Amusing entertainment news this week comes out of Britain, where Deadline London reports an upcoming Barack Obama miniseries based upon journalist Richard Wolfe’s book, “The Making of a President.”
Here’s an idea for a better title: Obama’s Big Fat Greek Bailout.
After all, Obama’s enormous and unsustainable entitlement agenda perilously tracks Greece’s, and the future consequences will be the same unless he someone interrupts his bad sequel.
That British entertainment news dovetails with less-humorous news elsewhere in Europe this week, as the Greek fiscal meltdown suddenly escalated into a European contagion. Subsequent credit downgrades in Portugal and Spain triggered alarm that the entire euro zone faces a debt crisis, and increasingly panicked investors abandoned euro zone stocks and bonds. Additionally, the cost of insuring European companies against debt defaults jumped following this news, and the euro’s value declined.
Previous cost estimates of a €45 billion ($60 billion) Greek bailout suddenly reached €120 billion ($160 billion).
Beginning to sound familiar?
Unfortunately, no one can say whether this Greek bailout would be just the beginning. Recall that Argentina plummeted from one of the world’s more prosperous countries to basket-case status after continuing fiscal recklessness and repeated IMF bailouts. Similarly, this could merely be the first in a series of rescues whenever Greek citizens riot in the streets to selfishly demand that German or Belgian taxpayers perpetuate the bloated social welfare payments to which they feel entitled.
So how does this relate to Obama and the United States?
Well, consider the alarming similarity between Greek and American debt levels. According to the nonpartisan Congressional Budget Office, Obama’s new spending and deficit agenda will more than double federal debt in just ten years (from 40% to 90% of GDP), approaching Greece’s current debt levels. As Fortune also noted, America’s course under Obama dangerously resembles Greece:
Historically, a debt-to-GDP ratio north of 90% and a deficit-as-a-percentage-of-GDP north of 10% have been the lines in the sand to watch. As governments cross those barriers, they enter into the Pig Zone. While the leaders of Greece can try to blame speculators for their fiscal issues, the reality is that hedge funds are betting against Greece based on years of the country budgeting far beyond its means. The Greek leaders have managed their nation to a debt-to-GDP ratio north of 110% and deficit-as-a-percentage-of-GDP that exceeds 12.7%. Blaming speculators may be politically convenient, but it doesn’t change the facts. As we watch the Greece situation unfold, the fiscal metrics in the United States become even more concerning. According to estimates, the United States is running a debt-to-GDP ratio of 84% and a deficit-to-GDP of almost 11%.
Consider also Obama’s performance record to date in other areas. This month, the official Centers for Medicare & Medicaid Office of the Actuary (CMS) acknowledged that ObamaCare will increase healthcare spending, breaking his assurances that it would instead reduce spending. The CMS now projects that total costs will increase by $251 billion over the next ten years.
That’s not a rounding error – it’s one-quarter of a trillion dollars.
Perhaps the “O” symbol used by Obama supporters now stands for “Ooops?”
That is merely one very recent example. Recall that Obama also projected that his “stimulus” bill would keep unemployment below 8%, but it continues to hover at 10% over one year later. Combine Obama’s burgeoning record of budgetary miscalculation with his affinity for bailouts, and we suddenly have a script for a very bad sequel to My Big Fat Greek Wedding.
Obama and liberals mindlessly seek to make America more like Europe, but Greece illustrates the tragic ultimate destination. Deficit spending certainly didn’t begin under Obama, but he took the historical average deficit of 2.9% of GDP and quadrupled it to 11% in just one year. By way of comparison, since Obama seems to enjoy scapegoating his predecessor, President Bush’s average was just 3.2%.
Fortunately, there’s a way we can avoid the Greek path upon which Obama is taking America. Namely, by returning to fundamental principles of spending and entitlement discipline in the manner boldly suggested by Rep. Paul Ryan (R-Wis.).
Otherwise, we can prepare for a big fat Greek fiasco with Obama playing the starring role.
Timothy Lee is Vice President for Legal and Public Affairs for the Center for Individual Freedom.