Greece's budget problems reflect the willingness of the government to pay workers wages and benefits that exceed the willingness of citizens to pay taxes. That difference is sufficiently large that it creates sizeable deficits that the country is unable to finance. The simple lesson is that governments cannot promise benefits without regard to their cost. Market forces are now forcing the unhappy and disappointed Greeks to reconcile the benefits they provide with the taxes they are willing to pay. So, it is also disappointing that the U.S. government, at this very same time, chose to create a new entitlement program wth health care, despite observing the Greek situation, when we are already also running very large budget deficits. The markets are not ready to stop financing U.S. budget deficits at this time. But it may become a problem down the road.

It is amusing and alarming that Greek citizens are striking over the possibility they may be subject to cuts in their benefits. Workers feel like the government should not fix its budget problems on the backs of workers, without any recognition that it is that the generous benefits to workers behind the budget problems. The media has reported, quite appropriately I believe, that the Germans who retire at 67 are unlikely to be sympathetic about lending money to the profligate Greeks, where workers retire at 55. Still, the Europeans are pragmatic enough to find some way to provide support for the Greeks, although they will also demand severe budget cuts to bring Greek finances back into line over time.

It is remarkable how little we have learned from watching the Greek tragedy unfold. There's no doubt that our medical system requires some sort of overhaul. But the plan passed by Congress is designed more to expand medical coverage and to create a medical entitlement than it is to contain costs and improve efficiency. Moreover, the real costs of this program are likely to be vastly greater than suggested. Cost savings will be difficult to realize and coverage expenses could easily prove to be far greater than projected.

The current budget is deeply in deficit, which is appropriate for an economy just coming out of recession. Longer-term, politicians and analysts are aware that the future unfunded Medicare and Social Security obligations will come due, which will greatly complicate efforts to reduce the deficit. Adding to the obligations of the new health care system will create an even more dangerous brew. But, that will be someone else's problem. We may not be so lucky.

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