Let’s Not Follow Europe’s Lead

COMMENTARY Budget and Spending

Let’s Not Follow Europe’s Lead

May 20, 2010 2 min read

Spokesperson, The LIBRE Initiative

Israel Ortega is a former contributor for The Foundry.

Europeans, and the rest of us, live in interesting times.

For starters, an unpronounceable Icelandic volcano has been wreaking havoc on travelers worldwide as it spews volcanic ash. And if that wasn’t exciting enough, Europe has been dealing with an economic crisis of epic proportions as a number of countries implode under the weight of unsustainable debt.

We may be tempted to dismiss this news as being of little importance to us. But the reality is much more sobering -- especially considering our own country’s spending spree and mounting deficits.

To fully understand the possible parallels between Europe’s follies and our country’s precarious position, it’s important to describe the events leading up to the recent violent protests in Greece, the “birthplace of democracy.” Greece, like a number of other European countries, is part of the Euro -- a single currency -- that was created to strengthen economic and political ties. And for several years, the “Euro model” seemed to work, even rivaling the dollar and other strong global currencies.

But beneath the surface, the seeds for the eventual unrest were being planted. A number of smaller European countries acted as if their newfound economic posterity was a license to spend lavishly. Greece embraced generous social welfare programs, and many of its citizens spent and borrowed without a care in the world. Unfortunately, the party is over.

Because the Euro ties economies together, this crisis wasn’t contained to Greece. Instead, other countries, especially Germany, are being forced to pitch in to prop up the Greek economy and help repay its loans. Of course, that was a tough sell for German Chancellor Angela Merkel, whose countrymen aren’t happy to have to bail out the Greeks. In return for their financial assistance, the Germans demanded a number of belt-tightening economic concessions from the Greeks.

Getting something is always a lot easier than giving something up, and that’s how we get to chaos and disaster in the streets of Athens.

Think that the Greece’s problems couldn’t happen to us? Then consider the Treasury Department’s recent announcement that the federal deficit for April soared above $82 billion. This shouldn’t be a surprise, considering how our federal government has been spending during the last few months. A recently passed health care reform bill, for example, is predicted to cost our country more than $1 trillion over the next 10 years. (Expect the actual price tag to be much higher, though.)

Of course, that came on top of numerous “stimulus” bills aimed at improving our economy. The federal government has adopted the philosophy that spending is the best way to grow our economy. Unfortunately, our unemployment rate continues to hover around double digits.

And if this weren’t bad enough, Congress is eyeing even more federal spending in the form of a costly energy bill that would raise our taxes and dig us deeper into debt.

If we are to avoid Greece’s fate, our government must avoid reckless spending and borrowing and chart a responsible course to reduce our deficit while growing our economy. The free market, not free-spending politicians, can be our salvation.

Israel Ortega is a Senior Media Services Associate at The Heritage Foundation 

First appeared in El Diario de La Prensa