The Stanford University Public Policy and International Studies Programs just published a study that rates the relative fiscal health of national economies around the world. How did the U. S. rate? According to the Sovereign Fiscal Responsibility Index (SFRI), the United States ranks 28th out of the 34 countries studied.
The fiscal diet solution? As usual, the diet is simple: spend a lot less public money. It’s interesting to note that Scandinavian counties and former British colonies (like Australia and New Zealand) have led the world by passing fiscal reforms that limit government spending.
More about SFRI:
“Our fiscal index provides unique and useful insight into the fiscal sustainability of countries across the globe by incorporating a wide range of important factors,” said David M. Walker, the Founder and CEO of the Comeback America Initiative. “It is clear that there is great potential for a fiscal crisis in many countries, including the United States, if they don’t start addressing the structural deficit challenges that lie ahead. The index reinforces the fact that the U.S. needs to engage in comprehensive and timely reforms to restore fiscal responsibility and sustainability and to avoid a debt crisis that would be felt around the world.”
Walker continued, “The index also shows that countries that engage in dramatic and comprehensive reforms can dramatically improve their fiscal prospects. New Zealand ranks number two after engaging in such reforms in the early 1990s when it faced a currency crisis. And the U.S. ranking would improve to number eight if the Congress and the President worked together to enact fiscal reforms that had the same ‘bottom line’ impact as those made by the National Fiscal Responsibility and Reform Commission.”
The SFRI is the result of a Master’s Thesis project completed by a team of Stanford University graduate students under the guidance of the Hon. David M. Walker, the former Comptroller General of the United States. The SFRI incorporates both quantitative and qualitative metrics, based on several authoritative sources, including the International Monetary Fund (IMF), to define ‘fiscal responsibility’ and carry out cross-country comparisons. Specifically, this index was intended to illustrate where the United States is, where it is headed, and how it compares to other nations in the area of fiscal responsibility and sustainability.