Shocker: German Spending Cuts Lead To Economic Recovery

ITAR-TASS: BERLIN, GERMANY. NOVEMBER 26, 2010. German chancellor Angela Merkel gives a press conference in the Berlin Chancellery. (Photo ITAR-TASS/ Maxim Shemetov) Photo via Newscom

Back in June Chancellor Angela Merkel introduced an austerity package for Germany, which has Europe’s largest economy, that included a proposed $84 billion in spending cuts by 2014 while avoiding tax hikes. Labor activists in the country protested the cuts and the Obama administration urged Germany to engage in a program of government “stimulus” spending instead, but on Thursday the BBC reported that full employment may well be possible in Germany soon:

Germany’s economy minister Rainer Bruederle has given an upbeat assessment of his country’s recovery, including the assertion that “full employment will soon be possible”.

He said that Germans were “doing well and spending again”, and that domestic consumption was strong.

Data released this week showed German business confidence at a 20-year high.

German optimism is in marked contrast with the gloom engulfing some European economies struggling with high debts.

Meanwhile, here in the United States, we’ve done the exact opposite of Germany. We’ve inflated spending with a $787 billion “stimulus” bill that was more than twice the size of the nation’s annual discretionary budget, and while we haven’t exactly raised taxes yet, the Democrats have voiced their intent to let the Bush tax cuts expire either in part or in total which would represent major tax hikes for the nation’s economy.

The Obamacare bill also included significant tax hikes, and the potential for a cap and trade tax on carbon emissions has been looming for some time as well.

The impact on America’s economy? As Don Surber points out, unemployment went up from 7.6% to 10.3% in the first six months of Obama’s term.

On a related note, it’s worth remember that Germany has limits on the amount of debt their country can accrue. One of the reasons why Chancellor Merkel was successful in passing her austerity measures was that the country was obliged to follow its own laws on debt creation.

Here in America Congress does set a cap on the national debt, but every time our debt reaches that cap Congress votes to raise it again. And, if spending growth isn’t reined in soon, one of the first things the new politically divided Congress will have to do is raise the national debt limit once again.

It’s almost comical to call that limit a “limit” when it doesn’t every really limit anything.

Rob Port

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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