The Washington Post, with an assist from Mark Zandi of Moody's, indulges in a little deficit scaremongering:
Interest payments on the national debt will quadruple in the next decade and every man, woman and child in the United States will be paying more than $2,500 a year to cover for the nation's past profligacy, according to figures in President Obama's new budget plan.We are in a self-reinforcing, vicious cycle," Zandi said. [...]
He compared the United States to European nations such as Greece or Portugal, or developing nations that in the past have received bailouts from the European Central Bank or the IMF.
"But there's no one we can get help from," Zandi said, noting that no economy is bigger than the U.S. economy. "There's no sugar daddy out there for us."
The United States is not Greece, we are not on the verge of a fiscal collapse, and this is a zombie narrative that needs to die. To that end, here is Dean Baker with a point-by-point explanation:
1) The United States has its own currency -- this means that we can always buy our own debt. That could lead to inflation, but insolvency is not an issue. So the story of no one being willing to buy U.S. bonds is not even a theoretical possibility. Of course the people who actually have their money on the line are very willing to buy U.S. bonds, demanding an interest rate of just 3.4 percent on 10-year Treasury bonds.
2) The United States collect taxes. The OECD puts tax evasion in Greece on the order of 35 percent. This of course encourages corruption in all aspects of Greek government. If the rich rip off the government by not paying the taxes they owe, why shouldn't everyone else try to rip it off too?
3) The United States has a huge diversified economy. If you want to find an economic illiterate, look for someone who warns that the dollar will plummet in value if we don't get our debt under control. If our dollar plummets in value (e.g. 2 dollars = 1 euro, 3 yuan = 1 dollar), the U.S. would suddenly be hyper-competitive. We would buy nothing from the countries who rely on the U.S. market. And our exports would be wiping out competitors around the world. For this reason, China, Germany, Japan and everyone else would make sure that the dollar did not just plummet. This would not be the case with Greece if it did have its own currency.
I also recommend Paul Krugman, who forcefully argued against the comparison last year, when it was very much en vogue. To repeat my blogging from the last few days: The long-term debt is a problem, but it's not a pressing problem, and it's certainly not a crisis. The real problem is persistent, long-term unemployment. Anyone saying otherwise is either misinformed or lying to you.
