For Republicans, Greece is the Word
Well before the current debt ceiling crisis, Americans learned from the elephant's mouth that virtually every GOP talking point is "not intended to be a factual statement." In their perpetual crusade to gut the federal government, Republicans have now distilled their debt duplicity and fear-mongering into a single word: Greece.
Earlier this year, Senate Minority Leader Mitch McConnell first likened the U.S. to Greece, a nation teetering on the brink of default even as its brutal austerity program is producing a crippling economic contraction:
"Look, we've got a $14 trillion debt. It's as big as our economy. We look a lot like Greece."
After McConnell in early July repeated that "We look a lot like Greece already," Senator Lindsey Graham (R-SC) was quick to regurgitate the sound bite. Graham, who in January cautioned that failure to the raise the $14.3 trillion debt ceiling would result in "financial collapse and calamity throughout the world," now has a different warning. As Politico reported:
Graham, in turn, said that the real threat to the nation is the burden of unsustainable debt. "What is calamitous is the path we're on as a nation," he said. "We're becoming Greece."
While FactCheck.org was quick to conclude that "whatever it 'looks like' through Sen. McConnell's eyes -- the fact is that the U.S. is not yet a fiscal wreck of Greek proportions," its analysis hardly does justice to the scale of the Republican myth-making. The Washington Monthly's Steve Benen summed it up quite succinctly:
New rule: every time a confused Republican lawmakers compare the United States' fiscal conditions to that of Greece, an angel loses its wings.
Look, the very idea is just crazy. The U.S. has extremely low interest rates and foreign investor are happy to loan us money; Greece has extremely high interest rates and no one is eager to loan the country money. The U.S. has our own currency; Greece has the Euro. We have a great credit rating (for now); Greece has an awful credit rating. We have a manageable debt; Greece has a debt crisis. We're a large country with an enormous economy; Greece is a small country with a small economy. We have one of the world's most stable systems of government (at least until six months ago); Greece's government structure is a little shaky.
For his part, Nobel Prize-winning economist and New York Times columnist Paul Krugman has been decrying the "Hellenization of economic discourse" for months. "Greece -- with a long history of fiscal irresponsibility, very high public debt, and a country without a currency -- doesn't bear much resemblance even to the other peripheral Europeans, let alone the United States."
Here's debt levels (if you ask me the IMF projections for Greece are too optimistic):
Plus there's the having your own currency thing, and the fact that the interest rate on US 10-year bonds is 3.11 percent, on Greek bonds 16.82 percent.
Otherwise we're exactly the same.
As it turns out, there are a host of other reasons the United States and Greece bear so little resemblance to each other. As Michael Lewis explained:
But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of tax evasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can't trust their fellow Greeks.
That rot starts with the epidemic of tax cheating which has crippled Athens. As the New York Times reported last year in "Greek Wealth is Everyhere But Tax Forms," the "wholesale lying about assets" in that nation of 11 million people is symptomatic of the "staggering breadth of tax dodging that has long been a way of life here." With a GDP of $341 billion and a budget of $108 billion, the impact on Greece's fiscal health is grave:
Various studies, including one by the Federation of Greek Industries last year, have estimated that the government may be losing as much as $30 billion a year to tax evasion - a figure that would have gone a long way to solving its debt problems.
To put that number in perspective, U.S. GDP reached $14.25 trillion GDP in 2009, while President Obama's proposed federal budget for next year is $3.8 trillion. So the tax cheating epidemic in Greece is roughly three to four times worse than in the United States:
Various studies have concluded that Greece's shadow economy represented 20 to 30 percent of its gross domestic product. Friedrich Schneider, the chairman of the economics department at Johannes Kepler University of Linz, studies Europe's shadow economies; he said that Greece's was at 25 percent last year and estimated that it would rise to 25.2 percent in 2010. For comparison, the United States' was put at 7.8 percent.
(Sadly, Americans seem to be closing the gap. The Brookings Institution recently estimated that the U.S. Treasury is losing up to $500 billion a year to tax fraud and evasion. Unsurprisingly, Republicans voted to cut funding for IRS enforcement despite its 10 to 1 return on investment, prompting Ezra Klein to remark, "Converting dollar bills into $10 bills is an excellent way to pay off your credit card. Except, it seems, if you're a House Republican.")
Throughout this GOP-manufactured debt ceiling crisis, some Republicans have accused the Obama administration of "scare tactics" and "outright blatant lies" in describing the economic calamity a U.S. default would produce. Now the GOP is doing both with its "we're becoming Greece" talking point. To the default deniers and debt kamikazes of the Republican Party now pushing for Greek-style austerity here in the U.S., Salon's Andrew Leonhard has a simple message:
"We can easily try this experiment at home in the United States. All we'd have to do is fail to raise the debt ceiling, and immediately cut government spending by 40 percent. If we want riots and higher unemployment, just like Greece, that's exactly the way to go about it."
For the United States, that would be a real Greek tragedy.