July 3rd, 2011
02:04 PM ET

Could America go the way of Greece?

By Fareed Zakaria, CNN

Watching the return of the Greek crisis, many people in America are wondering, are we next?

Will America face the same financial disaster that the Greek government faces, with a soaring deficit and debt, markets that have lost faith in it and a downward spiral of budget cuts that then further depress the economy?

It might, but let us understand something really important: America stands in a fundamentally different place than does Greece.

Greece has two problems. First, it has a big budget deficit and markets have lost faith that it can ever repay its loans.

Second, it is an unproductive economy and cannot generate enough economic growth over the next few decades. In economics-speak, Greece has a liquidity problem but also a solvency problem.

The United States, by contrast, does not have a solvency problem. The American economy remains one of the world's most competitive, with many of the fastest-growing companies in most of the advanced industries. It houses the best capital markets in the world, the greatest universities and the most dynamic society.

America is demographically vibrant, thanks to immigration. It will be the only rich country that will see its population grow over the next 25 years.

America could face a liquidity problem - that is, it could have difficulty financing its debts and deficits if markets lose faith in it. But, again, let's be clear: This has not happened yet. In fact, right now the world is lending to America more cheaply than ever before.

The most important difference between Greece and America is this: America has many paths to solve its deficit problem. Were it to implement the Simpson-Bowles Deficit Reduction Plan, for example, it would instantly give America among the strongest public finances of any rich country.

Would Congress simply allow the Bush tax cuts to expire - returning rates to where they were under Bill Clinton's presidency when America created almost 25 million jobs - that one action would provide the federal government with $3.9 trillion in revenues over the next decade and basically solve the deficit problem. We would still face the long-term problem of entitlements, especially health care costs, like every other rich country, but the short and medium-term crisis would be over.

Greece, Portugal and Ireland have no such economic answer to their problems. Europe is choosing between only terrible and dangerous options in resolving the Greek dilemma - massive, unending bailouts or a default that could turn into a Lehman Brother collapse type of event.

Now, America's economic problems might have a simple solution, but our political system seems utterly unable to get us to this solution. One party refuses to even think about tax increases, the other will not take seriously the problem of entitlement reform. The result is paralysis.

If we do end up losing the trust of markets, and it can happen, it will not be because they lost faith in America, in our economy and our society, but because they despaired at the country's selfish and self-defeating politicians.

On July Fourth weekend, that's a pretty depressing thought.

For more on this, you can read my column at TIME.com.

soundoff (731 Responses)
  1. Wow! Thank you! I permanently wanted to write on my site something like that. Can I implement a fragment of your post to my blog?

    I'm happy I came across this weblog, We couldnt learn any kind of info on this material prior to. I also chance a site and if you wish to ever serious in the little bit of guest producing for me if attainable feel free to let me know, i'm usually appear for people to look at out my site. Make sure you stop by and leave a new comment sometime!

    November 17, 2011 at 3:29 pm | Reply
  2. Priscila Hemming

    I would be interested to know how long it took you to pump out this information. I think it's great. I completely agree and you are very insightful. Thank you.

    November 28, 2011 at 9:45 pm | Reply
  3. Nelly Alteri

    And if my recent experience on jury duty is an indication of the overall process, it will never be possible for a physician to have a jury of his peers in a malpractice trial.

    December 13, 2011 at 11:42 pm | Reply
  4. Araceli Trinks

    It's really a great and helpful piece of info. I'm satisfied that you just shared this helpful info with us. Please stay us informed like this. Thanks for sharing.

    December 14, 2011 at 1:24 pm | Reply
  5. web hosting

    Bilanz festzunageln ueberrascht melken vibrierend bekritteln Subregnum und dich westgermanische Sprache ueberzeugen der abzusichern virtual server linkslastig quaelen bar icke solch auszubaden der Genfer Schule fordern sechs tun voller und surinamisch fortzuschreiten Rolle.

    January 3, 2012 at 6:04 am | Reply
  6. Business Start-up Coach

    I've been exploring for a bit for any high-quality articles or blog posts on this sort of house . Exploring in Yahoo I eventually stumbled upon this web site. Reading this information So i'm happy to exhibit that I've an incredibly excellent uncanny feeling I found out just what I needed. I so much indisputably will make sure to don?t forget this website and provides it a glance on a constant basis.

    April 16, 2012 at 4:32 am | Reply
  7. virtility

    Great post, very informative. I'm wondering why the opposite specialists of this sector do not realize this. You must continue your writing. I am confident, you've a huge readers' base already!|What's Happening i'm new to this, I stumbled upon this I've found It positively useful and it has aided me out loads. I'm hoping to contribute & aid different users like its helped me. Great job.

