Filed under: Capitalism, Economy, Europe, Taxes | Tags: Bad Adcice for Europe, federal spending, G-20 Meeting in Toronto
In the Wall Street Journal today, George Melloan writes:
The American leaders are under the illusion that their Keynesian spending and easy money policies actually have worked, 10% unemployment notwithstanding. They cite the weak recovery that has been underway since last summer as proof.
Across the pond, however, British Chancellor of the Exchequer George Osborne is proposing deep cuts in spending in his proposed budget, reaching half a trillion pounds over the next five years.
German Chancellor Angela Merkel, together with her vice-chancellor, Guido Westerwelle, head of the Free Democratic party passed the largest austerity package since World War II on Monday, with spending cuts and new business levies aimed at saving 80 billion euros by 2014. Merkel says Germany, as Europe’s largest economy must set an example.
So guess who is on the phone to tell P.M. David Cameron and Chancellor Merkel that they must not save, but spend, spend, spend? Well, that kind of puts the real problem up in neon lights, doesn’t it? “Barack Obama is refusing to listen to reason on economic policy,” reads the headline in the Telegraph. In Der Spiegel, it’s “Merkel Defends Herself Against Criticism from Washington.”
Obama is pressing Europe to focus more on sustaining their deficit spending rather than debt reduction. Germany, Europe’s de facto bailout banker-in-chief, has essentially responded “Are you nuts?” Germany’s Finance Minister, Wolfgang Schauble, more diplomatically told reporters “Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of this crisis.”
Well, the upcoming G-20 Summit in Toronto should be a little more lively than usual. No one can accuse President Obama of not practicing what he preaches. He has all kinds of big-ticket items on his list that he hasn’t even managed to get funds appropriated for yet. And apparently the idea of restraining spending seems like one of those crackpot Republican ideas.
In the Wall Street Journal, again, Ann Mettler, executive director of the Lisbon Council says:
In the run-up to this weekend’s G-20 meeting, there is growing U.S. pressure on Europe to suspend its austerity programs. Among those urging for continued deficit spending to overcome the economic crisis are Nobel Prize winner Paul Krugman, U.S. President Barack Obama and—in a nearby oped—his Treasury Secretary Tim Geithner and National Economic Council Director Larry Summers. Their advice is economically unreasonable, politically inappropriate and demonstrates a profound lack of understanding of European realities.
The advice demonstrates a pretty profound lack of understanding of American realities as well.
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