- By Charles HomansCharles Homans is a special correspondent for the New Republic and the former features editor of Foreign Policy.
It seems like just yesterday that we were asking ourselves if the United States was Rome. In light of the financial collapse in the other great cradle of Mediterranean civilization, the New York Times’ David Leonhardt poses the inevitable follow-up question:
It’s easy to look at the protesters and the politicians in Greece — and at the other European countries with huge debts — and wonder why they don’t get it. They have been enjoying more generous government benefits than they can afford. No mass rally and no bailout fund will change that. Only benefit cuts or tax increases can.
Yet in the back of your mind comes a nagging question: how different, really, is the United States?
The U.S.’s national debt, Leonhardt notes, is projected to rise to 140 percent of GDP within the next twenty years — Greece’s is 115 percent today.
Elsewhere at the Times, Paul Krugman questions the credibility of that long-range projection and argues that the U.S. shouldn’t worry:
Basically, the United States can expect economic recovery to bring the deficit down substantially; Greece, which has a larger structural deficit and also faces a grinding adjustment to overvaluation with the eurozone, can’t.
About that eurozone: in a phenomenally awkward bit of timing, Estonia happened to be trying to join it today, and succeeded. Other countries like Poland and Bulgaria, however, are having second thoughts. Greece’s current predicament, and the looming crises in Spain, Portugal, and elsewhere, have offered a cautionary tale. The Associated Press looks at the divergent experiences of Hungary and Romania, which are members of the European Union but not the eurozone, and Greece, which is in both: When the IMF bailed out Hungary and Romania in 2009, the countries were able to make the necessary adjustments quickly, if painfully, by letting their currencies fall. Greece, however, can’t, and is now looking at far harsher, more drawn-out austerity measures attached to its 110 billion euro bailout.