Alright, so the developing countries got elevated to the big boy’s club and the G8 got expanded into the G20, and so they go to the G-20 (except for Lula, who’s attending to the floods). Now what? A fight on spending.
Dan Mitchell says, The G-20 Fiscal Fight: A Pox on Both Their Houses
Austerity, in the European context, means budget balance rather than spending reduction. As such, David Cameron’s proposal to boost the U.K.’s value-added tax from 17.5 percent to 20 percent is supposedly a sign of austerity even though his Chancellor of the Exchequer said a higher tax burden would generate “13 billion pounds we don’t have to find from extra spending cuts.”
Raising taxes to finance a bloated government, to be sure, is not the same as Obama’s strategy of borrowing money to finance a bloated government. But proponents of limited government and economic freedom understandably are underwhelmed by the choice of two big-government approaches.
What matters most, from a fiscal policy perspective, is shrinking the burden of government spending relative to economic output. Europe needs smaller government, not budget balance. According to OECD data, government spending in eurozone nations consumes nearly 51 percent of gross domestic product, almost 10 percentage points higher than the burden of government spending in the United States.
Unfortunately, I suspect that the “austerity” plans of Merkel, Cameron, Sarkozy, et al, will leave the overall burden of government relatively unchanged. That may be good news if the alternative is for government budgets to consume even-larger shares of economic output, but it is far from what is needed.
Unfortunately, the United States no longer offers a competing vision to the European welfare state. Under the big-government policies of Bush and Obama, the share of GDP consumed by government spending has jumped by nearly 8-percentage points in the past 10 years. And with Obama proposing and/or implementing higher income taxes, higher death taxes, higher capital gains taxes, higher payroll taxes, higher dividend taxes, higher business taxes, and a value-added tax, it appears that American-style big-government “stimulus” will soon be matched by European-style big-government “austerity.”
Go read the rest, which includes this from the Christian Science Monitor.
But both Dan and the CSM may be taking the whole thing too seriously. Obama’s attention is elsewhere:
When U.S. President Barack Obama stepped off his helicopter in Huntsville on Friday, the first thing he said was, “You’ve got a lot of golf courses here, don’t you?” Industry Minister Tony Clement told the National Post in an exclusive interview.
See? It’s all in the drive.
Speaking of drives, the press was sent away. 150 miles away, that is,
Obama Gives Press the Slip
Last [Friday] night, the White House sent the press corps — which by agreement stays close to the president in order to report on any incident — back to Toronto, leaving the president 150 miles behind. In the wee hours of this morning, the crew of a dozen or so reporters and photographers in the press corps got back on a bus and returned to Muskoka for the day’s events.
It is highly unusual for the president to shun his permanent media detail that way, particularly at a high-profile event in a remote location.
Highly unusual, you say?
Name one president in the past twenty years who has done this at a G8/G20.
But hey, Obama doesn’t want anyone catching him on the links.
