Hope we don’t have to come up with $1 trillion overnight

Holman Jenkins today sums up why our debt crisis is different from Europe’s – at least for now:

Mr. Romney, who is a terrible liar and thus a terrible politician, has lately been running around admitting to voters that though his tax plan cuts their rates, it won’t actually cut their taxes, because he’s also going to do away with their deductions. Can you imagine Mr. Obama saying anything (on purpose) so truthful and impolitic?

Mr. Romney is thoroughly lacking in thespian appeal, but on the real policy crux of this year’s campaign—what can the executive branch do to get the growth machine going so our spending frenzy doesn’t end in disaster?—he has the better argument. We’d say he’s the only one even offering an argument.

He would make the tax code less distorting, less of a dead weight on investment, job creation and work effort. Mr. Obama would make it more distorting, on the theory that directing more favors to Democratic donor blocs (teachers, green-energy impresarios) will lead to growth.

The Hail Mary is still in the air. Mr. Obama, let’s face it, has gained huge advantage from not being faced with a crisis. Does that statement surprise you? It contradicts everything he keeps telling us. In reality, although he presides over a stagnating economy, he has benefited incalculably from the extraordinary gift of unusually low interest rates and an unusual willingness of investors (a term we use loosely) to let the U.S. keep piling up debt and avoid any painful choices on Mr. Obama’s part.

This is the only difference between the U.S. and Spain. Talk about austerity: Imagine if Mr. Obama had to come up with $1 trillion in spending cuts and tax hikes overnight because the Fed and Red China stopped buying our bonds.

Then New Deal Mythology:

Alan Blinder, the respected Princeton economist and Obama supporter (and occasional contributor to this page), no sooner was introduced on Bloomberg radio this month than he insisted that the Romney plan consisted of a heedless slashing of government spending. “We tried that back in the Hoover days with pretty bad results.”

Mr. Blinder knows better. He’s unfair to both Romney and Hoover. FDR actually ran against what he called Hoover’s “reckless” spending, and the New Deal was basically an extension of Hoover’s scattered activism (and no more effective).

Ties in to the euro crisis as well:

European leaders are accused of being in denial. But denial is not the problem. Their crisis is unresolved because no resolution exists that the democratic politics of the individual countries will sustain… there is simply no getting around the fact that tax-hiking Spanish austerity is the price German voters demand for quelling each emergency that threatens Spain’s ability to keep paying its debts.

 

 

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