GOP’S BIG FAT GREEK TALKING POINT…. Last week, just hours after the best monthly jobs report in more than four years, House Minority Whip Eric Cantor (R-Va.) tried his best to downplay the good news. “I look at the horrible images coming out of Greece and I am struck by the reality of what can happen when a country goes on a shopping spree without paying its bills,” he said.
It was an odd quote — it was Cantor and his Republican Party that added $5 trillion to the debt during the Bush era, refusing to pay for wars and new government programs — but it raised the specter of a new talking point. The GOP, it seems, just loves the Greek debt crisis.
After all, the story seems relatively easy to exploit. Greece over-spent and went into a deep debt, which has led to a crisis that threatens the global recovery. As Republicans see it, the United States has a huge debt, too, and if we want to avoid becoming Greece, we’ll have to start slashing spending and reducing the enormous deficits that Republicans created in the first place.
That the GOP wants to slash spending anyway is probably just a coincidence, right?
Either way, the result is the same — conservatives who got the Great Recession spectacularly wrong now have a new toy to play with, and a new rationale to justify ridiculous cuts to domestic spending.
Thankfully, Paul Krugman tackles this argument today, and explains why the right, once again, is wrong.
For one thing, the similarities between the U.S. position and Greece’s are severely limited.
Both nations have lately been running large budget deficits, roughly comparable as a percentage of G.D.P. Markets, however, treat them very differently: The interest rate on Greek government bonds is more than twice the rate on U.S. bonds, because investors see a high risk that Greece will eventually default on its debt, while seeing virtually no risk that America will do the same. Why?
One answer is that we have a much lower level of debt — the amount we already owe, as opposed to new borrowing — relative to G.D.P.
For another, we’re on the path to recovery and Greece isn’t.
The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. […]
Greece, on the other hand, is caught in a trap…. Greece faces years of grinding deflation and low or zero economic growth. So the only way to reduce deficits is through savage budget cuts, and investors are skeptical about whether those cuts will actually happen.
Ultimately, the point to remember is that Republicans’ hype is misguided.
[H]ere’s the reality: America’s fiscal outlook over the next few years isn’t bad. We do have a serious long-run budget problem, which will have to be resolved with a combination of health care reform and other measures, probably including a moderate rise in taxes. But we should ignore those who pretend to be concerned with fiscal responsibility, but whose real goal is to dismantle the welfare state — and are trying to use crises elsewhere to frighten us into giving them what they want.
The GOP argument is predicated on simplistic, child-like thinking: the U.S. has a large debt; Greece has a large debt; therefore the U.S. may end up like Greece unless we let Republicans do what they want to the budget. There’s no reason for sensible people to take this seriously.