"As Europeans Push To Ease Austerity Amid Record Unemployment, The U.S. Digs In"
Eurozone-area unemployment, still plagued by a continent-wide push for austerity, rose to yet another record high in March, and 12.1 percent of Europeans are now unemployed. Spain’s economy contracted for the seventh consecutive quarter in the first three months of 2013, and across the continent, growth is stagnant. Even Germany, home to Europe’s strongest economy and its biggest deficit hawk in Chancellor Angela Merkel, is seeing higher unemployment.
That has led European leaders to rethink their focus on austerity, largely at the urging of American officials. European officials pledged to rein in austerity efforts earlier this month, and European Union president Jose Manuel Barroso said last week that the EU was considering easing its austerity policies and deficit reduction targets to help boost growth. Others have gone farther, with officials in France and Italy calling for total abandonment of austerity, the Washington Post reports:
In France, the doubts have spread to President Francois Hollande’s Socialist Party and government, with officials suggesting that the debt-ridden continent needs to stimulate growth at all costs — even including more debt — if it is to climb out of the economic and financial crisis that began unfurling in 2008. […]
“Italy is dying because of austerity alone,” that country’s new prime minister, Enrico Letta, complained in his first address to Parliament on Monday. “Stimulus policies can no longer wait.”
European leaders haven’t yet abandoned austerity to focus on growth that would help countries like Spain and Greece — where unemployment rates top 25 percent — but they are at least considering it. But even as the U.S. pushes those reconsiderations, lawmakers here remain focused not on growth that would help reduce America’s own persistently high unemployment rate but on reducing deficits and debt. Sequestration, the automatic budget cuts that went into effect on March 1, is America’s most irresponsible form of deficit reduction yet, and despite its gutting of vital programs and its harmful effects on economic growth, Republicans in Congress have shown no willingness to abandon it in favor of policies that would actually help the economy.
The U.S. bucked the European trend toward austerity in 2009, when President Obama signed a large stimulus bill into law that halted the recession and turned the economy around. The stimulus put the U.S. on a faster pace of growth than Europe experienced, but the focus on deficit reduction since then has only prevented the recovery from taking full effect. Though government spending has typically driven economic recoveries in the United States, it has plateaued amid deficit reduction efforts and perpetual manufactured crises (like the 2011 debt ceiling debacle) since 2010. Instead of helping the recovery, those efforts have only hurt it. But even as some European leaders rethink austerity, and even with evidence that stimulative policies sparked a better recovery than Europe’s, American lawmakers remain committed to spending cuts that will only hinder efforts to grow the economy and reduce unemployment.