While most major countries, led by the U.S., continue to grow their government debt, the fiscal disasters of yesteryear are reporting budget surpluses.
The United States seems at the moment to be incorrigible in its descent into fiscal madness. The national debt has been growing out of control for years, and the current budget negotiations in Congress will do little to change that. Politicians left and right refuse to reform the entitlement programs that drive the debt and will even join together to expand them on occasion.
The U.S. government isn’t an outlier in its cavalier attitude toward living beyond its means. If anything, it has been leading a worldwide movement of governments unconcerned about reckless fiscal policy. As a 2024 analysis of 65 countries by the International Monetary Fund found, “Parties across the political spectrum sound increasingly similar when it comes to fiscal policy: they all campaign on ideas of a bigger government and promising more spending.”
We’re all Argentina now. The world is becoming Greece-ified. Except — Argentina and Greece have actually been shining lights of fiscal responsibility in recent years.
You read that right: The countries that had been bywords for ballooning debt have been getting their acts together while the supposedly responsible countries like the U.S. have gone the other way.
Politically, they have gone about it very differently. President Javier Milei in Argentina is an ideological libertarian economist/rock singer who waves around a chain saw at rallies and reportedly asks his dogs, which are clones of each other, for policy advice. Prime Minister Kyriakos Mitsotakis of Greece is a purposefully anti-populist center-right technocrat who talks about reducing inequality alongside cutting taxes and spending.
Both approaches have worked. Argentina announced in January that it ran a budget surplus of 0.3 percent of GDP in 2024, the first surplus in 14 years. “Zero deficit is a reality,” Milei said. “Promises are fulfilled.”
Now, Greece has announced a budget surplus of 1.3 percent of GDP in 2024. Only six of the 27 members of the EU ran a surplus last year, and the average EU country ran a deficit of 3.2 percent of GDP. Greece’s finances “record a significant overperformance by the national economy and a surplus in state coffers. Which means that, with everyone’s help, we did much better than we expected,” Mitsotakis said.
Greece is also a NATO member, and it is one of the few countries that currently spends more than 3 percent of its GDP on defense, going above and beyond current NATO guidance of 2 percent. Mitsotakis also announced this month a €25 billion modernization program for the Greek military.
He said the country was prioritizing its defense and would continue to be responsible in cutting elsewhere. “The ultimate judge is the markets and the sustainability of our debt. The flexibility must be used sparingly so as not to derail our path,” Mitsotakis said.
Imagine that: Listening to the markets. Maybe a Greek leader speaks this way because he knows from his country’s own history what happens when you ignore markets.
Government debt is an abstraction for most people — until it isn’t. During Greece’s debt crisis, unemployment peaked at over 25 percent. Argentina saw triple-digit inflation while its politicians failed to make credible reforms.
Both countries were basket cases for a long time, but they have proven that it is possible to turn things around. Despite their differences in personality, both Milei and Mitsotakis had the political courage to tell their countrymen that past politicians had lied to them, reforms were necessary, and they had a plan to do it. They both found that voters were receptive to that message, and Mitsotakis has even won reelection.
The results speak for themselves. An expected recession due to Milei’s immediate cuts in Argentina’s massive government spending has already given way to growth, with inflation being cut nearly in half. Milei’s repeal of rent controls has led to falling prices and a massive expansion of housing supply.
Greece’s unemployment rate has dropped to 8.6 percent, still high by U.S. standards but the lowest rate in Greece in 17 years. S&P upgraded Greek sovereign debt back to investment grade in 2023 and just upgraded it again last week, citing “unwavering fiscal discipline.”
The IMF projects Greece’s economy will grow at twice the average rate for advanced European economies this year, and it projects Argentina’s economy will grow by 5.5 percent, faster than China’s or Vietnam’s.
Greece and Argentina learned the hard way that government debt matters, and they currently have leaders who are taking those lessons to heart and putting their fiscal policy on a different path. It might have been hard to explain to someone in 2010 that Greece and Argentina would be modeling fiscal responsibility for the world, but here we are.