Can Europe cut its way back to economic health?

[I AM NOT THAT GUY 5,715]

German Chancellor Angela Merkel on Saturday contradicted US President Barack Obama, saying that Europe will push for a swift exit from fiscal stimulus programs and focus instead on budget cuts at the G20 meeting.

German Chancellor Angela Merkel on Saturday signaled that she expected next week's G20 summit in Canada to focus on budget consolidation rather than continue with stimulus packages to strengthen the global economic recovery as favored by US President Barack Obama.

Germany's cabinet this month backed budget cuts worth about $105 billion - the country's biggest postwar austerity program -through 2014, while French President Nicolas Sarkozy this week raised the retirement age and increased taxes.

Merkel's stance heading into the G20 summit is contrary to that of President Obama. On Friday, Obama urged caution when it came to scaling back government spending.

"Our highest priority in Toronto must be to safeguard and strengthen the recovery," Obama said in a letter to G20 leaders on June 16.

"We worked exceptionally hard to restore growth; we cannot falter or lose strength now. This means that we should reaffirm our unity of purpose to provide the policy support necessary to keep economic growth strong," he said.

However, Germany - and other members of the European Union - are having to come to each other's aid in a joint effort to protect the euro, shared by 16 of the EU's members. Merkel has said that the billions the German government had already agreed to were in the greater interest of the euro currency, not individual member states.

Merkel also said that the European Union would push again for a global financial transaction tax at the G20 meeting.

Germany and France support the introduction of the tax in Europe but G20 hosts Canada as well as Britain are opposed to it.

"There will certainly be controversial discussions about this but I am happy the European council reached a common stance on this for the G20 meeting," Merkel said.

http://www.dw-world.de/dw/article/0,,5710437,00.html

Edited June 19, 2010 by ##########

[Heracles 417]

It's funny Europe is often used as an example against government and welfare yet Canadians and Australians more often than not receive more in benefits than them. Therefore, why are neither of these two countries poor?

In reality what many on the right ignore or are unaware of is that tax evasion is rampant throughout Europe. Furthermore, Europe's Libertarian fair tax equivalent of high sales taxes does not offset the lost tax revenue.