- 29 Jun 2011 15:08
#13743871
The Americans are in a significantly worse place than Europeans with regard to debt. Overall debt levels are about the same but while the EU as a whole has about a 6% deficit (mainly at national level, with wide variations), for the US it is double at 12%.
There is no indication, despite the claims of Obama's financial wizards, that this will attain a reasonable level any time soon:
1) On foreign policy, Obama has fully committed to expanding both the defense budget and American overseas interventions (notably in Afghanistan, where he increased commitment by 60,000 men, cost of $1 million per man per year).
2) Republicans, now dominating Congress, will prevent all attempts to reasonably increase taxes, even on the über-wealthy.
3) Despite Republican posturing, there will be no major reductions on the elderly's welfare expenditure, the biggest outlays of the federal budget (Medicare, Social Security). Minor gains will be predictably made by targetting for elimination welfare for the poor and the black community.
4) There is no indication yet, although it is extremely complex and things will get clearer with time, that Obama's health reform will in any way reduce America's hideously inefficient healthcare system (17% of GDP, normally 10% for an industrialized country).
As such, Americans should be worried. They will continue along their current decadent path for some time, misled and lied to by their leaders. It may be the US economy can simply outgrow the problems posed by its structurally defective political system. However, it also means America's current state is extremely brittle: any "double dip recession", unexpected war or crisis could simply lead to unsustainably high expenditure and thereby high inflation or bankruptcy.
And this doesn't even mention the massive private and personal debt in the United States, used to fund their oversized cars, housing, healthcare and 5-6 figure college educations.
The only hope is that, if a crisis were to occur, it would enable the political elite to get past its artificial divisions and do the necessary reforms (some combination of reduced welfare (not my preferance), effective health reform, defense cuts and tax hikes). Given recent history, I think this optimistic scenario is unadulterated fantasy.
A stubborn porcupine: heredity & nationhood. Meditate, brother!
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