It’s becoming difficult to tell the difference between Greece and the U.S. Senate.
The Greek Parliament collapsed May 15 over the failure to agree to austerity measures that represent the best hope to save the nation’s economy and prevent economic catastrophe from sweeping across Europe. Apparently unable to fathom curtailing their lavish government benefits, Greeks voted to elevate political parties that oppose the spending cuts required under terms of the international bailout agreement designed to prevent the nation’s complete financial collapse and the disintegration of the euro as a viable currency.
Without the $165 billion in rescue loans keeping their economy afloat, the Greek government will quickly run out of money to pay for pensions, salaries and health care. Depositors have already withdrawn $1 billion from Greek banks, prompting the media to use terms like “run on banks” and “panic” not as exaggerations or flashbacks to 1929 America but as realistic, near-term possibilities.
As worldwide stocks plunge with every Greek setback, even a 21 percent unemployment rate, a credit rating downgrade to “junk bond” status, and mounting international pressure have not convinced leaders in Greece to commit to desperately needed economic reforms.
Which brings us to the U.S. Senate. On May 16, the Democratically controlled Senate voted on five separate budget plans and failed to pass a single one of them. Every Senate Democrat voted against the House-passed budget plan to cut spending by $5 trillion over 10 years en route to a balanced budget. Most strikingly, the Senate rejected President Obama’s budget plan by a vote of 99 - 0. Combined with the unanimous House rejection, President Obama’s budget blueprint has failed to garner a single vote in Congress this year with a total tally of 513 - 0. This is the second straight year the president’s budget has failed to win support from his own party in the Senate, having failed last year by a vote of 97 to 0.
The Democratic majority in the Senate has not passed a budget of any kind in more than three years now. They claim that the bills based on President Obama’s budget policies are simplifications and do not count. If so, then why not develop legislation they do consider representative of the president’s budget priorities and vote on that? Why not develop budget proposals of their own, like House Republicans have done? In the wake of one of the worst recessions in our history and facing a rapidly approaching debt crisis, balancing the budget is our most pressing national challenge. Remaining on the sidelines is a total abdication of responsibility.
Granted, the U.S. economy is not yet in quite the dire straits as Greece. In CNBC’s ranking of the world’s worst debtor nations, we only come in 20th place with an external debt to GDP ratio of 99 percent. That’s a full five places behind 15th-ranked Greece (179 percent).
Even so, an eventual Greek-style default is not out of the question. Our credit rating has already been downgraded once. And we all know the alarming economic statistics: almost $16 trillion in debt, four consecutive years of trillion-dollar deficits, Medicare heading for bankruptcy in 2024 followed by Social Security in 2033.
The Greek government has failed time and again to adopt meaningful reforms. Now both time and the patience of their creditors are running out. Unless legislators of all political parties and branches of government get serious about America’s fiscal challenges, our democratic system of government may not be the only Greek example we emulate.