 Barack Obama and Nicolas Sarkozy. |
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The radicalism of the Obama administration has startled even European lefties. Writing in the Guardian, Jonathan Freedland remarked on the spectacle: "[Obama] and Brown stand together, supposedly the representatives of Anglo-American turbocapitalism, struggling to push the statist French and Germans--and this is the bit that was in nobody's script--leftward."
President Bush seemed to revel in the European indignation his policies aroused, but Obama seems genuinely surprised. Nowhere has this been more apparent than in his failed attempt to convince Europeans to launch Keynesian atomic bombs at the economic crisis.
French president Nicolas Sarkozy made a classic French drama out of his rejection of "Obama-style" stimulus. Czech prime minister (and current head of the rotating EU presidency) Mirek Topolánek warned that Obama's plans could destabilize world markets, adding that "all of these steps, these combinations and permanency, is [sic] the road to hell."
As a result, European policy has been fairly calm in this storm. The chart at right indicates how dramatically U.S. policy has diverged from world norms this year. It compares the fiscal impact of the stimulus package that Obama and the Democrats enacted to the impact of similar packages adopted by European countries from 2008 to 2010. In each case, the total impact is scaled by GDP.
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Source: "The OECD Economic Outlook Interim Report." OECD.
March 2009. http://www.oecd.org/dataoecd/3/62/42421337.pdf. |
Relative to GDP, the fiscal impact of the U.S. stimulus is nearly ten times larger than that of France, and almost double that of Germany. It is significantly larger than that of even the most Keynesian of European countries, Luxembourg. Obama may have a calm presence on television, but his economic policy looks like it has been driven by panic.
Europeans may have been reluctant to adopt massive Keynesian plans because their policy elite have become very data-driven. They know that such plans are unlikely to be effective. In addition, they recognize that stimulus today must eventually be paid for with higher taxes, and Europeans seem to cherish the competitive advantages associated with their low marginal tax rates.
America's Left spent the last century striving to drive the United States to the European model. But while they were doing that, the Europeans changed. Thus, we can expect another four years of classic European derision targeted at the American president. Only this time, it will be more fun.
Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.
