When you drastically cut government spending in a depressed economy the GDP takes a nosedive. Greece's GDP dropped by a staggering 25%. That's the equivalent of

When you drastically cut government spending in a depressed economy the GDP takes a nosedive. Greece's GDP dropped by a staggering 25%. That's the equivalent of a 4.25 trillion drop in GDP for the US. So the government spending that remains is large compared to the GDP that remains. But of course the cuts were still massive. The percentage of GDP that's called "government" is pretty malleable. There's no real difference between a for-profit railroad monopoly that depends on government subsidies, and a nationalized railway system. But in one case the railroad is classified as private industry, in the other case as government spending. This applies throughout the economy. For instance, the work US military contractors do would be considered government work in Europe. So you can't simply compare the government-to-GDP ratios between countries. When it comes to austerity the issue is the change in government spending, not the size of the government. The sudden change is what shocks the economy. Government spending in Greece went down by a lot, services got cut, salaries got cut, pensions got cut. The name for this kind of policy is austerity. So you shouldn't take anybody seriously who puts austerity in Greece in scare quotes.