- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

Still Not Greece, But Getting Closer Every Day

Posted By J.D. Foster, Ph.D. On June 17, 2010 @ 1:15 pm In Economics | Comments Disabled

[1]

The Washington Post [2] reported today that the International Monetary Fund and various world governments warned U.S. officials years ago that “escalating financial problems” in the United States “had to be addressed quickly to forestall a larger threat to the world economy, but those urgings were discounted.” The Post went on to observe that by the time U.S. officials finally responded, “the price tag for stemming the financial contagion had soared.’

Truth to tell, the Post story was not about the U.S., but about Europe’s debt crisis beginning with Greece. But the United States, led by President Obama’s spending explosion, is on the very same disastrous course. If the federal government refuses to get its spending under control, then the Post will be able to rerun the story as described above, possibly in the very near future.

The problem, correctly diagnosed by the Post, is that “political systems and their leaders often prove hesitant to take dramatic action on the sort of partial evidence available when a threat is emerging, avoiding decisions on controversial and expensive measures until there is no choice”. This certainly describes Europe, but it applies equally well to the United States. For all the talk of bold leadership and change, President Obama’s contribution to addressing Americans’ ballooning national debt problem is first to make it much worse, and then to appoint some powerless lame duck commission to study the obvious and delay the necessity of even considering the possibility of thinking about recommending a policy.

While the details will vary, Europe is giving the United States a good look into the future if the Post’s observation about dilly-dally politicians continues to hold. It is therefore all the more important to heed the reported observations of the European Union President Manual Barroso. According to the British Daily Mail [3], Barosso has “set out an apocalyptic vision in which crisis-hit countries in southern Europe could fall victim to military coups or popular uprisings.”

In speaking in particular of Greece, Portugal, and Spain, Barosso is reported to have said, “Look, if they do not carry out these austerity packages, these countries could virtually disappear in the way that we know them as democracies.”

As astonishing as are these observations, they are all the more so as a very undiplomatic assessment by the ever-diplomatic EU President. This is not to suggest that the U.S. is at all at risk of a military coup. The flag of freedom still flies proudly in America. It is to suggest, however, that the wrenching changes that will have to be made to federal tax and spending policies will be intensely painful to the nation if made when the crisis hits. On the other hand, if the U.S. were to listen to its own advice given to the Europeans as they face their debt crisis, acting preemptively before the storm, the American people could skirt the storm entirely and look forward again to growth and prosperity.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/06/17/still-not-greece-but-getting-closer-every-day/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/Greece-Acropolis-10-5-13.jpg

[2] The Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2010/06/15/AR2010061505598.html

[3] Daily Mail: http://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.html

Copyright © 2011 The Heritage Foundation. All rights reserved.