These are rough days for the European Union (EU). What began as a sovereign debt crisis has now metastasized into a political debacle for the leaders left holding the bag. Nicolas Sarkozy’s electoral defeat in France, the ouster of an austerity-minded government in Greece; and last month’s collapse of the governing coalition in the Netherlands are all symptoms of a deeper problem for Europe: bloated governments are hard to tame, even when there is no money left to pay for them. This is bad news for Europe. But the political tumult on the continent is also a stunning vindication of the post-War thinkers who anticipated this outcome. These individuals, men like Friedrich von Hayek and Wilhelm Röpke, would become founding intellectual fathers behind the modern conservative movement in Europe and the United States. Even today, their foresight provides a defining roadmap for navigating away from Europe’s current crisis and offers a chilling warning to the United States about repeating the same mistakes. Much like the debt crisis of our own time, the dimensions of Europe’s post-War reconstruction were staggering. Only instead of ruined factories and decimated cities, today’s contemporary European leaders must contend with bombed out credit ratings and the herculean task of reordering the continent’s dysfunctional economies. Then, as now, the basic policy debate centered on the state’s role as guarantor of public prosperity and welfare; and perhaps more importantly, how to finance it. Wading into this dispute, Hayek, Röpke and other post-War conservatives did not deny the need for basic social insurance schemes. But they foresaw that the promises of an ever-expanding welfare state would be maintained at heavy costs: both in taxation and freedom. With stunning prescience, they warned that unless state services were limited to basic forms of social insurance, the financial basis for Europe’s economic order would become structurally unsound and dangerously unmanageable. Government largesse would invariably grow and require increased revenue from taxes or heavy borrowing against future economic growth. As citizens relied on the state to protect them from the uncertainties of life, they would become dependent on it; but woe to politicians who would try to wean voters off of the state. This is an uncannily close portrait of Europe as it exists today. From angry street protests in Greece and Romania, to plaintive calls for a return to government stimulus spending by France’s president-elect François Holland and Italian Prime Minister Mario Monti, resistance to budget austerity is as predictable as it is strident. While this opposition does not alter the EU’s underlying financial problems, it could affect the political outcomes of the crisis. Going forward, the EU faces four potential scenarios, some of which could occur in combination: Voluntary Austerity: Europe’s over-burdened governments could fully commit to the rationale and rigors of sustainable budgets. Already, the EU’s Baltic economies (Estonia, Latvia and Lithuania) have demonstrated that deep cuts to state spending are possible. Such an approach, however, requires strong leadership and an understanding of what’s at stake by the voting public. In this case, Baltic memories of economic chaos during the late 1980s and early 1990s helped to catalyze decisive action. Imposed Austerity: External actors (e.g., Germany or the EU) could alter national spending habits by leveraging treaty or market forces. As recently as January, trading houses savaged Hungary’s currency and imposed crushing interest rates on government debt until officials agreed to a credible reform agenda. By enacting its new Fiscal Treaty, the EU hopes to avoid a similar pummeling of Euro-zone economies. But in binding its members to budgetary prudence, the EU has triggered virulent push back in France, Greece, Spain, Italy, Ireland and the Netherlands. Repudiation: Individual states could repudiate their treaty and debt obligations but incur economic isolation and impoverishment. Significantly, this approach would accelerate the emergence of a “two tiered” Europe as the gap between healthy and unhealthy Euro-zone economies widens. EU decision-making would be concentrated into the hands of solvent countries, while weaker economies could invite aggressive speculative pressure against the Euro. Faced with this scenario, the common currency is unlikely to survive in its current form. Repugnant Replacements: Paralyzed by inaction, Europe’s current governments could be replaced by new leaders who are antagonistic to trans-Atlantic norms and fiscal necessity. In recent months, non-mainstream parties in Austria (Freedom Party), France (National Front), Greece (Golden Dawn), Hungary (Jobbik), and the Netherlands (Freedom Party) have reaped an alarming windfall of voter support. And even if these parties are unable to translate a burst of popularity into majority rule, their role as political kingmakers in wobbly parliamentary coalitions could inflict lasting damage on fundamental values like open borders, free trade, free markets, and inclusive societies. As the EU gropes for a way out of its financial malaise, continental leaders would benefit by heeding the advice of thinkers like Hayek and Röpke. Faced with Europe’s current economic prospects, both men would be skeptical of centralized or collectivist approaches to spurring growth, preferring instead to stimulate entrepreneurialism through tax incentives and greater economic freedom. While Hayek might argue against applying a Keynesian balm for Europe’s ills, Röpke was more willing to prescribe public sector spending during a crisis. Even so, he warned that such a policy should be deployed only with great caution and for brief periods. Given the current levels of European indebtedness, it is difficult to imagine either Hayek or Röpke endorsing the rising counter-argument in France and Greece that public debt got us into this and even more debt will get us out. This would reinforce the rationale behind “voluntary austerity” and encourage national governments to fearlessly prune decades of overgrowth in public sector spending. For the United States, the insight of Hayek and Röpke highlights the need for cutting our own runaway deficits. Viewing Europe’s troubles, we can glimpse how our own story is likely to end if Congress cannot bridle federal spending. In this event, the cost of inaction would be counted not only in dollars and cents but in the unwanted decline of America’s capacity for global leadership.
