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Home Publications Blogs Beat the Press Representative Ryan Can't Tell the Difference Between Greece and the United States: Where Is the Ridicule?

Representative Ryan Can't Tell the Difference Between Greece and the United States: Where Is the Ridicule?

Wednesday, 26 January 2011 05:41

During the presidential primaries, then Senator Obama gave a talk at fundraiser in which he referred to people in small town Pennsylvania as "bitter." The media highlighted this "gaffe" and made it a major theme over the next few weeks of the campaign. In other words, it was big news that Obama had said something that the media viewed as inappropriate.

Last night, in the official Republican response to President Obama's state of the union address, Representative Paul Ryan suggested that the United States could be like Greece if it did not change its current budget path. This comparison was either dishonest or reflected an extraordinary degree of economic ignorance.

Briefly, there are three big reasons that the United States is very different from Greece:

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.

This is why we give politicians who compare the U.S. to Greece a nice lollipop and balloon and pat them gently on their little head. And if they are important politicians, we give them a big helping of ridicule.
Comments (16)Add Comment
written by J-Bentham, January 26, 2011 7:46
It seems that everyone missed the big headline, again, about SOTU. President Obama is offering to compromise before we've even begun, which means that he really wants to cut spending. Is he trying to kill his reelection prospects?
written by J-Bentham, January 26, 2011 7:47
Ryan is pathetic.
Paul Ryan Understands Competition as the Race to the Bottom
written by izzatzo, January 26, 2011 8:04
... Ryan suggested that the United States could be like Greece if it did not change its current budget path.

As one of the three founding members of the House GOP Young Guns Program, Ryan introduced the Roadmap budget program in 2010 designed to make the USA more like Greece by adding $4T to the deficit caused by tax cuts for the upper 5%.

Don't be bitter with the macaca slurs Whose Your Nanny. Ryan understands the role of economic competition essential to recovery, so clinging to it desparately as a religion is a virtue, not a vice.

Ryan can transform the USA into Greece faster than Obama ever could. May the best man win.
..., Low-rated comment [Show]
..., Low-rated comment [Show]
J-B, Obama wants to win money-raising 'election'
written by fairleft, January 26, 2011 11:00
over his potential Republican foes. For that he needs lots of Wall Street 'votes'. His actions as President, his 'compromises', are easy to understand in that context.
Ryan is not that ignorant
written by paul, January 26, 2011 12:51
He is simply dishonest (gee, another dishonest political hack in DC - who da thunk it?)

The media doesn't call him on it because it likes the story of U.S.=Greece. The media can write and talk about it week after week and month after month. No doubt we will still be hearing it years from now.

Here's a news flash from DC: FACTS DON'T MATTER! Only the story matters, i.e., the BP oil "disaster" the the Gulf of Mexico that would last forever.
written by fuller schmidt, January 26, 2011 1:43
I disagree. There can't be a handful of people inside the beltway who understand economics. But the lobbyist and patronage folks are as dishonest as can be, so they've got that covered too.
Another Big Difference
written by signsanssignified, January 26, 2011 2:21
Greece's debt amounts to 110% of their GDP. Our adds up to about 60% of GDP--not healthy, but certainly nowhere near Greece's.
written by Calgacus, January 26, 2011 2:30
U S politicians have promised many benefits that cannot possibly be paid.

They can't be paid - now - because the obligations are in the future. The future will take care of itself if we take care of the present. This unfunded obligations BS is like calculating the amount of uh, excrement the human race will produce in the next century and concluding we are all about to be drowned in a tsunamis of sh*t. Flush as you go, like pay as you go, works a lot better.

And skeptonomist - the principal financial difference between Greece and the USA is having our own currency.

Keep the printer going, Low-rated comment [Show]
More like a 93% US debt to GDP ratio, signsanssignified
written by AndrewDover, January 27, 2011 7:34
Trillions of U.S. Debt, % of GDP (Actual, 2010)
9.018 62.1% Debt Held by the Public
4.509 31 % Debt held by Govt Accounts
13.527 93.1% Totals

From Table C2

You have to be consistent. If the bonds in the SS trust fund are an asset to SS, then they are a liability to the federal government.
He may actually not know
written by Floccina, January 27, 2011 10:02
He may actually not know, politicians are experts on only one thing and that is getting elected. It is more important that median vote know but he is rationally ignorant.

Now that is an argument for free banking.
What is a Gaffe
written by scottinnj, January 27, 2011 11:40
I'm not sure who coined the phrase but someone said a gaffe is when a politician inadvertantly tells the truth.
written by W., January 27, 2011 4:18
Ryan is smarter than you dorks think.... i'd love to see any of you debate him on the budget. greece was an "analogy" you fool. basically, if we don't get our fiscal house in order, bad things will happen - very bad things. does anyone think we can sustain this trajectory?
written by Rich Hodde, January 31, 2011 3:24
I think you are being a bit unfair. Just because Mr. Ryan says the U.S. could be "like" Greece does not mean exactly so. Would you not agree that if over the next 30 years our federal government's fiscal condition continues on its current path that our balance sheet might be "like" Greece's? The latest CBO Outlook shows public debt o/s moving to 78% of GDP by 2021---before the worst of the Medicare spending kicks in. In its 2009 outlook, the CBO showed that public debt could be 300% of GDP by 2080. Would you not think that would in some way make us like Greece today?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.