The misguided GOP focus on deficits and austerity in the U. S. is messing up the whole world’s economy. From the NYT*:
“The Europeans lately have slightly eased their austerity policies, after four years of deep spending cuts and rising taxes that many economists blame for keeping the Continent in recession long after America’s ended.
“And the Obama administration, after years of pressing Europe to adopt American-style stimulus measures, is now presiding — if reluctantly — over European -style austerity that is measurably slowing its recovery. …
“The new reality in the Unites States reduces the president’s already limited leverage in his fiscal debate with Europeans…even as Europe’s woes continue to act as a drag on its trading partners, including the United States.”
I would force every Republican member of Congress to write “Keynes was right” on the blackboard 1,000 times.
* “Lines Blur in U.S.-Europe Debate on Austerity,” Jackie Calmes
At the G-8 summit, both President Obama and new French President Hollande gave a boost to Alexis Tsipras, who is expected to win Greece’s new round of elections next month, by urging Germany’s Angela Merkel to soften her tough austerity stance and focus more on growth. Tsipras, leader of the far left Syriza party, is campaigning on keeping Greece in the euro zone, but forcing its creditors to renegotiate the tough terms of their loans to Greece.
President Obama has to thread the needle carefully here to try to avert disaster in Europe. If he is seen as being too much in bed with the socialist Hollande and the even-further-left Tsipras, he gives ammunition to the crazies on the American right and their Obama is a socialist/communist meme. His support for leftists in Europe will be touted as a warning for what he will do here in a second term.
But the truth is that what needs to be done, both in Europe and the United States, is classic Keynesian economics, which both Democrats and Republicans used to accept and follow.