The Greek financial crisis has done more than just grab headlines in the financial world; it's repeatedly bruised the euro and it's served as a warning for what's in store for the U.S. economy, says former House Speaker Newt Gingrich.
Public spending is out of hand in the United States as it has been in Greece and the day of reckoning is on the way.
"Federal spending alone this year accounts for 25 percent of our nation's gross domestic product," says Gingrich, according to the American Enterprise Institute for Public Policy Research. "If you add state and local spending, the number is closer to 50 percent," he said.
"No economy can thrive when nearly half of all economic output is directed by politicians rather than entrepreneurs and small businesses."
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Unions are also causing problems, says Gingrich.
While overall union membership has declined during the last decades, the government has been more than happy to lend a hiring hand.
"Over 50 percent of all union workers in the U.S. are employed by the government compared with only 17 percent in 1980," says Gingrich.
"In addition, government workers make about $10 per hour more than the average private sector worker."
For Gingrich, reduced public spending and tax cuts are the way to right America's finances.
Even the Obama administration admits the need to control spending.
"It is not possible to imagine sound budgets in the absence of economic growth and solid economic performance," says chief White House Economist Lawrence Summers, according to Reuters.
Nevertheless, Summers says the Obama administration is aware of the dangers tied to a projected $1.56 trillion deficit but stresses that public spending is the way to get the economy rolling again.
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Appropriate short-run expansionary budget policy can make an important contribution to establishing the confidence necessary for sound growth," says Summers.
"I am convinced that it is impossible to sensibly address either unemployment or long-run fiscal challenges in isolation."
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