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Could America ”“ struggling to emerge from the aftershocks of a recession ”“ become like Europe?

Some Republicans charge that Europe is “socialist” because of too much government involvement in the economy. They warn that the United States is on the path to European socialism.

The United States and Europe do, in fact, suffer from the same problem, but the problem is too much debt.

The American federal debt results from massive outlays for the wars in Afghanistan and Iraq, a large tax cut, the unfinanced Medicare prescription program, and economic stimulus spending. It does not stem from government social programs, though Medicare will soon be a problem.

Under President George W. Bush, the United States followed the unusual policy of going to war and cutting taxes at about the same time.

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In 1964, a tax cut proposed by Democratic President John F. Kennedy stimulated the economy, and, ever since, Republicans have advocated cutting taxes to increase tax revenues from a growing economy. Unfortunately, that hasn’t worked, and revenues from the Bush-era tax cuts have not kept pace with spending.

European debt has different causes. It stems from huge spending for government programs, including social welfare, accompanied by insufficient tax revenues and, in some cases, blatant tax evasion.

Some European political parties have won office by promising more services, lowering the retirement age and cutting the standard work week without raising taxes to pay for these new benefits.

In the United States, the economy fell into a deep recession because people did not have enough money to keep current with their debt, especially home mortgages. Institutions essential to the economy like banks and automobile manufacturers had also taken on too much debt.

Government is limited in what it can do to help, because it, too, is burdened with too much debt. In the past, increases in government spending had breathed new life into the economy, but it cannot do enough now.

With the economy reducing tax revenues, governments at all levels have reduced spending rather than increasing it even temporarily.

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The Democrats want to cut government spending, target outlays more at promoting growth and get more revenues from a tax increase on the most wealthy.

The Republicans want to make deep spending reductions and free the private sector to invest and stimulate recovery by eliminating some regulations. They say that increased stimulus spending, as proposed by the Democrats, is the path toward socialism.

In Europe, some countries, including France, want more government stimulus. Other countries, including Germany, want more austerity ”“ cuts in government spending.

So the debate on both sides of the Atlantic seems to be the same.

However, the relatively modest stimulus spending possible in the United States is far below the level of European social spending. European socialism does not loom for the United States.

The economic challenges faced by the United States and Europe seem unlikely to be resolved by simply stimulating the economy. Economists increasingly agree that the deepest economic slowdown since the Depression requires some changes in its very structure.

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That probably means that wages and benefits will not be as generous after the recovery as they were a few years ago. And recovery will take time.

The biggest difference between the United States and Europe is that Americans will have an easier time working their way out of the economic crisis than Europeans.

That’s because we have a single currency, a federal tax system and a central bank that can control the supply of money. For the United States, adopting measures to promote economic recovery, whether by the Democratic or Republican routes or a compromise, is a matter of making decisions.

Our problem is that the people running government cannot seem to find enough common ground to make those decisions.

Many European countries have the euro as their common currency, but they have no unified tax policy, and the weak central bank cannot do much to control the money supply.

Europe still struggles between the demands of national sovereignty and the need to take more unified action to support its common currency.

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As a result, it lacks the tools Americans have to solve their economic problems. Either they will develop those tools, as Germany advocates, or their recovery will take many years more than in the United States. Right now, a united Europe is still just a dream.

The bottom line is that the United States is better than off than Europe, because it is united.

Americans need to make more of their advantages and get on with restoring the economy ”“ and worry less about becoming like the Europeans.

— Gordon L. Weil is an author, publisher, consultant, and former official of international organizations and the U.S. and Maine governments.



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