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We’re Already Europe
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Topic Started: Feb 24 2012, 08:53 PM (738 Views)
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Jim Miller
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Feb 24 2012, 08:53 PM
Post #1
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We’re Already Europe
With seemingly every day bringing more bad news from Europe, many are beginning to ask how much longer the United States has before our welfare state follows the European model into bankruptcy. The bad news is: It may already have.
This year, the fourth straight year that we borrowed more than $1 trillion to support the U.S. government, our budget deficit will top $1.3 trillion, 8.7 percent of our GDP. If you think that sounds bad, it’s because it is. In fact, only two European countries, Greece and Ireland, have larger budget deficits as a percentage of GDP. Things are only slightly better when you look at the size of our national debt, which now exceeds $15.3 trillion, 102 percent of GDP. Just four European countries have larger national debts than we do — Greece and Ireland again, plus Portugal and Italy. That means the U.S. government is actually less fiscally responsible than countries like France, Belgium, or Spain.
And as bad as things are right now, we are on an even worse course for the future. If one adds the unfunded liabilities of Social Security and Medicare to our official national debt, we really owe $72 trillion, by the Obama administration’s projections for future Medicare savings under Obamacare, and as much as $137 trillion if you use more realistic projections. Under the best-case scenario, then, this amounts to more than 480 percent of GDP. And, under more realistic projections, we owe an astounding 911 percent of GDP.
Meanwhile, counting both official debt and unfunded pension and health-care liabilities, the most indebted nation in Europe is Greece, which owes 875 percent of GDP. That’s right, the United States potentially owes more than Greece. France, the second most insolvent nation in Europe, owes just 549 percent of GDP. Even under the most optimistic scenario, we owe more than such fiscal basket cases as Ireland, Italy, Portugal, and Spain.
So far we have been able to avoid the consequences of our profligate ways because the very public turmoil in Europe has helped prop us up as the world’s safe haven for foreign investment. Compared to the euro’s problems, the dollar looks pretty safe. This means that others are still willing to lend us money at absurdly low rates. But that won’t last forever. In fact, already seven European countries, including Germany and Sweden, have better credit ratings than the U.S.
Perhaps we can take some solace in the fact that our welfare state is not yet as big as Europe’s. But the key word here is “yet.” Today, our federal government spends more than 24 percent of GDP. Throw in state and local spending, and government at all levels consumes over 43 percent of everything produced in this country over the course of a year. As bad as that is, it’s still less than Europe, where the average of government spending at all levels is slightly more than 50 percent of GDP. But the Congressional Budget Office projects that federal-government spending in this country is currently on a path to exceed 42 percent of GDP by 2050. Government spending at all levels will exceed 59 percent of GDP. And CBO assumes state and local spending will decline in the future, which seems unlikely.
By way of comparison, today, Ireland is the only country in Europe with a bigger government than the U.S.’s will be in 2050. That’s right, one can look at countries like France and Greece, or even Denmark and Sweden, and realize that we will eventually have bigger governments than those quintessential welfare states have today.
At that point does the United States cease being the United States as we have known it? At the very least, can our economy survive such a crushing burden of government spending, and its attendant level of taxes and debt?
Given this looming disaster, President Obama has just submitted a budget that explicitly rejects “austerity,” avoids any reform of Medicare or Social Security, and adds some $7 trillion to the national debt over the next ten years. And Republicans? They are busy debating the pros and cons of birth control.
What is wrong with this picture? LINK
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Chris
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Feb 24 2012, 09:00 PM
Post #2
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Interesting analysis...
Rolling back the years- Quote:
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TALK of a Japanese style "lost decade" has abounded ever since the financial crisis took hold in 2008. The Economist has crunched the numbers and on the basis of seven indicators covering economic output, wealth and labour markets, the United States has already gone back in time some ten years. Its GDP per person, for example, was at a higher level than today back in 2005 and its main stockmarket index was higher in 1999. Of the countries considered, Greece has fared the worst. In economic terms, it is just entering the new millennium again. As a whole the rich world has been hardest hit by the financial crisis. Just six of the 34 "advanced" economies categorised by the IMF have GDP per person higher in 2011 than in 2007. Notable among them are Germany and Australia. 
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MrsS
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Feb 25 2012, 12:22 AM
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We’re Already Europe....the European model into bankruptcy....
The author of the article, Michael Tanner, obviously grabbed the broadest brush he could find to justify his gloom and doom title!!
Did he forget, that Europe consists of fifty states? Or if you just take the EU, that 27 states are left after all? .....And all of them on the brink of
bankrupcy?
Europe, the bugaboo of the US-right?
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Sea Dog
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Feb 25 2012, 12:25 AM
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Do not feel bad, The US right also believes that Canadians, being socialist,exist by eating government provided gruel!
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Jim Miller
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Feb 25 2012, 12:27 AM
Post #5
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Stay out of our business, Sea. You are embarrassing yourself. Again.
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MrsS
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Feb 25 2012, 12:27 AM
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Sea, thanks for comforting me.....
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MrsS
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Feb 25 2012, 12:32 AM
Post #7
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- Jim Miller
- Feb 25 2012, 12:27 AM
Stay out of our business, Sea. You are embarrassing yourself. Again.
Jim, according to the topic-title, you`re already Europe........and I being from said Europe, don`t mind comments from foreigners, quite the
opposite: the more the better.
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Jim Miller
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Feb 25 2012, 12:33 AM
Post #8
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This topic is about us, MrsS.
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Banandangees
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Feb 25 2012, 12:36 AM
Post #9
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Hey, the EUs in good financial shape.
All that bailout stuff in the papers and on the news is just American right wing propaganda.
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Jim Miller
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Feb 25 2012, 12:43 AM
Post #10
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The office of Senator Jeff Sessions, ranking member on the Senate Budget Committee, sends along this chart, showing that 'America’s Per Capita Government Debt Worse Than Greece,' as well as Ireland, Italy, France, Portugal, and Spain:  LINK
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