A Spartan budget

Washington Post columnist Dana Milbank is no conservative, but he is worried, very worried about the deficit.  He sees what is happening in Greece as our future:

Look into the face of George Papandreou, America, and see your future.

The Greek prime minister is in town this week as part of a world tour seeking help for his beleaguered homeland. Greece is broke, its government on the verge of default. As Papandreou landed in Washington, there were strikes in the streets of Athens over his tax increases, his wage cuts for government workers and his scaling back of retirement benefits.

As he and Secretary of State Hillary Clinton faced the cameras Monday, she spoke of the weekend’s election in Iraq. “Greece is the birthplace of democracy, so anytime there's a democratic election anywhere in the world, Greece should get a royalty, Prime Minister,” Clinton said.

“Would help our deficit, too,” Papandreou joked.

“Yeah,” Clinton agreed. “It’s a new way of plugging the hole.”

Remember that scene. If current trends persist, an American president will be doing the same thing in about 10 years. He or she will probably be in Beijing, asking for more favorable interest rates or pleading with the Chinese government to keep speculators from betting on an American default.

Greece’s national debt last year reached 113 percent of gross domestic product. The United States will hit that in about 2020, according to the Government Accountability Office, assuming policy continues as it has. And last year’s U.S. budget deficit amounted to 9.9 percent of GDP, nearly rivaling Greece’s 12.7 percent.

To pull Greece back from the edge, Papandreou has promised to cut the deficit to 3 percent of GDP by 2012. For the U.S. government to make an equivalent cut, it would have to shut down the Pentagon and a few other agencies: the departments of Agriculture, Commerce, Education, Health and Human Services, Energy, Homeland Security, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, the Treasury, and Veterans Affairs, plus the Environmental Protection Agency and NASA — and even then we'd come up a few dollars short.

via Dana Milbank – From Greece, an economic cautionary tale for the U.S. – washingtonpost.com.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Peter Leavitt

    Dana Milbank is right. Unless America gets control of its hugely unfunded entitlements, we are headed in the direction of Greece or,
    worse, a banana republic. The only serious proposal to address this is Paul Ryan’s Roadmap foe America that deals with MediCare, Medicaid, Social Security and tax reform that continues the “entitlements” but on a sustainable basis.

    The problem is as much with the demand of many American people for a nanny state under Uncle Sugar as it is with most of the feckless politicians inside the Beltway.

  • Peter Leavitt

    Dana Milbank is right. Unless America gets control of its hugely unfunded entitlements, we are headed in the direction of Greece or,
    worse, a banana republic. The only serious proposal to address this is Paul Ryan’s Roadmap foe America that deals with MediCare, Medicaid, Social Security and tax reform that continues the “entitlements” but on a sustainable basis.

    The problem is as much with the demand of many American people for a nanny state under Uncle Sugar as it is with most of the feckless politicians inside the Beltway.

  • Martin

    It’s amazing that, when the US defense budget is discussed, as bloated and wasteful as it is, no one even thinks to mention the deficit. But talk about using federal funds to help the disadvantaged, and “Christians” come out of the wordwork to sanctimoniously condemn it. Equally as fetid is that no “Christian” bemoans tax cuts for the wealthy, even though their effect is to increase the deficit and put a greater tax burden on the working class. The militarlized, pro-rich ‘gospel’ of the GOP (and to a great extent the Democratic Party) and the gospel of Christ are competely incompatible. For proof, I refer you not only to the gospels themselves but to Catholic social teaching.

  • Martin

    It’s amazing that, when the US defense budget is discussed, as bloated and wasteful as it is, no one even thinks to mention the deficit. But talk about using federal funds to help the disadvantaged, and “Christians” come out of the wordwork to sanctimoniously condemn it. Equally as fetid is that no “Christian” bemoans tax cuts for the wealthy, even though their effect is to increase the deficit and put a greater tax burden on the working class. The militarlized, pro-rich ‘gospel’ of the GOP (and to a great extent the Democratic Party) and the gospel of Christ are competely incompatible. For proof, I refer you not only to the gospels themselves but to Catholic social teaching.

  • DonS

    Well, Milbank’s finally waking up a little bit. But notice, his first resort to resolve the deficit is to “shut down the Pentagon”. That’s the only thing liberals can think of when they want to cut spending. But, national defense is also one of the very few tasks which the federal government is actually constitutionally authorized to do!

