we’re right to be concerned about 2040, the U.S. is in deep trouble now. Yet if you mention the debt to most Americans, they’re either confused or indifferent. “But Obama lowered the deficit.” “Just print more money.“ “It’s Reagan’s fault!”
Since most graphs look like this, I created my own user-friendly debt chart focused on three big numbers: Deficit, revenue and debt. (My first version was published a couple of years ago. This one is updated with the most recent figures).
It’s an imperfect analogy, but imagine the green is your salary, the yellow is the amount you’re spending over your salary, and the red is your MasterCard statement.
The chart is brutally bipartisan. Debt increased under Republican presidents and Democrat presidents. It increased under Democrat congresses and Republican congresses. In war and in peace, in boom times and in busts, after tax hikes and tax cuts, the Potomac flowed ever deeper with red ink.
Our leaders like to talk about sustainability. Forget sustainable — how is this sane?
Yet when a conservative hesitates before increasing spending, he’s portrayed as a madman. When a Republican offers a thoughtful plan to reduce the debt over decades, he’s pushing grannies into the Grand Canyon and pantsing park rangers on the way out. While the press occasionally griped about spending under Bush, they implore Obama to spend even more.
When I posted the earlier version of this chart, the online reaction was intense. A few on the right thought I was too tough on the GOP while those on the left claimed it didn’t matter or it’s all a big lie. Others told me that I should have weighted for this variable or added lines for that trend. They are free to create their own charts to better fit their narrative and I’m sure they will. But the numbers shown above can’t be spun by either side.
All of the figures come from the U.S. Treasury and math doesn’t care about fairness or good intentions. Spending vastly more than you have, decade after decade, is foolish when done by a Republican or a Democrat. Two plus two doesn’t equal 33.2317 after you factor in a secret “Social Justice” multiplier.
If our current president accumulates debt at the rate of his first six-plus years, the national debt will be nearly $20 trillion by the time leaves office. That is almost double what it was when he was first inaugurated.
Like many Americans, I haven’t had the privilege of visiting Greece. Unfortunately, Greece will be visiting us unless we change things and fast.
$18,000,000,000,000 is only 75% of our economy?
I’m trying to be more than a non thinking drone.
We have people who want free shit. We have gangsters for banks . We have self serving slime for politicians.
O yeah! It can happen here.
I was on The Economic Collapse Blog earlier and one of the commenters asked why the markets weren’t blowing up today, since Michael Snyder and so any others have said that Greece might be a flash-point for a global economic collapse. This was my response:
The problem is not Michael or any of the other analysts. The problems are twofold (at least): First, blame Hollywood. Every movie made has a sudden shift from normal to not normal. This is called the “Inciting incident” and is a MUST for virtually every screenplay ever produced. This makes us perceive that when Michael and others say things like “crash” and “collapse” we expect it to be like a movie. One minute everything is a-ok and the next everything is chaos. Michael does enforce this paradigm with words like “explode” i must admit. But, here’s the thing: the real world doesn’t respond that fast. The system has tremendous momentum. Think of WW1. Everyone knows that it was started by the assassination of Archduke Franz Ferdinand, right? But was every army mobilized and entrenched on the battlefield the next day? It was an extremely volatile geopolitical dynamic then, but it still took some months to get bad and years to play out. The other issue is with the nature prediction itself. By definition chaotic systems cannot be accurately predicted, because small changes in input result in HUGE changes in output. People who are willing to look can see the faults in the system, but predicting which one will fail and when is a impossibility. Greece may or may not take down the global economy, ditto Peurto Rico. No one can predict this. No one. What we can be sure of is this: eventually one of these “small” inputs WILL take down the system.
It was bank runs in Greece that was the nail in their coffin and it will be bank runs in the PIIGS that prove the Markets are financial Kabuki. There is what’s called a “silent bank run” in America now.
Like many Americans, I haven’t had the privilege of visiting Greece. Unfortunately, Greece will be visiting us unless we change things and fast. – article
That sounds like a hopeful idea but changing things means doing a 180. Most folks think we can do a 90 degree turn and ride alongside the Grand Canyon. Others hope we pull a Thelma and Louise.
wip, I don’t get his #s either. Total GDP right now is estimated at 18T, give or take a few billions. Thus our debt is 100% of GDP, not 75%. Plus, this guy Gabriel thinks we might have 25 YEARS before our debt chickens come home to roost? I think he’s whistling past the graveyard.
I always find it entertaining when people try to blame the debt on a certain political party or president. This guy at least realizes that parties don’t matter when it comes to our debt. The thing he fails to realize is that with debt-based money supply mathematically requires an exponentially growing ampunt of debt to function. This mess was put in place in 1913. It is simple math, but as Chris Martensin co ers in his Crash Course people in general fail to understand exponential functions and how they operate.