As I have traveled the country recently promoting the need for fiscal responsibility many people have asked me: Are we Greece?
Over the past 40 years, U.S. government spending has grown by almost 300 percent after adjusting for inflation, and our revenues haven't kept pace. Our current deficits are the highest as a percentage of our economy since World War II.
In that respect, we sure look a lot like Greece, or at least we will in the near future. As a percentage of our economy, total federal, state and local public debt in the U.S. already exceeds levels in Spain, and are comparable to Ireland and Great Britain. We will reach Portugal's levels within two years and Greece's levels within 10 years on our present course.
To be sure, there are some big differences between the U.S. and Greece. We are by far the largest economy in the world. The dollar also represents more than 60 percent of the world's reserve currency. That means, unlike the situation in Greece, our foreign creditors will give us the benefit of the doubt for a while.
But they also see the very grave threat of the escalating deficits we will face in the future based on our current fiscal path. These projected structural deficits are driven largely by rising health care costs, known demographic trends, and the cost of financing what we will need to borrow to pay for increased spending.
So, are we Greece? Not yet. But if we don't change course and recognize that we are not exempt from the fundamental laws of prudent finance, we could be in the not too distant future.
Ultimately, we will need to take a range of steps to recapture fiscal flexibility and stabilize the ratio of our debt to the gross domestic product. This might include re-imposing tough but realistic statutory budget controls, achieving comprehensive Social Security reform, increasing savings rates, addressing health care costs, implementing defense and other spending reprioritization and constraint, and engaging in comprehensive tax reform that raises more revenues.
But the first step, of course, is to summon our age-old American spirit to take bold actions to ensure the United States of America never ends up like Greece. The time to start avoiding a crisis and building a better future is now.
David M. Walker served as U.S. comptroller general from 1998 to 2008 and currently serves as the president & CEO of the Peter G. Peterson Foundation.
Mr. Walker will speak about controlling the national debt and other issues on Wednesday, May 26, from noon to 1:30 p.m. at the Scottsdale Plaza Resort.
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USA Today: We’re not Greece, but are we still America?