Originally posted here:
Europe’s Crisis: A Roadmap From the Past
From the diaries. Two years ago, I was a regular citizen, a physician serving the people of my community, and raising my family in Northern Michigan. Suddenly, I found myself answering the call to become a citizen-legislator. It occurred at a time when many of us recognized how seriously at risk our country was after the liberals had taken control of all three branches of government after the November ‘08 election. Under the new administration, this nation was flooded with czars, executive orders, regulations, and then there was the Stimulus package. I could no longer stand-by and watch our children’s future be mortgaged. So, I sought and won the Republican primary and then went on to be chosen by the people of MI-01 to represent them in Congress. Many others across the nation heeded the same call. MI-01 sent me to Washington, entrusted with the mission of stopping out-of-control spending, stopping Congress from passing laws against the peoples’ will, stopping the over-regulation of our small businesses and stopping the intrusion of government into our personal lives. In other words, reform Washington. I’ve been in DC a little over a year and a half and I must tell you it has been an enormous challenge. While many of us thought we could undo the damage overnight, the reality is starker. The same goals were there, but without control of the Senate and presidency, we’ve had to use stopgap measures instead of immediately restoring the principles of our Founding Fathers and the Constitution. The presidency of Barack Obama has brought this country further economic hardship and massive debt that poses an incredible risk to the overall economy. The Democrats promised job creation, but we’ve had failure after failure of Stimulus-funded companies. The enormous debt taken on by the U.S. government currently works out to over $48,000 for every man, woman and child in America. Despite our efforts to stop the out-of-control spending and to initiate reforms, we’ve been blocked at almost every turn. Currently the new healthcare law is before the Supreme Court. I, as many others, hope and pray it is overturned – not only is it unconstitutional, it was passed against the peoples’ will. We can reform healthcare with a patient centered system, tort reform and allowing portability of health insurance across state lines. The current administration is regulating America to death. Small business owners are defeated even before they can get started. They can’t afford the costs of trying to comply with government regulations, and they can’t afford to gamble on uncertainty when it comes to what to expect from the government. For businesses that have managed to survive the Obama economy, they can’t afford to hire new employees. Businesses cannot stay solvent when weighted down by government regulations. On May 1st, I launched my “100 in 100” tour. I am visiting 100 small businesses in a 100 days across Michigan’s First District in order to speak directly to our entrepreneurs – we must hear their concerns and address them in Washington. Our message to Washington hasn’t changed, neither have our goals. In fact, the need is greater than ever to take a stand. This remains my pledge and vow to the people of MI-1; I will continue to work to restore and defend the American Dream as it was meant to be, one where all have the opportunity for achievement. Not one dependent on government, but on their own self-reliant and capable selves. I will continue to work to end the political sense of entitlement in Washington that has brought weakness to America, not strength. When we restore our core principles, our sense of optimism and our “can do” spirit will return. We will have growing employment numbers, not growing unemployment numbers. Once businesses are free to grow and hire, MI-01 will once again be master of her own destiny. This November, we can do this. We can do this with your support and belief in America. To find out more about my campaign or to donate please visit Benishek2012.com Thank you, Rep. Dr. Dan Benishek
Today President Obama’s reelection campaign launched a new ad campaign attempting to deal with Obama’s failed economic policies . As the headline for an article by Yahoo News White House correspondent Olivier Knox, put it: “ New Obama ad strikes ‘don’t blame me’ tone on economy .” The new ad plays right into the hands of the Republican National Committee’s effort to re-brand the 2008 Obama campaign “hope and change” theme with “ hype and blame .” Worse, after attempting to avert blame by once again talking about the “inherited” recession, and another reminder about getting bin Laden, the ad ends with this admission: “Instead of losing jobs, we’re creating them. Over 4.2 million so far. We’re not there yet. It’s still too hard for too many. But we’re coming back.” This is a huge mistake for Obama. Having said that if he doesn’t have this “done in three years, then there’s going to be a one-term proposition ,” admitting that after three years “we are not there yet,” is the same as admitting that he is going to be a one term president. Perhaps Obama was paying attention when Romney said, the presidential campaign is “ still about the economy…and we’re not stupid .” The new Obama ad is also notable for the fact that it fails to mention Obama’s signature still unpopular ObamaCare , Dodd-Frank financial reform, and $831 billion-dollar so-called stimulus package. The new ad will air in the battleground states of Virginia, Pennsylvania, Ohio, Nevada, New Hampshire, Iowa, North Carolina, Florida and Colorado. You can watch Obama’s “Go” ad here .
