PIIGS ‘R’ Us? The Coming U.S. Debt Crisis and What Can Be Done About It
University of Calgary – School of Public Policy Communiqué, Vol. 3, Issue 2, July 2011
8 Pages Posted: 25 Jul 2011 Last revised: 7 Sep 2011
Date Written: July 25, 2011
The U.S. is beset by weak economic growth, ballooning debt and stubbornly high unemployment but the collapse of the housing bubble that spurred the 2008-2009 global financial crisis was more a consequence than a cause of what is wrong. The real culprit was and remains poor policymaking in the areas of taxation, finance and economics, which helped bring on the crisis by encouraging Americans to engage in counterproductive behaviour. This paper warns that without meaningful fiscal reform, the U.S. risks joining the PIIGS – Portugal, Ireland, Italy, Greece and Spain – on the road to ruin through unsustainable debt, high spending and chronically low growth. The author acknowledges the heated partisan debate over whether the answer is higher taxes or lower spending and explains that neither course alone offers a practical way out. A balanced approach incorporating aspects of both, combined with detailed policy reform as set forth in this paper, is the best solution. U.S. politicians must put aside their differences and replace bad policies with sound ones or the American economy will face disaster.
Keywords: U.S., debt, tax, policy, reform
JEL Classification: H21, H24, H25, H55, H62, H63
Suggested Citation: Suggested Citation