    Martin @ 2: So is the US defense budget the only one that is “bloated and wasteful”? I agree with you that there is waste in the Pentagon’s budget, as there is in all government budgets. But, as long as we are going to remain actively engaged in war in Afghanistan, and occupy bases in many other countries of the world, it is actually a fact that we are underfunding the troops, particularly in the areas of equipment and maintenance. So, we should root out the waste, but largely re-direct those funds to these considerable concerns. We have a president who aligns with your views, yet has chosen to escalate in Afghanistan. So if you have an issue with that, lobby him.

    Even were we to cut the defense budget to zero, we would still have a deficit this year of some $900 billion! So, Martin, you are going to have to think a little harder about where there might be some waste to cut. I can help you with that, if you want some suggestions.

    The so-called “rich” are paying a historically high percentage of the nation’s taxes. So the old canard about taxing the rich isn’t going to fly and isn’t going to raise that much additional revenue, if any. That’s why the tax increases always come down to hit the middle class — that’s where the money is. Martin, Christ never called us to minister to the poor through the government. His message was an individual one. He basically ignored the government, teaching that you give it its due, but your responsibility is to obey the Lord your God. Personally.

  • DonS

    Well, Milbank’s finally waking up a little bit. But notice, his first resort to resolve the deficit is to “shut down the Pentagon”. That’s the only thing liberals can think of when they want to cut spending. But, national defense is also one of the very few tasks which the federal government is actually constitutionally authorized to do!

    Martin @ 2: So is the US defense budget the only one that is “bloated and wasteful”? I agree with you that there is waste in the Pentagon’s budget, as there is in all government budgets. But, as long as we are going to remain actively engaged in war in Afghanistan, and occupy bases in many other countries of the world, it is actually a fact that we are underfunding the troops, particularly in the areas of equipment and maintenance. So, we should root out the waste, but largely re-direct those funds to these considerable concerns. We have a president who aligns with your views, yet has chosen to escalate in Afghanistan. So if you have an issue with that, lobby him.

    Even were we to cut the defense budget to zero, we would still have a deficit this year of some $900 billion! So, Martin, you are going to have to think a little harder about where there might be some waste to cut. I can help you with that, if you want some suggestions.

    The so-called “rich” are paying a historically high percentage of the nation’s taxes. So the old canard about taxing the rich isn’t going to fly and isn’t going to raise that much additional revenue, if any. That’s why the tax increases always come down to hit the middle class — that’s where the money is. Martin, Christ never called us to minister to the poor through the government. His message was an individual one. He basically ignored the government, teaching that you give it its due, but your responsibility is to obey the Lord your God. Personally.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    I don’t know, couldn’t we cut the salaries of congressmen and women? Perhaps we can cut down the amount of time they work too. The president should give them a mandate, balance the budget, that’s it, unitl you do, I sign no other legislation, we have enough laws already.
    The pentagon actually does something for us. What does congress do again?

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    I don’t know, couldn’t we cut the salaries of congressmen and women? Perhaps we can cut down the amount of time they work too. The president should give them a mandate, balance the budget, that’s it, unitl you do, I sign no other legislation, we have enough laws already.
    The pentagon actually does something for us. What does congress do again?

  • http://www.circeinstitute.org Andrew Kern

    Of course, Dana is fantasizing about China in ten years. Their economy, such as it is, is a command economy. If they set it free it will unravel. If they don’t it will collapse.

    They won’t be there for us in ten years.

  • http://www.circeinstitute.org Andrew Kern

    Of course, Dana is fantasizing about China in ten years. Their economy, such as it is, is a command economy. If they set it free it will unravel. If they don’t it will collapse.

    They won’t be there for us in ten years.

  • WebMonk

    Andrew, are you seriously predicting the collapse of China’s economy in ten years?? And that will happen no matter what they do? If so, Circe had an epic fail in educating you.

    And let’s not get in a panic over our national debt either – it’s serious, extremely serious, but having it reach 113% won’t be the breaking point where we have to declare a national economic emergency similar to what Greece is going through. There are major differences between Greece’s current situation and our situation in 2020 with 113% debt.

    None of that is to say things are just fine and rosy here and that we won’t ever reach a point of disaster, but declarations of the economic collapse of the world in ten years is nonsense.

