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Greece's crisis and U.S. finances

Protesters gathered outside the Finance Ministry in central Athens.
Protesters gathered outside the Finance Ministry in central Athens.
AP Photo/Dimitri Messinis

Greece’s debt-ridden financial house is a toxic spill, seeping its poison across Europe. The ratings agency Standard & Poor’s cut Greek debt to junk status, which set off a widespread panic.

There was a rapid stock market sell-off that galloped at a near-hysteria pace. The euro dipped to a five year low.

The upheaval is a contagious horse set loose on the continent, causing relentless fear. If the crisis is not resolved swiftly other countries with high debt ratios—Portugal, Spain, Italy—could struggle with repayment schemes as the confidence of investors in government bonds is shredded.

A rescue package is desperately and immediately needed. Negotiations to develop and present one are underway, with Germany demanding drastic economic reform.

President Obama has been on the phone with German Chancellor Angela Merkel to discuss “the importance of resolute action by Greece and timely support from the IMF and Europe.”

Greece’s toxic spill of debt threatens catastrophic consequences for the international financial system. If all efforts at a bail-out fail, and Greece ultimately defaults, the resulting chaos is incalculable.

What we are witnessing from the relative safety of this side of the Atlantic Ocean is a harbinger of things to come—Greece’s predicament ought to be a frightening warning to us. The exact financial drama stampeding across Europe will soon visit our shore if we do not take urgent action to cut the national debt.

It is in this tense environment—only eighteen months removed from our own financial crisis which required a $700 billion patch—that the Debt Commission operates. We have repeatedly been assured that “everything is on the table”, but already whispers are that higher taxes are inevitable.

There’ll be think tank studies followed by a slick advertising campaign, but the endgame will be the age old story. A new revenue stream will be recommended as the only possible conclusion to be drawn from the blue-ribbon panel’s investigative work.

Higher taxes—government implementing new and improved ways to feed itself so it can increase its reach. The raise taxes option is merely business as usual. Government is a self-perpetuating entity that’ll always have zero difficulty justifying the confiscation of more of its citizen’s money.

What about curtailing expenditures? Why not sincerely and transparently put “everything on the table”?

Not every entitlement program is crucial or even necessary. To not be willing or prepared to implement serious cuts is hypocritical, self-serving, disingenuous, and a recipe for disaster.

The Congressional Budget Office predicts that there will continue to be an expanding gap between spending and tax revenues—an annual gap in the trillion-plus neighborhood.

This year the national debt will hit $9.2 trillion. On the present course, by 2020 it’ll reach $20.3 trillion. A trillion here, a trillion there, and pretty soon we’ll be talking about real money.

The Debt Commission cannot be business as usual. A calamity is approaching that’ll only be averted by radical, genuine, immediate reform.

Can anyone in Washington hear the hoofbeats trampling across Europe?



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