|Posted by Zachary Woodman on May 8, 2012 at 8:35 PM|
The results from the European elections are in and it’s not good for the Austerity hawks. In Greece, anti-austerity parties won almost 60% of the vote, including the New Dawn party, a neo-Nazi Greecian National Socialist political party. In France, the first socialist in more than twenty years won the presidency with 51.7% of the vote.
Now American liberals in this country are saying that the elections of socialists and neo-Nazis help them. According to Rep. Chris Van Holland (D-MD), these elections “confirm the position that many of us have taken, which is the most important thing right now is to sustain and nurture the very fragile economy.” Because neo-Nazis and socialists obviously are only concerned about the “fragile economy,” and not about expanding government power. “While we have to develop and implement a long-term deficit reduction plan, we should be very careful in designing that, that we do nothing to hurt the fragile economy,” Holland continued. “In fact we believe that we should make some additional investments.” Holland is sponsoring a $50 billion bill on infrastructure in an attempt to spur these “investments.”
In other words, Holland’s argument boils down to this: fiscal austerity has failed in Europe and voters are rejecting it, showing we shouldn’t institute austerity in America.
The problem? Europe hasn’t started any Austerity. According to the EU website, 23 of 27 EU countries increased spending in 2011, and 24 are doing so this year. Over the last decade, EU spending skyrocketed 62% and government spending as a percentage of GDP has gone up from 44.8% in 2000 to 49.2% this year. The fiscal austerity treaty which was signed will not be enacted until 2013.
Taxes have gone up as well to try and raise revenue, rather than cut spending which is almost half of the European economies. France increased taxes on wealthy earners getting more than €500,000 last year as they expanded social security payments 1%, and added a 6% excise tax on alcohol and tobacco. In Britain, they increased income taxes to 50% on highest earners; coincidentally, income tax revenue fell £509 million in January after the institution of the tax as wealthy earners started exporting production to avoid new costs (which is exactly what would happen if taxes were increased on high earners in the US).
The result of all this spending and failed tax policy throughout the years have been massive debts; 485.7% debt-to-GDP in Britain, 271.5% in France, 220.13% in Greece and an astounding 1242.25% in Ireland. America’s not far behind some of these countries with 102% debt-to-GDP. As are result of such massive government intrusion into markets, Europe is in a proverbial depression; with cross-eurozone unemployment at near all-time highs of 10.7%. And inflation, as the Euro rapidly loses its value thanks to debt, went up by 2.7% in February alone, and 2.6% in January. French and Greek voters rejected austerity based off of fears of austerity that hasn’t even happened yet, not because its failed because increased spending in Europe has failed, contrary to what Holland claims.
In this country, big government has failed as well. Federal spending has been an aggregate $14.4 trillion under Obama, or 98.6% of our annual GDP, in FY 2009-2012 as annual federal spending is up $800 billion, to 26% of our GDP. The debt has increased to above the size of our GDP to $15.7 trillion, up $5.1 trillion from the day Obama took office. The result of this outrageous amount of spending has been that inflation is above annually 8% according to the Everyday Price Index and wage growth is a flat 2.1% according to the Bureau of Labor Statistics as unemployment, while adjusted for record labor force retractions since 2009, is at 10.9% and 10 million jobs are needed to restore our labor market to pre-recession levels.
Expansion of government has failed in America, failed and caused the massive recession in Europe, yet Holland thinks more spending is the solution and ignores the facts that austerity hasn’t even been tried in Europe? Where is he going to get his $50 billion? From taxes, which decreases revenue by increasing costs of production thus decreasing production, and debt, which increases inflation? More devaluation of wages and higher costs of production for companies is not the solution to get this economy going again, and it has failed in Europe. We must decrease the amount of government if we hope to revitalize the economy.
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