Politics Straight, No Chaser
Events in Europe spur more economic debate
Published: Tuesday, May 8, 2012
Updated: Tuesday, May 8, 2012 04:05
Just as the 2012 presidential race is getting underway in the United States, France held its highly anticipated presidential election Sunday. In what is being deemed a considerable upset, Socialist Party candidate François Hollande defeated sitting President Nicolas Sarkozy to become the first president from his party since 1995. Hollande called for a return to a more economically equal France during the campaign and his victory can be considered a sharp rejection of the deficit reduction measures engaged by right-wing Sarkozy—measures that lowered spending by reducing public services and benefits as a means to escape Europe’s economic crisis. This means implications across the Eurozone as the European Union tries to work together to keep its economic alliance in tact.
France’s tactics for climbing out of economic peril are called austerity measures, and they’re controversial because they can cause suffering on the backs of a nation’s poorest people. Also, they aren’t entirely proven to be successful. Great Britain, which is not a member of the EU, cut public services, and government officials in London recently announced that they have moved back, or “double dipped,” into a period of recession.
The austerity campaign in Europe has been largely led by Germany and its Chancellor, Angela Merkel. A continent-wide project, it has caused riots and protests in countries like Spain, Italy and Greece. Much like the U.S., Europe faces a debt problem. Decades of borrowing and the increased reliance on government services in exchange for high tax rates have created a debt problem some economists thought Europe could never emerge from. Still, for generations of countries who have never known life without socialized industries like health care, high minimum wages and considerable mandatory paid vacation time, eliminating or cutting them in the name of austerity has been a difficult sacrifice for many.
The rioters and protesters would rather see an increase in taxes for the wealthy and profitable businesses to close the debt imbalance. According to the New York Times, President-elect Hollande has promised to raise the tax rates of businesses making more than €1 million a year in France to 75 percent, a number unthinkable to most Americans.
These European events have sparked an interesting debate across the Atlantic Ocean. The U.S. has the dark clouds of debt circling overhead as well. While our economy, and how we manage our economy, remains far less complicated than that of Europe, how to handle the debt is still at the forefront of political debate. Considering the unstable times—our nation’s economy is still fragile from the 2008 recession—our leaders must be extremely delicate in how they attempt to deal with the problem. Simply cutting spending would hurt America’s most vulnerable and poorest people who need government aid or would leave our military unprepared and weakened. Simply raising taxes could hurt industries and business still in recovery and prevent them from hiring more workers.
Democrats propose a mixture of both approaches. They would agree to spending cuts, preferably avoiding those cuts that would affect social programs. In return they would like to see increased taxes on our nation’s wealthiest individuals, who pay lower tax rates than people in lower tax brackets making less money. Democrats also call for the closure of loopholes that prevent large businesses and the ultra-wealthy from paying their fair share. Overall, they call for a flatter tax system, where more Americans pay an equal percentage of what they earn. A few months ago, Democrats agreed to a 10-to-1 “grand bargain,” where for every dollar raised in tax revenues, $10 would be cut from government spending. Republicans rejected this deal.
Republicans, especially presidential candidate Mitt Romney, strictly call for an austerity package similar to what is being done in Europe. They are always in favor of privatizing industry and shrinking the size of government and would prefer to see services cut to lower our debt, even if it means eliminating departments that keep our water clean and our roads safe. In this time of economic uncertainty, when ordinary working class people are hurting, Republicans would choose to cut services and make the taxes on the wealthy even lower then they presently are. In fact, almost all members of the GOP since the late 1980s have signed a pledge vowing to never raise taxes. This pledge has prevented them from any compromise with Democrats and locked both sides into a stalemate for the past year.
Throughout our nation’s history, the debate between these sides has guided us to prosperity. Strict capitalism may be profitable, but without government oversight we wouldn’t have the land of equal opportunity we so cherish in the U.S. Ultimately, it’s the combination of the two, where businesses have the freedom to operate in their most profitable capacities, but also where the government is looking over those businesses shoulders to make sure they operate safely and fairly, which will be the optimum policy. Our political process may be slow, arduous and at times horribly frustrating, but it usually works out for the best in the long run. We may have a long road of recovery ahead, no doubt filled with divisive debates and tough decisions, but America will be the world’s leader for many years to come.