U.S. Congressman Kenny Marchant

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Europe Sets Example with Budget Cuts
Posted by on June 17, 2010

Europe Sets Example with Budget Cuts

Recently, I have been struck by Wall Street Journal headlines: Italy Approves Budget Cuts; U.K. Is Set to Detail Cuts to Trim Deficit; Czech Poll Sets Stage for Budget Cuts; etc. "Cuts" – a word Europe is becoming all too familiar with in responding to the declining euro, falling stock market, and worrisome deficits.

This week the Economist highlighted Germany’s new budget cut proposal by Chancellor Angela Merkel. If her plan is enacted, the country will save an estimated 80 billion euro ($96 billion) from its federal budget by 2014. While reactions have been mixed to Merkel’s unveiling, the Economist described the plan as follows:

"Its main purpose is to cut the federal government’s structural deficit—that is, the part not related to the business cycle—from an expected 2.5% of GDP this year to 0.35% by 2016, as required by a recent amendment to the constitution. That is also supposed to set an example to profligate members of the euro zone. To avoid crushing a fragile European recovery, the savings will be phased in. Growth will be dampened but, says Eckart Tuchtfeld, an economist at Commerzbank, ‘the economy seems to be pretty resilient.’ Investment in education, research and infrastructure, the sources of future growth, has been largely spared." (Link to full article)

Merkel hopes to set an example for Europe, yet Europe is already setting an example for the U.S. The Obama Administration continues to spend profligately, and House Democrats are two months overdue in presenting an FY ‘11 budget. We are taking a back-row seat in deficit reduction. I addressed this crisis on the House floor yesterday, calling for a budget so that we can have a debate on improving our fiscal condition. You can follow this link to hear my full speech: http://bit.ly/cYDOed

Comments
The opinions expressed below are those of their respective authors and do not necessarily represent those of this office.
  • Jim Killion commented on 6/17/2010
    My company began budget cuts in the 4th qtr of 2008 in the beginning of the recession. I don't understand why the US & European governments have waited until now to do the same. Perhaps now is a good time to propose a moritorium on all earmarks until our budget is balanced.
  • H. Tieben commented on 11/26/2010
    I think that Germany is not only setting an example for the other European countries, but also for the US. One should listen to Schäuble. Best regards http://www.mth-partner.de
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