So the Greek plan got an approving vote from the European Commission, but it’s getting a slightly less enthusiastic response from the Greek people, upon which the plan’s austerity measures will fall.
From the NY Times:
DIMITRIS DAMIANIDIS is a high school teacher and a strong supporter of Greece’s socialist government. But that won’t deter him from going on strike with hundreds of thousands of other public sector workers next week to fight for the 28,000-euro pension that he expects to receive annually after he turns 60 next year.
“Why should I as a worker pay for the errors in policies?” he asked, in response to reports that the embattled Greek state will cut his pay and, by extension, retirement benefits. “The worker can’t be the scapegoat. So we have to defend ourselves.”
As Mr. Damianidis and others on the state payroll prepare to stop work on Wednesday, fear is building that the country’s new government may lack the nerve to cut public wages and pension payments, which make up 51 percent of its budget.
There’s a reason they call them “entitlements,” and in Europe, as here, they have been sacrosanct. But membership in the eurozone, as well as the bond vigilantes, may force some very uncomfortable decisions to be made. What’s unfolding in Greece right now, and could very easily move into the so-called periphery countries, is the exact reason why nobody in this country is willing to address the imbalances in our nation’s Social Security and Medicare accounts. And don’t even talk about the states’ pension plans. Because doing so will really, really up-end the apple cart.
Of course, not doing so eventually leaves you where the Greeks are. There are, in the end, no gimmicks. A government that spends more than it takes in will run into trouble. There is no substitute for fiscal responsibility. You can fool the voters, the bond market, even your trading partners for a while. But the United States is coasting off its reputation right now, and that will not last forever.