Greek Debt Crisis

Greece adopts drastic austerity measures

John Dimsdale Feb 13, 2012

Kai Ryssdal: There’s a certain wow factor every time the White House comes out with a budget. Three or more trillion dollars usually; $3.8 trillion this year. Staggering deficits, and not much chance of it passing intact in this presidential election cycle.

So let’s do this instead, just as a way to make global economic news a little more real. Cut our budget by 25 percent, give or take. Lay off hundreds of thousands of government workers. Stake the entire economy on those cuts and others.

Over the weekend, the Greek parliament did exactly that. Our Washington bureau chief John Dimsdale draws a comparison.

John Dimsdale: Imagine if the federal minimum wage dropped from $7.25 an hour to $5.50, plus the eligibility age for Social Security jumped to 70. And 450,000 government workers lost their jobs and health benefits over the next three years. That’s close to how the latest Greek cutbacks would feel in this country.

Stuart Eizenstat:  It would for sure throw us into not only a recession, but a very deep recession.

Stuart Eizenstat was U.S. ambassador to the European Union when the euro was adopted.

Eizenstat: Because if you take that much purchasing power out of several million people who are on the minimum wage and you suddenly lay off 400,000 people, it would put a massive squeeze on unemployment insurance and it would reduce purchasing power dramatically. 

Lay that on top of a country already suffering from 21 percent unemployment after five years of recession and he says you can understand why Greeks have taken to the streets. Costas Panayotakis says Americans have little sense of what the Greeks are going through.

Costas Panayotakis: Everybody, if you ask the average American what is the state of the economy now, they will say it’s very bad. And yet, the output in the U.S. is not going down. So, we’re talking about a situation of output shrinking for five years, which has never happened in Greek history.

Panayotakis says educated and talented Greeks have no choice but to leave the country. He’s now a professor at the New York City College of Technology.

In Washington, I’m John Dimsdale for Marketplace.

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