Greece and Portugal are now the poster boys for fiscal mismanagement, with both having to turn to their European brethren for financial bailouts. But the United States isn’t too far behind, says John Silvia, chief economist at Wells Fargo.
"To me, being in Europe for a few days, the plot in Greece and Portugal sounds an awful lot like the same plot that's going on in the United States,” he tells CNBC. “But the characters have different names."
Silvia is concerned about the U.S. budget deficit, which the Congressional Budget Office estimates at $1.48 trillion for the year ending Sept. 30. And he is concerned about whether Congress and the White House can agree to spending cuts.
President Barack Obama visits Lincoln Memorial after shutdown averted. (Getty photo)
Entitlement spending – Social Security, Medicare and Medicaid – must be reduced, he says.
"We have to make some arrangements in terms of cutting back the promises that were made by prior politicians for these entitlements."
Moderate economic growth won’t be enough to generate the tax revenue needed to continue current entitlement commitments, Silvia says.
Columbia University economist Jeffrey Sachs is pessimistic about the chance for real budget reform at this point.
"We need it now,” he tells CNN. But, “We're not going to get it from either party because both parties feed at the same trough. Both parties are after the big campaign contributors and the powerful lobbies.”
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