AMERICA'S APPROACHING DEBT DISASTER
May 17, 2010
When the Greek economy melted down recently its citizens rioted in the streets. Some have called it "the death-spiral of a welfare state" -- too much borrowing for too many social programs for too long. Eventually, the bottom falls out, says the Christian Broadcasting Network.
But if you don't think the economic chaos in Greece can come to America, economists say think again. America is on a fiscal course economists warn is unsustainable -- racking up debts we will not be able to repay. This nation, they warn, is already on the path to economic ruin.
Our national debt is out of balance:
- Federal debt as a percentage of the Gross Domestic Product (GDP) now stands officially at around 60 percent.
- But with the course the country is on, it will hit 150 percent in 10 years, and 300 percent by 2050.
- By comparison, Greece began to melt down when its debt reached 115 percent of GDP.
There are many economic similarities between America and Argentina:
- Before World War II, Argentina was one of the most prosperous nations in the world, with a strong industrial base and thriving middle class, it attracted immigrants much like America.
- But within 15 years, Argentina went one of the richest nations to one of the poorest.
- Argentina President Juan Peron fomented class warfare and bashed business, banks and the wealthy; he made labor unions his allies and unleashed massive social spending that the nation couldn't afford.
- As a result, one of the strongest nations in the world was ruined.
The Committee for a Responsible Federal Budget has laid out six future scenarios for America, and all of them are bad. The best case is long-term economic stagnation. The worst case -- default -- when the government can no longer pay its bills.
Another possible scenario is runaway inflation. What worries the experts is that Washington, D.C., has heard all the warnings and not only keeps spending, but spends more.
Brian Williams, legislative director for the National Center for Policy Analysis, said lawmakers would rather give their constituents government-financed freebies than a balanced federal budget.
"As long as the American electorate is in a mode of getting free education and free health care and free transportation and everything for free -- somebody pays for it," he said.
Source: Dale Hurd, "America's Approaching Debt Disaster," CHRISTIAN BROADCASTING NETWORK, May 17, 2010.
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