Following decades of welfare-state comfort and years of Keynesian stimulus spending, a panicky Europe is seeing the arrival of austerity politics. Resentful debtors such as Greece, Spain and Portugal are being forced into tax increases and spending cuts that are painful, unpopular -- and just beginning. Their resentful citizens throw tantrums and sometimes rocks at police. Resentful creditors such as Germany provide bailouts while wondering why they ever shackled themselves (and the value of their currency) to such irresponsible governments.
Those not resentful are scared.
And America is not exempt.
In 2009, the federal government spent $1.67 for every $1 it collected in taxes. The Obama administration's budget proposals would dramatically increase publicly held debt as a percentage of the economy over the next decade, eventually slowing economic growth, fueling inflation and making America more dependent on the kindness of creditors.
This can go on for only so long before a challenge more similar to Britain's becomes a fate more similar to Greece's. America is about to enter its own period of austerity, which is likely to be the dominant political reality for the next decade. The new game will have few winners and many losers.
I have only recently realized how horrifyingly bad the US debt situation is. I knew it was bad but I had no appreciation of just *how* bad. It overshadows every other political and social issue. Not only is the Federal government way in the hole, many of the States are as well.