In bemoaning the pain of fiscal responsibility, the Democrats show they
still haven't learned the lessons of Europe
Greece, Ireland, and Portugal-the three countries committed to austerity
programs as conditions for European and International Monetary Fund
bailouts-have shrunk over the past year. The unemployment rate is above
10 percent in all three. Meanwhile, the U.K. economy is growing sluggishly. But to infer from this that the United States can postpone serious attempts at fiscal stabilization would be completely wrong-and deeply dangerous.
The point is that Greece & Co. are in trouble because of excessive borrowing. Between 1999 and 2010 the structural deficit of the Greek government rose from 2 percent of gross domestic product to nearly 18 percent. Ireland went from surplus to minus 11 percent.
Portugal was little better. The result was a debt explosion. The net government debt of Greece, the worst offender, soared from 76 percent of GDP to 142
percent last year.