  • WebMonk

    Andrew, are you seriously predicting the collapse of China’s economy in ten years?? And that will happen no matter what they do? If so, Circe had an epic fail in educating you.

    And let’s not get in a panic over our national debt either – it’s serious, extremely serious, but having it reach 113% won’t be the breaking point where we have to declare a national economic emergency similar to what Greece is going through. There are major differences between Greece’s current situation and our situation in 2020 with 113% debt.

    None of that is to say things are just fine and rosy here and that we won’t ever reach a point of disaster, but declarations of the economic collapse of the world in ten years is nonsense.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    I don’t know Webmonk,
    I might bet five dollars that it collapses. Lots can happen in ten years.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    I don’t know Webmonk,
    I might bet five dollars that it collapses. Lots can happen in ten years.

  • WebMonk

    You know what Bror, I’d be willing to take that bet at 4:1. If we happen to remember this bet in ten years, I’ll put my $20 to your $5 that there won’t be anything close to a global financial collapse. Heck, I’ll pay out even if just China or just the US goes into a Greece-like emergency.

    Surest $5 I’ll ever make. :-)

    (actually, I’d be willing to lay even larger odds on either of us actually remembering something like this in 10 years! LOL!)

  • WebMonk

    You know what Bror, I’d be willing to take that bet at 4:1. If we happen to remember this bet in ten years, I’ll put my $20 to your $5 that there won’t be anything close to a global financial collapse. Heck, I’ll pay out even if just China or just the US goes into a Greece-like emergency.

    Surest $5 I’ll ever make. :-)

    (actually, I’d be willing to lay even larger odds on either of us actually remembering something like this in 10 years! LOL!)

  • WebMonk

    Addendum to my #6 post:

    WWII saw the US debt jump up over 120% of GDP for a while. 100%, or even 120%, isn’t a magic number where a person or government suddenly collapses under the weight of debt. I realize that we’re in a very different situation than what we were in the 1950s, and that goes to show the situation is just as important as the exact percentage of debt when it comes to a debt collapse.

  • WebMonk

    Addendum to my #6 post:

    WWII saw the US debt jump up over 120% of GDP for a while. 100%, or even 120%, isn’t a magic number where a person or government suddenly collapses under the weight of debt. I realize that we’re in a very different situation than what we were in the 1950s, and that goes to show the situation is just as important as the exact percentage of debt when it comes to a debt collapse.

  • Winston Smith

    Bring the troops home, and shut down most of the hundreds of U.S. military installations around the world. Let the other countries pay for their own defense.

  • Winston Smith

    Bring the troops home, and shut down most of the hundreds of U.S. military installations around the world. Let the other countries pay for their own defense.

  • WebMonk

    Winston – that might be a great policy/political achievement, but it wouldn’t be anywhere near enough to dent our debt situation. Like it was mentioned above, we could slash our military spending to ZERO and still have a deficit of almost a trillion dollars.

  • WebMonk

    Winston – that might be a great policy/political achievement, but it wouldn’t be anywhere near enough to dent our debt situation. Like it was mentioned above, we could slash our military spending to ZERO and still have a deficit of almost a trillion dollars.

  • Cincinnatus

    WebMonk: Thanks for your voice of reason, though I can’t shake the feeling that you somewhat resemble Nero fiddling while Rome burns.

    In any case, just as our current situation is much distinct from that of Greece, so is it too from that of ourselves in 1945–for one thing, our national debt isn’t composed of one-time military disbursements to fight a war that is decidedly over. The bast bulk of our deficit and our debt–as you admit–comes from various welfare and entitlement programs, which, if they continue as mandated by law, will only expand and further increase the debt. There is no plan in place to reduce the rate of this debt and deficit expansion–much less a plan to pay it off, as there was in post-war America, for instance.

  • Cincinnatus

    WebMonk: Thanks for your voice of reason, though I can’t shake the feeling that you somewhat resemble Nero fiddling while Rome burns.

    In any case, just as our current situation is much distinct from that of Greece, so is it too from that of ourselves in 1945–for one thing, our national debt isn’t composed of one-time military disbursements to fight a war that is decidedly over. The bast bulk of our deficit and our debt–as you admit–comes from various welfare and entitlement programs, which, if they continue as mandated by law, will only expand and further increase the debt. There is no plan in place to reduce the rate of this debt and deficit expansion–much less a plan to pay it off, as there was in post-war America, for instance.

