A new study finds America to be one of the most fiscally irresponsible nations in the world, spending excessively on health care and defense while running up record government deficits.
The United States ranked 28th out of 34 industrial powers — just behind Italy — in the health of its national finances, according to the survey by the nonpartisan Comeback America Initiative, a Bridgeport, Conn., group that advocates reducing the nation’s red ink. Study authors said in a press briefing Wednesday that Washington has as little as two years — and no more than 16 years — to repair its finances or risk seeing the economy slip below the levels reached during the recent global recession.
Australia and New Zealand topped the global survey, while only Hungary, Ireland, Japan, Iceland, Portugal and Greece ranked lower than the United States.
If the U.S. continues on the current path, according to the study, it could lead to a global depression, massive unemployment, ridiculously high interest rates, a decline of the dollar as the global reserve currency and the end of America’s status as a world power within a generation.
“Americans aren’t used to seeing our country ranked so low, nor should they be,” said David M. Walker, founder and CEO of the Comeback America Initiative, and former U.S. comptroller general. “All Americans, especially elected officials, should be embarrassed by how low the United States performs. We need to do something before we pass a tipping point.”
Even Mexico ranked higher than the U.S., prompting Walker to ask, “Which way are people going across the border?”
The rankings paint a dark picture for the U.S. on its current course, Mr. Walker said. But he emphasized that not too long ago — in the 1990s — Australia and New Zealand also had dire stories to tell. Now they lead the way.
“If New Zealand can do it, the United States can do it, too,” Mr. Walker said. “The question is, ‘When will we?’”
House Republicans have jumpstarted these efforts with a proposal to cut $61 billion in spending by the end of the year. Mr. Walker, however, said this is the wrong approach because the plan does not offer enough reductions or time to complete the massive overhaul. He suggests gradually reducing spending by $125 billion to $150 billion over the next three years.
This could mean changes to popular programs like Social Security, he said, adding that 10,000 Americans are retiring each day. The government could “gain some confidence to take on some bigger things,” if they successfully deal with this matter, he said.
The newly minted health care reform didn’t help, Mr. Walker said. “That’s going to cost us a lot more money than politicians are telling us.”
Scott Watkins, senior analyst with Anderson Economic Group in Lansing, Mich., pointed to a proposal from Michigan Gov. Rick Snyder that would require local government employees to pay 20 percent of their health care costs. He said the federal government should consider similar measures.
The wars of the last decade also have pushed the country toward a fiscal crisis. Mr. Walker said the recent strike on Libya is just “another example of the U.S. trying to be the world’s policeman.”
But reform doesn’t necessarily mean cutting popular programs, Mr. Watkins said. If the federal government cleaned up its act, reducing inefficiencies, the country could get back on the right track. That might mean eliminating redundant and overlapping programs.
“It’s not a matter of cutting programs altogether,” he said. “It’s a matter of asking, ‘What can we do more efficiently. And how can we get a greater bang for our buck?’”