RSS Feed MenuWhile the U.S. debates Obama’s spending slushie, Spain readies truly draconian spending cuts plus tax increases, intended to cut its budget deficit from over 11% of GDP to 3% by 2014. Spain has a Socialist government by the way.
Spain has to do these things for the same reason that Herbert Hoover did what he did back in the 1930s: because its local currency is fixed to an external value, in Hoover’s case gold, in Spain’s case, the Euro.
My AEI colleague Desmond Lachman has been sounding the alarm about the crisis facing Euro countries: either impose severe deflation on themselves or face the crackup of their new currency.
Spain has made the choice: the currency, not the domestic economy. Can this possibly continue? And with this advance at what it means to close a budget deficit in the midst of a savage recession, there’s cause to wonder: Could this be America’s future too?
teabag // Feb 1, 2010 at 7:41 am
I will believe that the right is fiscally Conservative when a Republican President actually cuts the deficit.
None have done so in recent times while every Democratic President since the wars has. Fiscal Conservatism is an absolute myth.
LFC // Feb 1, 2010 at 1:18 pm
Teabag is spot on. St. Ronnie had a skyrocketing deficit. That was OK to pull us out of the fiscal hole we were in for a couple years, but there was zero excuse for not fighting for deficit control at any point in his 8 years. George HW, who I generally like as a President, simply couldn’t understand that there was a problem. (“It’s the economy, stupid.”) Clinton started getting things under control, but then George II and the GOP Congress went off the charts in overspending. At least they cut taxes to offset their spending. [/snark]
For months, the GOP has been screaming at Obama for overspending, not grasping (or actively ignoring) that roughly 100% of the change in deficit came from a drop in revenue, not additional spending. Part of that came from the tax cuts Obama pushed for, the type of tax cuts that the GOP has supported continually for decades.
Very recently, we had a vote on “pay as you go”. EVERY Republican Senator votes against it. Why? Because they’ve never practiced anything remotely like it and they are too politically cowardly to do so. Remember the increase in Medicare spending without even $1 of offset? Great politics, horrible for our nation. Two wars? Put ‘em on the government credit card. Tax cuts? Oh, they’ll pay for themselves. Yeah, that’s the ticket.
Borrow and spend. That’s GOP SOP.
DFL // Feb 1, 2010 at 5:03 pm
The Right generally wants budget cuts only when they have little political responsibility, especially when a Democrat is president. Yes, the Republicans are political cowards when it comes to fiscal conservatism. That’s one of the reasons why defeating Obama in 2012 is pointless.
LFC // Feb 1, 2010 at 5:37 pm
Now it turns out that Tim Pawlenty has become a “tax cuts solve all ills” snake oil salesman. Bruce Bartlett slivers his latest bulls*** with reality, something the GOP is in short supply of at the moment.
David: Pawlenty calls for more tax cuts. GOP Senators unanimously vote against pay as you go. GOP is in total denial that their policies have failed miserably. Time for a top of the page post on why the current GOP is the worst worst choice (as compared to the least worst choice) for fiscal conservatives.
Borrow and spend. It’s the GOP way.
Arch // Feb 1, 2010 at 7:59 pm
Not just tax cuts. Tax cuts for Warren Buffet and his peers.