Can U.S. Avoid Greek Disaster if Washington is Asleep at the Wheel?

Kathryn Nix / May 17, 2010

Greece’s recent escapades in economic disaster are a sobering example to the United States of the consequences of allowing government spending to far exceed revenue.  But though Americans’ concern regarding the financial outlook of the federal government grows, those with the power to act something seem largely unaffected.

The International Monetary Fund (IMF) recently released a report that the United States’ debt could surpass 100 percent of Gross Domestic Product (GDP) as early as 2015.  According to the Hill, “The IMF predicts that the U.S. would need to reduce its structural deficit by the equivalent of 12% of GDP, a much larger portion than any other country analyzed except Japan. Greece, in the midst of a financial crisis, needs to reduce its structural deficit by just 9% of GDP, according to the IMF’s analysis.”

As depicted in Heritage’s 2010 Federal Budget Chart Book, the national debt is on its way to unprecedented and unsustainable new levels.  The Congressional Budget Office predicts that the budget deficit in 2010 will be 10.3 percent of GDP—the historical national average is 2.9 percent.  The end of the recession will mean increased revenues and deficit reductions, but it is nevertheless on track to climb dramatically in future years. (more…)