US debt levels are worse than in Portugal, Ireland and Italy under some calculations. The federal government needs a fiscal plan that addresses short-term economic concerns and structural deficit issues

Significant media attention has recently been focused on the fiscal deficit and sovereign debt challenges in Europe and the US. Greece is just one of many countries that must make tough choices to improve their financial condition and fiscal outlook.

Most European nations have imposed austerity measures to address their deficits and mounting debt. In the US, the Obama Administration has promoted various stimulus approaches to strengthen economic growth and reduce unemployment and under-employment, while also acknowledging the need to address ‘longer-term’ deficits. However, not enough progress has been made in connection with America's structural deficits.

While the US faces escalating deficits and mounting debt, it has more time to act than many European nations given the size of the US economy, the instability in Europe, and because the dollar represents over 60% of global reserve currencies. As a result, the US and the dollar have been viewed as temporary ‘safe havens’.

Temporary is right: based on total government public debt as a percentage of GDP, the US is already worse than Spain and the U.K. These percentages do not consider the trillions of dollars that the US owes to its social insurance and other ‘trust funds’.

When this debt is considered, the US is already in a worse position than Portugal, Ireland and Italy, and is only two years away from the debt/GDP ratio that Greece experienced at the beginning of its debt crisis.

Arguably, our biggest challenge in the US is the political dysfunction in Washington, DC. The parliamentary systems in Europe have facilitated making tough and more timely choices with government finances. However, hyper-partisanship and growing ideological divides have created a stalemate whereby much needed social insurance programs and the tax reforms are not being addressed.

The US government must develop and implement a fiscal plan that addresses both short-term economic issues and structural challenges in an integrated manner. After all, significant reductions in short-term spending or increases in tax burdens could derail the weak economic recovery and undercut attempts to increase employment opportunities.

The US, however, must also begin to address its structural deficit challenges before a debt crisis reaches its shores.

David M. Walker is the founder and chief executive officer of the Comeback America Initiative and was comptroller general of the United States from 1998 to 2008. He is speaking at the International Federation of Accounts’ sovereign debt crisis seminar on 20 March