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In new ad, Obama admits he didn’t get it done in three years
“Every person in Indiana who wants me to continue, every person wherever they might be at this point, I encourage them to come out,” the six-term senator exhorted. “Come out immediately, as fast as you can.” So the Indianapolis Star quotes Richard Lugar, first elected to the Senate in 1976, as saying the weekend before his state’s Republican primary. Are those the words of a confident candidate? The Star reports : As a bell rang each time a volunteer won a commitment from a voter, Lugar pleaded with groups that he has helped over the years to now help him salvage his political career…. He appealed to veterans, Jewish voters who cared about his work to help Russian Jews, women who might have benefited from his program to build political networks and minority students who were helped by his scholarship program. Most of all Lugar is hoping for an inflow of Democratic and independent voters to rescue him from the Republican base. “I’m not asking anybody to cross over,” Lugar said. “I’m just saying positively, ‘Register your vote, because if you do not, I may not be able to continue serving you.’ At this point, help.” How the mighty have fallen. Six years ago, Lugar was returned to the Senate with 80 percent of the vote. The Democrats didn’t even bother to run a candidate against him. Now the Democrats are looking past him entirely. In a Jefferson-Jackson dinner speech to 1,200 party activists Friday night, Rep. Joe Donnelly, the presumptive Democratic nominee for Senate, didn’t even mention Lugar’s name. He trained all his fire on the longtime senator’s primary challenger, state Treasurer Richard Mourdock. “Richard Mourdock has said he is opposed to bipartisanship. I am the fifth of five kids. As the fifth of five kids, if you are not bipartisan, you do not eat at night,” Politico quoted Donnelly as saying. This country works best when we work together as a family.” Peggy Noonan also stressed family ties when making the case for sending Lugar back to the Senate: “What Washington needs is sober and responsible adults.” Noonan didn’t disclose who the children were in this relationship. But it is the sober and responsible adults who have accumulated a national debt larger than the country’s economy. There are two ways to demonstrate one’s sobriety and responsibility in Washington: to be as supportive of druken sailor-style fiscal irresponsibility as possible or to be as timid as possible in opposition to it. Noonan’s brief misses a larger point: The very reason Lugar is in trouble is that many Hoosiers see him as a creature of Washington, not Indiana — to the point where his residency has actually been challenged. Perhaps the handwriting was on the wall when Dan Coats, a former senator turned lobbyist, was barely returned to the Senate when two Tea Party candidates split the conservative vote in the Republican primary. This time, there is no split. Mourdock has Lugar’s right flank to himself. Lugar has recently been aggressive in defending his own conservative credentials and casting doubt on Mourdock’s. The Democrats are already keying in on Mourdock’s resistance to the unfunded Obama stimulus package. Lugar has specifically hit Mourdock on the flag-burning amendment and a comment in which the state treasurer seemed to open to consolidating military service branches. A late April Lugar statement asks: “Which military branch do you think is no longer necessary in the 21st
The April unemployment report brought attention to the millions of Americans suffering in silence as a result of President Obama’s failed economic policies. The Romney campaign has released a new video “Silence” highlighting the terribly disappointing April unemployment report: No wonder that during his so-called official start to his reelection campaign , President Obama told Americans not to ask if they are better off than they were four years ago, but how they’ll be tomorrow. Only 115,000 jobs were added in April, far fewer than the 180,000 economists were expecting. The reason the unemployment rate declined slightly to 8.1 percent and the broader “U-6″ measure remained at 14.5 percent is because 342,000 more people gave up looking for work and quit the labor force. As Mitt Romney said, “ It’s still about the economy…and we’re not stupid .”: The unemployment rate has remained above 8 percent for 39 straight months. Only 115,000 jobs were created in April, which is the smallest monthly jobs gain in five months. Hiring has now slowed in three straight months. The labor force participation rate declined in April to 63.6 percent, which is its lowest level since 1981. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.6% today—the unemployment rate would be 11.1%. When President Obama pushed through his $800-billion stimulus bill, his administration claimed unemployment would drop to 5.9 percent by April 2012. 22.8 million Americans remain unemployed or underemployed, or are only marginally attached to the workforce. Millions of Americans are suffering in silence as a result of President Obama’s failed economic policies . No, they are not satisfied .
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Obama’s failed policies cause millions of Americans to give up