  • DonS

    I love the Bror/Webmonk bet :-). Of course, if Bror wins Webmonk is paying him off with twenty worthless U.S. dollars, I guess.

  • DonS

    I love the Bror/Webmonk bet :-). Of course, if Bror wins Webmonk is paying him off with twenty worthless U.S. dollars, I guess.

  • DonS

    Both Webmonk and Cincinnatus have valid points. Yes, there is no magic about having a debt level equal to 100% of GDP, and there is past precedent for debt at that level here in the U.S. But, in 1945, the U.S. government’s additional liabilities due to unfunded future entitlements was essentially nil. There was no MediCare program, and Social Security was in its infancy. Today, however, if you include unfunded future entitlements, the U.S. debt load is actually about 5-6 times GDP. Moreover, as Cincinnatus points out, there is no foreseeable way that we are ever going to get a handle on it, short of default. It is time for very serious concern, and not many years away from time to panic.

  • DonS

    Both Webmonk and Cincinnatus have valid points. Yes, there is no magic about having a debt level equal to 100% of GDP, and there is past precedent for debt at that level here in the U.S. But, in 1945, the U.S. government’s additional liabilities due to unfunded future entitlements was essentially nil. There was no MediCare program, and Social Security was in its infancy. Today, however, if you include unfunded future entitlements, the U.S. debt load is actually about 5-6 times GDP. Moreover, as Cincinnatus points out, there is no foreseeable way that we are ever going to get a handle on it, short of default. It is time for very serious concern, and not many years away from time to panic.

  • WebMonk

    The “not many” is the part where I guess I’m disagreeing, depending on what that means. Not many compared with the 200+ years the US has been around – sure. Not many as in the next ten years – nope.

    If I had to place a bet (wow I seem to be in the gambling mood!) I would probably say we’re looking at disaster in 50 -60 years. Things will change between now and then, economically, and there are a variety of steps that can be taken to push things off even without doing a cut-to-near-zero of military and entitlement spending.

    Bump the retirement age up to 70 or 75, raise taxes, lower the rate of entitlement increases to below inflation, lower things like Medicare and Medicaid expenditures, etc. If we actually started implementing a lot of those now, I think we’d be able to go along indefinitely without hitting an emergency state. Obviously we aren’t doing that though. If we wait another 20 years before we start to do stuff like that, it will be too late and it will only push back crunch-time a few decades.

    Look at some of the European states for looks at how massive entitlement spending (compared to us) can be made to work well beyond our current situation. We may not like the things that seem to go along with the European methods (much higher taxes, for one) but they can be made to work, at least to some extent.

    They have a lot of other factors that don’t exist for the US though. For example, here in the US we don’t eat/exercise nearly as much as Europeans, and that makes a HUGE difference in their state medical expenditures. I tend to doubt that adopting a European method would work nearly as well for the US.

  • WebMonk

    The “not many” is the part where I guess I’m disagreeing, depending on what that means. Not many compared with the 200+ years the US has been around – sure. Not many as in the next ten years – nope.

    If I had to place a bet (wow I seem to be in the gambling mood!) I would probably say we’re looking at disaster in 50 -60 years. Things will change between now and then, economically, and there are a variety of steps that can be taken to push things off even without doing a cut-to-near-zero of military and entitlement spending.

    Bump the retirement age up to 70 or 75, raise taxes, lower the rate of entitlement increases to below inflation, lower things like Medicare and Medicaid expenditures, etc. If we actually started implementing a lot of those now, I think we’d be able to go along indefinitely without hitting an emergency state. Obviously we aren’t doing that though. If we wait another 20 years before we start to do stuff like that, it will be too late and it will only push back crunch-time a few decades.

    Look at some of the European states for looks at how massive entitlement spending (compared to us) can be made to work well beyond our current situation. We may not like the things that seem to go along with the European methods (much higher taxes, for one) but they can be made to work, at least to some extent.

    They have a lot of other factors that don’t exist for the US though. For example, here in the US we don’t eat/exercise nearly as much as Europeans, and that makes a HUGE difference in their state medical expenditures. I tend to doubt that adopting a European method would work nearly as well for the US.


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