European nations show way toward fiscal responsibility

During the Bush administration, European leaders felt a fair amount of lecturing and condescension coming their way from Washington, particularly over their qualms about invading Iraq.

OPPOSING VIEW: Avoid deficit phobia

Now, it seems, the Obama administration is doing the lecturing, this time over economic policy. President Obama and other top officials have admonished heavily indebted European nations not to move too quickly in cutting deficits, for fear of killing a fragile global recovery.

To be sure, no one knows precisely the right time to pivot toward austerity from the extreme stimulus that was needed to counter the Great Recession. Fears of a double-dip recession sent the stock market tumbling Tuesday. But if Europeans are suddenly willing to address their staggering liabilities, the U.S. should not try to stop them. In fact, U.S. leaders should thank them for leading the way.

A case can be made for not cutting too much too fast, but the recession also is a convenient excuse for avoiding long-term decisions — particularly about health care costs — that will only get tougher. Ideally, the stimulus spending now in the pipeline should be coupled with action to lock in long-term fiscal responsibility, as is happening in Europe.

Recent proposals, particularly in England and Germany, have been impressive.

In England, the newly elected coalition government of David Cameron advocates a freeze in government pay, cuts in most departments of roughly 25%, and a reduction in some benefits, all while hiking the nation's value-added tax from 17.5% to 20%.

In Germany, Chancellor Angela Merkel has proposed equally austere measures, even though her right-of-center party, the Christian Democratic Union, took a drubbing in recent elections and is suffering from low approval ratings. Even the French are getting into the act by cutting government spending and raising the formerly sacrosanct retirement age — albeit only from 60 to 62.

Europe, suddenly in the grip of a debt crisis, is beginning to confront economic reality, and it is doing so by taking on multiple sacred cows with cuts in benefits and hikes in taxes.

Compare this to what is happening — or, more accurately, not happening — in the United States. Congress could not even muster a majority to create a bipartisan commission to recommend ways to reduce the deficit. Obama created one himself by executive order. But it's unclear whether the panel will be able to muster the required supermajority to make formal proposals. Ideologues and political opportunists on the right are preparing to vilify any proposal to raise taxes. Those on the left are resisting any attempt to cut benefit programs. Compromise for the sake of the nation's future? Missing.

Or compare the actions of European leaders to those of Obama, who promises to take America's ballooning deficits seriously — at some indefinite point in the future. The Europeans are not waiting for a commission, or the next election, or some kind of alignment of stars. They don't believe they have any time to waste and are pushing forward now.

Many European countries, particularly Germany, learned painfully in the years following World War I of how government debt can unleash inflation and wreck economies. So when bond markets signaled their unease with European debt, they spooked governments into acting. If present trends continue, the same threat will emerge here.

So a little lecturing may be in order. But it is the USA that should be on the receiving end.

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