The US ranks near the bottom of developed global economies in terms of financial stability and will stay there unless it addresses its burgeoning debt problems, a new study has found.
In the Sovereign Fiscal Responsibility Index, the Comeback America Initiative ranked 34 countries according to their ability to meet their financial challenges, and the US finished 28th, said David Walker, head of the organization and former US comptroller general.
"We think it is important for the American people to understand where the United States is as compared to other countries with regard to fiscal responsibility and sustainability," Walker said in a CNBC interview. "Americans are used to rankings and they're used to ranking very high, but frankly in this area we rank very low."
While the news is bad, there is a bright side.
"Here's the good news: Some of the top countries had their own fiscal challenges, made reforms and now rank highly," Walker said. "If we adopt the recommendations of the National Fiscal Responsibility and Reform Commission or ones that have similar bottom-line impact, we move from 28 to 8."
As the US languishes near the bottom, these countries make up the top five: Australia, New Zealand, Estonia, Sweden, China and Luxembourg.
Walker acknowledged that some of the countries that rank ahead of the US do not have the same type of challenges.
But he said policymakers in Washington can learn much from countries like New Zealand, which faced a currency crisis and made the necessary reforms to get back to prosperity.
"First, they're arguing over the bar tab on the Titanic," Walker said. "We need to cut spending. Frankly we need to cut spending more than what has been talked about but over a longer period of time. But what's imperative is that we need to attach some conditions to increasing the debt ceiling limit that will bring back tough budget controls..."
Walker predicted the US will have a debt crisis "within the next two to three years" and implored Washington lawmakers to "wake up."