Dana Milbank writing in today’s Washington Post
…if you really want to know who will win the White House in November, you should ask the Europeans. They aren’t eligible to vote, but they may well cast the deciding ballot — and for President Obama, it’s looking grim.
To a point, he’s correct. And Obama is true to form in blaming someone or something besides his policies for our current economic malaise. Fair enough; many politicos do this. And Milbank is right in noting that as goes Europe’s economy, so goes our presidential election.
However, in this instance, there is a unifying theme between us and Europe: unsustainable economic policies. In Europe, it has become evident that some nations in the Eurozone can not apply the fiscal discipline needed to justify a hard currency like the Euro.
Here in America, we have an administration hell-bent on raising taxes in order to pay for more government spending. This is exactly backwards: we should be lowering spending in order to lower taxes and thereby ignite our economy.
And, as in much of Europe, an attendant belief that, somehow, more government spending will boost the economy. Despite ample recent evidence, both here and in Europe, massive government spending evaporates and must be renewed year to year. Sort of like an economic heart-lung machine. While it functions, the patient looks alive. Turn it off, the patient dies. Hence the spend-and-tax model is unsustainable.
Greece and Spain are merely in the front ranks in Europe. Both have official unemployment rates that, were they in effect here, would put us in Great Depression territory. Neither nation is likely to be able to fulfill the fiscal controls that will be placed on them if they are bailed out.
Today’s “problems” revolve around the false assumption that there must always be a Eurozone. The whole Euro project may appear doomed just now, but it was still-born. In what fantasy world would a culturally diverse group of nations, many with thousands of years of history as sovereign entities, give up an essential element of their sovereignty in order to enjoy some transient economic benefits?
Stated plainly, for the Euro project to succeed requires that there be a true central bank and a true fiscal union. With attendant controls and penalties for not meeting centrally-planned and implemented policies. Of course the Greeks, Spaniards, et.al. will instantly become as productive as the Germans.
Stop laughing back there.