Echoes of Europe in the Fiscal Cliff Debate
Posted at 1:30 p.m. on Nov. 30, 2012
Neil Irwin sees parallels between the series of decisions that brought about the current crisis in the Eurozone and the current US debate over the “fiscal cliff.”
“Like Europe, the United States did not need a recession-creating crisis to bring about economic reform. U.S. budget deficits are large, but so far manageable. Interest rates are extraordinarily low, and the ‘crisis’ the nation faces is not a traditional fiscal one, but rather a risk that decisions made in the past will, absent a deal between Congress and the White House, bring on a sudden bout of deficit reduction so severe as to cause a recession.”
“The Europeans were trying to create new institutions on the fly in the face of a crisis. The United States is testing whether our centuries-old institutions are up to modern challenges. Europe bungled the process enough so that its standing as a credible, global leader is in doubt. The goal for the United States is to achieve a better result.”
