Sen. Judd Gregg, R-N.H., warns that if the United States doesn’t quickly cut its deficit and debt, it will become like Greece in a few years.

"This nation is on a course where if we don’t do something about it, get federal situation, the fiscal policy [under control], we’re Greece. We’re a banana republic," Gregg told CNBC.

"Our status as a nation is threatened by what we’ve got coming at us in the area of deficit and debt. And it’s only a few more years, at the most, that we have to work with here before the market says, ‘Sorry, your currency is something we cannot continue to defend.’"

Last month, the U.S. government posted its second straight annual budget deficit in excess of $1 trillion as lingering unemployment constrained tax revenue. The shortfall totaled $1.294 trillion in the fiscal year ended Sept. 30, second only to the $1.416 trillion deficit in 2009, the Treasury Department said.

A jobless rate projected to exceed 9 percent through 2011 points to the difficulty of narrowing the budget gap even as the global economic recovery boosts company profits and produces more corporate tax receipts. Growth in government spending may slow because of declining costs associated with the financial crisis that spawned such rescue plans as the Troubled Asset Relief Program.

But as Republicans prepare to assert new authority in Congress, America’s overseas trading partners worry that Washington’s political upheaval may pose fresh challenges to the global economy, The New York Times reported.

Despite pledges to curb government spending and the huge United States budget deficit, Republicans are expected to address anxiety over unemployment and flagging growth by pushing for an extension of the income tax cuts passed during the presidency of George W. Bush — a move that would add to the deficit and, by extension, further weaken the dollar.

“The rest of the world, including Asia, is looking at the United States and seeing no real effective policy measures in bringing the economy back on track,” said Bart van Ark, the chief economist at the Conference Board, which measures American economic indicators.

“That is making the U.S. lose its legitimacy in the global economic community as a leader in terms of providing solutions.”

Meanwhile, Greece plans to stick to its agreement with the European Union and the International Monetary Fund in May in return for a 110 billion-euro ($153 billion) emergency loan package, government spokesman George Petalotis told Bloomberg.

The EU and IMF approved the aid package in exchange for Greece agreeing to cut public-sector wages and pensions and raise taxes on fuel, alcohol and cigarettes.

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massive inflation coming. Get details from the economists who predicted the
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