    April 20, 2012 at 11:54 am | Reply
  8. Social Media Marketing Plan, Social Media Marketing Strategy

    I actually enjoyed this. . I;ll Keep returning

    April 29, 2012 at 11:09 am | Reply
  9. albergopalermo

    Somebody essentially assist to make seriously posts I would state. That is the first time I frequented your web page and thus far? I surprised with the analysis you made to create this particular post amazing. Excellent process!

    April 30, 2012 at 1:07 pm | Reply
  10. business startup coach

    It's Info like that, encourages people to keep returning to a excellent resource like this site.

    May 26, 2012 at 2:49 pm | Reply
  11. best voip provider

    I'm still learning from you, while I'm making my way to the top as well. I absolutely love reading everything that is posted on your blog.Keep the tips coming. I loved it!

    June 5, 2012 at 4:42 am | Reply
  12. couteau pradel

    Hello there, I found your site by way of Google while looking for a comparable subject, your website came up, it seems to be good. I have added to my favourites|added to my bookmarks.

    July 3, 2012 at 11:36 pm | Reply
  13. direktori

    Hi there, I discovered your site by means of Google whilst searching for a similar topic, your web site came up, it seems to be great. I've bookmarked to my favourites|added to bookmarks.

    July 25, 2012 at 1:31 am | Reply
  14. SuchmaschinenoptimierungAnleitung

    This is really attention-grabbing, You are an overly professional blogger. I've joined your feed and look ahead to seeking extra of your magnificent post. Additionally, I've shared your web site in my social networks

    July 25, 2012 at 11:45 pm | Reply
  15. moving company london

    You recognize thus significantly when it comes to this matter, made me for my part consider it from so many varied angles. Its like men and women are not involved except it's one thing to do with Woman gaga! Your own stuffs nice. Always care for it up!

    August 7, 2012 at 7:28 am | Reply
  16. fiestas del pilar 2012

    I do not even know the way I ended up right here, however I assumed this submit was once good. I do not recognise who you're but definitely you're going to a famous blogger for those who aren't already. Cheers!

    September 3, 2012 at 5:07 pm | Reply
  17. Business mastermind group

    Excellent site. Will retweet, and tell others. Keep up the good work.

    September 5, 2012 at 4:44 pm | Reply
  18. seoandco

    Hello, i feel that i saw you visited my site so i got here to go back the favor?.I am trying to in finding issues to improve my site!I assume its good enough to use a few of your ideas!!

    September 11, 2012 at 1:46 am | Reply
  19. dubai's award winning web designing services

    It's appropriate time to make a few plans for the future and it's time to be happy. I have read this put up and if I could I desire to suggest you few attention-grabbing things or tips. Perhaps you could write subsequent articles regarding this article. I want to read even more issues approximately it!

    September 19, 2012 at 8:40 am | Reply
  20. Leberkrebs behandeln

    I do not even know the way I finished up here, but I believed this submit was great. I do not know who you might be but certainly you are going to a well-known blogger for those who aren't already. Cheers!

    December 28, 2012 at 11:09 pm | Reply
  21. new movies july 2013,new movies june 7 2013,new 2013 movies kids,salman khan new movies 2013,new kung fu movies 2013,akshay kumar new movies 2013,shahrukh khan new movies 2013,kristen stewart new movies 2013,new release kids movies 2013,new korean movies

    I take pleasure in, lead to I discovered exactly what I used to be having a look for. You have ended my 4 day lengthy hunt! God Bless you man. Have a nice day. Bye

    July 22, 2013 at 10:13 pm | Reply
  22. Maxwell Gloff

    You made some {decent|good|really


    December 1, 2013 at 9:46 pm | Reply
  23. 即時比分nba

    Amazing content, thanks a lot !!
    即時比分nba http://ts168168.net

    September 28, 2014 at 5:52 am | Reply
  24. consumo de electrodomesticos en chile

    Ponte en contacto con tu distribuidor con Bosch (en el manual de instrucciones, encontrarás más información). Si el problema continua, llama al teléfono del Servicio Posventa que aparece en el manual de instrucciones de tu Indego. Se recomienda dejar una distancia mínima de al menos 1 m entre el cable perimetral y cualquier obstáculo (p. ej., un árbol una valla). No obstante, si eso no ocurre y quedan zonas sin cortar, llama al teléfono del Servicio Posventa que aparece en el manual de instrucciones de tu Indego.


    September 27, 2016 at 8:10 am | Reply
  25. Max Durhan

    This is the awesome wonderful search system in the planet


    April 15, 2017 at 6:19 am | Reply
1 2 3 4 5 6 7 8 9 10 11 12 13

Post a comment


CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.