In his column today, Nobel laureate Paul Krugman claims its wrong to compare the US to Greece:
[W]e’re not Greece. We may currently be running deficits of comparable size, but our economic position — and, as a result, our fiscal outlook — is vastly better.
On his blog, Krugman tries to back that up with a graph of projected deficits:
Wow, the expected US deficits are lower than the Greek ones. One commenter on Krugman's blog laments that Americans won't be able to understand Krugman's graph:
The "Just Like Greece" scare is targeted to those who cannot (or will not) understand the facts... When, oh when will the American people learn to read a chart?
But it's Krugman who is confused. All his graph shows is that Greece is worse off than the US now, and in the near future. That should be obvious to anyone following the news of riots in Greece.
His graph hides the fact that, while our annual deficits may shrink -- some forecasters expect the economy to get better and stimulus funding to phase out -- every year the government will still spend more than it takes in, so total U.S. debt will keep rising. And Krugman’s graph doesn't get at the important question: are we on track to become what Greece is like now? This graph, which uses the same data set as Krugman's chart, helps answer that:
US Data: Auerbach-Gale projections cited by Krugman and U.S. Budgets. Greek data: IMF (here and here.)
In short: In 10 years, under Obama's budget plan, the USA will likely be in same debt position as Greece is now.