Legislators in Washington who are tempted to punt yet again this fall and not take the painful medicine needed to tame the government’s spiraling debt might want to consider the fates of European political leaders who did the same thing in years past.
As a powerful financial virus spawned by debt overload has moved from country to country across the Atlantic, governments that dallied and failed to address their debt problems have been toppled, from Ireland to Greece and Portugal to Italy.
Some debt-plagued countries have gone through several changes of government amid the turmoil. Political leaders in Greece and Italy who were recently under the gun of extreme financial turmoil pushed through some of the painful budget cuts and economic reforms needed to cure the debt disease had to fall on their swords because the measures were so unpopular.
They have been replaced by unelected technocrats charged with steering their countries into solvency.
“It’s either suspend politics or suspend the markets,” said Gabriel Glockler, a deputy director at the European Central Bank, speaking of the dire choices facing European leaders once the debt tsunami engulfs their country.
Mr. Glockler noted that the magnitude of the U.S. debt problem is equal to or worse than those in many of Europe’s most troubled countries, and suggested that U.S. legislators who continue to put politics ahead of economic reality may be living on borrowed time.
Just as U.S. politicians from President Obama on down are facing record-low approval ratings as a result of the unresolved debt and economic problems here, Mr. Glockler said, public disgust in Europe with the “abysmal state of the domestic political systems” was what ushered in the dramatic and sudden changes in political leadership there.
But at the same time, Mr. Glockler defended the sometimes messy democratic processes that led to the succession of government crises and downfalls in Europe this year.
“This is the way democracies work. Sometimes there’s a snag along the way. You get pushed into doing things,” he said, noting that U.S. legislators, like their European counterparts, in the past often acted only under the gun of financial crisis to make tough decisions.
“If you want a government that’s run differently, go to China,” he said.
Analysts say Washington could easily tame its debt problems today with less painful measures than those being rammed through legislatures in Europe - such as by gradually lifting the Social Security retirement age, paring cost-of-living adjustments for government employees, programs and beneficiaries, and phasing out various tax cuts.
But economists warn that further procrastination in Congress runs the danger of driving the U.S. into the kind of “do or die” debt crisis seen in Europe.
There, disruptive changes in social programs are being made abruptly and in a crisis atmosphere, causing real hardship for citizens, stoking social unrest and making matters worse for everyone by sinking the nations deeply into recession.
Perhaps most tellingly, the politicians there who hoped to survive by denying their debt problems and postponing unpopular changes lost their jobs anyway.
“There’s an old saying that ‘the higher you fly, the harder you fall,’ ” said John Browne, senior market strategist for Euro Pacific Capital, one of many Wall Street investment gurus and economists who think the woes in Europe will eventually visit Washington.