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Greece Debt Crisis Coming to a Neighborhood Near You?

Greece Protests

May 6: A protestor gestures to the riot police officers as they stand outside the Greek parliament during an anti government rally in Athens. (AP)

Until its day of reckoning arrived this week, Greece lived for years beyond its means, borrowing money and spilling red ink to finance excessive government spending, offer socialized health care and provide lavish wages for federal workers.

Sound familiar?

Some lawmakers and analysts are sounding the alarms over America's fiscal policies and deficits, warning that Greece's financial crisis could be coming to a neighborhood near you.

"I'm very concerned we're headed down the same path as Greece," Rep. Cathy McMorris Rodgers, R-Wash., told Fox News. "Greece found itself in a situation where its public debt was 113 percent of its GDP. They had taken on all this debt, expanded programs and America is headed down the same path. 

"If governments don't start tightening their belts, implementing balanced budgets and prioritizing and start saying we can't afford these bailouts for everyone, I don't see where it's going to stop," she said.

Greece is buckling under a debt burden of $388 billion, which is bigger than its $356 billion economy. Greece was facing a May 19 due date on debt it said it couldn't repay without a bailout. So Greek lawmakers voted Thursday 172-121 to approve austerity measures insisted upon by the EU and IMF worth about $38 billion through 2012 – that will slash pensions and civil servants' pay and further hike consumer taxes.

In the United States, the federal government is in debt about $12.3 trillion, which is roughly 80 percent of the nation's $13.3 trillion economy.

But some economists aren't worried that America will suffer the same fate as Greece.

"The United States government is a currency-issuing nation, our debts are denominated in dollars, we control the dollars," said economist Mike Norman who noted that Greece's debt is denominated in euros without the ability to create euros. "So it's functionally like a state in the United States or me or you or anybody else who's strapped for cash. If it doesn't have it, it doesn't have it."

"So the question of solvency or going broke or not having the money, as the congresswoman said, is totally inapplicable," he said.

But J.D. Foster, a senior fellow in economics at the Heritage Foundation and a former economist in the Bush administration, told FoxNews.com that America is headed toward its own Greek tragedy if it doesn't tackle its fiscal problems.

Foster said it's unlikely that the U.S. would try to inflate its way out of its debt. "Frankly it doesn't work and it's a self defeating approach," he said. It helps that the world's reserve currency is the dollar, he said. But he added that if bond investors lost trust in the U.S. like they did with Greece, the dollar will not save the country.

"I think what is more likely to happen is we are headed toward a crisis and we'll deal with it, either be enacting a large VAT (value added tax, or national sales tax) or not enacting a VAT and slash spending back. But one way or another, we'll address the situation. The problem with Greece, it's doubtful they will do what is necessary."