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America faces a big, fat Greek-style bankruptcy


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Las Vegas Review-Journal

America faces a big, fat Greek-style bankruptcy



Have you read the news lately? Greece is bankrupt. The entire country was poised to default on its debt when the European Union (led by Germany) and the IMF (led by the United States) decided to bail it out -- or risk the collapse of the entire EU and their currency, the euro.

As always happens anytime government is involved, the dollar figure necessary to save Greece keeps rising. First it was $50 billion ... then $100 billion ... now $145 billion, the biggest loan to a country ever. Trust me, within a year it will become clear that $145 billion is not nearly enough. Just like with AIG, GM, Fannie Mae, Freddie Mac and the failing public school system in America, the money we give Greece will never be enough. It's a bottomless pit.

But Greece is the EU's smallest problem. The other PIIGS (Portugal, Italy, Ireland and Spain) are in far deeper trouble. But those debts are all small when compared to the problems of France and the United Kingdom. There isn't enough money in the world to bail out the rest of Europe. We are staring at economic Armageddon.

So what caused this? Big government and government employee unions. Greece's problem is Europe's problem ... and following closely behind, America's problem, too. We're all Greeks now. Quite simply, Greece's problem starts and ends with government employee unions. There are too many government employees (one of every three Greek citizens works for government); their salaries are way too high; their bonuses can be described only as insane (2 months for each public employee); their pensions are ridiculous (retirement far too young and free health care for life); and their government jobs are guaranteed for life.

Sounds crazy, right? Sounds like in Greece the inmates must be running the asylum. Except America has the exact same problem. California, New York, New Jersey and Illinois are our very own homegrown versions of Greece. These states are bankrupt, insolvent and desperately need a bailout. Why? For the same reasons as Greece. Far too many government employees; bloated salaries for civil servants; bonuses and raises are contractually obligated even during an economic crisis; sky high pensions; and jobs guaranteed for life. The only difference is that we are a nation of 300 million, so the debt is far bigger than Greece. It turns out that we are Greece squared.

The solution to save America from economic Armageddon? Simple. Use the same "austerity measures" imposed upon Greece, in return for this $145 billion loan, to dramatically cut spending on government employees:

-- Freeze government hiring for the next three years.

-- Eliminate bonuses and raises for the foreseeable future.

-- Institute layoffs and across the board wage cuts. Why should government employees enjoy "privileged status" that no employee in the private sector enjoys?

-- Change pensions from "defined benefit" to "defined contribution" pension plans, meaning retirees receive only what has been built up in their 401K type retirement accounts.

-- Raise the retirement age. In Greece it is going from age 53 to 67. Gold-plated pension plans are the single biggest factor that bankrupted Greece. The same problem bankrupted U.S. automakers GM and Chrysler.

-- Require government employees to pay more of their health care (through co-pays and deductibles).

-- Change the way pensions are calculated by eliminating overtime and raises in the last years of employment to "game the system."

The real global threat to our existence isn't global warming -- it's catastrophic government spending and, more specifically, spending on government employees. Our government's unfunded liabilities are now estimated at $60 trillion to $75 trillion over the coming decades. To give you some perspective, the New York Post recently reported that one New York firefighter is retiring on a pension of $240,000 per year. If he lives 40 years beyond retirement, that will cost the taxpayers almost $10 million. That's for one single government employee.

There are millions of them on the federal, state and local level. It can only be described as a ticking time bomb that threatens to destroy our children's and grandchildren's future.

Nevada's economic future is clouded by this same crisis.

Government employees should be cheering the solutions I have laid out above. This plan might actually save their jobs and pensions. But keeping the status quo of unsustainable spending will sink this country -- in which case government employees will lose their jobs and pensions. Anything that saves our economy, will be healthier for them (as well as the rest of us) in the long run.

Government employees must wake up before they go for broke, and wind up broke. As usual, unions stand in the way of a sane solution.

It turns out that the Greek model is the American model. It turns out that we need saving too. We're all Greeks now. We either stop the insanity, or we wind up with our own big fat Greek bankruptcy.

Wayne Allyn Root, the 2008 Libertarian vice presidential nominee, writes from Henderson.


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