First Greece, now Britain bite the budgetary bullet. Is America next?
No signs of it yet.
Last spring we watched Greece, the most profligate child in Europe, face up to their severe budget deficit (around 15% of GDP). The government took dramatic measures, slashing services left and right. Greeks citizens reacted with violent protests.
The new government in Britain has quickly attacked their deficit (10% of GDP), announcing last week that
“Government departments will on average have their budgets cut by about 19%.”
This 5-year austerity plan reportedly
“will cost as many as half a million public sector jobs and trim welfare payments to families and the disabled.”
These are the deepest cuts since World War II, and government services face the harshest budget limits since the mid 1970’s. Londoners have been protesting in the streets.
So, with our own federal deficit at 8.9% of GDP, what about the United States? I’m told the federal deficit will start cramping my family’s financial situation very soon: higher taxes on the kids, lower retirement and safety net payments for us, inflation to devalue the national debt – all a big drag on the national economy and individual’s budgets.
But Congress might have Republican majorities next session. I hope we can look to ‘the party of small government’ to tackle the deficit? But I see nothing encouraging.
Neither does last Sunday’s Doonesbury strip, which wryly depicts what most political commentators are saying.