Robin SmithGreece, a country with a population of about 11 million citizens, has long been viewed as the crossroads of Europe, Asia, and Africa. Yet this diverse nation, with three seas bordering its mostly mountainous inland, finds itself at another crossroads these days, albeit a far less dignified one: financial insolvency.
The root of the Greek problem is simple: As the government budget kept growing to fund social services for its citizens, the tax base - or the working population and businesses who paid taxes - did not keep the same pace.
On June 30, 2015, Greece became the first developed nation to fail to make a scheduled debt payment on a loan given by the International Monetary Fund (IMF). This 188-member international organization - located in Washington, D.C. - works to protect against the instabilities of currencies, economies and loans covering national debt, among other purposes.
Greece possesses a long history of financial woes. Yet its populace, politicians and general public alike have lacked the integrity and courage to address the true source of their problems.
According to the Greek Ministry of Finance's 2010 report, "Stability and Growth Program 2010," published to address the already-blossoming crisis, "the output increased in nominal terms by 40 percent, while central government primary expenditures increased by 87 percent against an increase of only 31 percent in tax revenues."
In East Tennessee plain talk, that means that while the nation's economic output grew, government spending grew at a drastically higher rate, despite its failure to collect enough tax money to foot the ever-expanding bill.
By the end of 2013, Greece's national unemployment was 28 percent, a record high for a country with a retirement age of 57 and an extremely tolerant attitude toward tax evasion. The gross domestic product of Greece (the aggregate economic value of its manufactured goods, services and output) has declined by 30 percent since 2008. The Greek national debt is now approaching 200 percent of its GDP. Talk about a frightening economic scenario: The total debt of Greece is double the worth of the entire Greek economy.
But that's just happening in Greece, right?
Wrong. According to the Federal Reserve Bank of St. Louis' data, the percent of our debt to GDP was 102.59 percent at the end of the first quarter of this year. Sure, this amount is far less than Greece, but our own government's overspending puts us on a startlingly similar trajectory as our European counterpart. Think of it this way: If our debtors demanded full payment at this moment (not likely, but the possibility exists), this transaction would consume more than our economy generates in a year.
Not included are "unfunded mandates," promises made by laws that distribute funding into the future. According to the Office of Management and Budget, health programs like Social Security, the Obamacare-expanded Medicaid and Medicare make up 86.9 percent of the 2015 mandatory spending budget. These annually renewed programs will alone take $2.236 trillion of the projected $3.9 trillion to be spent in total this year.
Numbers, numbers, numbers. Reality says our economy, like Greece's, must dramatically expand to cover our automatic expenditures. First, though, our government must curtail its reckless spending.
The unfolding Greek tragedy - floundering government, populace in revolt, banks empty and solutions absent - should give pause to any leader who puts a national economic wish list ahead of simple common sense.
America's best days can be ahead. But only if leaders possess the fortitude to send the able-bodied back to work, stop feathering their political nests and put America's interests first in the global community.
Robin Smith, a former chairwoman of the Tennessee Republican Party, is the owner of Rivers Edge Alliance.