Rosenberg: The Only Reason We’re Not Greece, Is That The World Knows Taxes Are Going WAY Higher

Courtesy of Joe Weisenthal at Clusterstock

US debt levels are actually higher than Greece or Portugal. So why aren’t we in similar trouble?

Simple, says Gluskin-Sheff’s Davied Rosenberg, the US has a lot of room to raise taxes.

Greece here, Portugal there. Did you know that the structural deficit-to-GDP ratio is actually higher in the U.S. (7.8%) and the U.K. (7.6%) than it is in Greece (6.1%) and Spain (5.8%)?  Of course, what makes the U.S. different is that it has a revenue-to-GDP ratio of only 30%, which is at the very low end of the OECD rates which hover close to 40% or above. So America certainly has much more taxing capacity than anyone else does (and undoubtedly will have to use it because cutting back on health care is going to be a tough task ahead looking at the future demographic trends).  It is with this taxing power in mind perhaps that Congress is now busy preparing for another $100+ billion budget bill (Jim Bunning finally relented) that will revive popular tax goodies and extend jobless benefits through to year-end (when undoubtedly they will get extended again). Canada seems pristine with just a 2.5% structural budget deficit and a debt ratio that is also below the U.S.  However, when you tack on Ontario’s dilapidated fiscal situation, we still look okay comparatively speaking but it’s still somewhat of a dire budgetary landscape.

If you are looking for countries with low primary deficits and low government debt ratios then what fits that bill are Australia, New Zealand, Switzerland, Korea, Norway, the Netherlands and Sweden.

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