German official flays US policy on tax breaks

The Peninsula ^ | November 14, 2004

[NCjim]

The German deputy finance minister, Caio Koch-Weser, sharply criticised the US administration in an interview made available yesterday for showering tax breaks on the wealthy and letting deficits get out of control while failing to improve the economy.

He said it had “handsomely reduced taxes for those who earn the most money. Economically speaking, that was not good, since it hardly succeeded in reviving the economy and has accumulated huge budget deficits.”

In the interview, to appear in Der Spiegel magazine on Monday, Koch-Weser said it would have been wiser if President George W Bush had spread tax cuts more equitably.

The burgeoning budget and balance of payments deficits were a cause of concern to money markets that the recent presidential election had done nothing to allay, Koch Weser said.

He added that the US badly needs to restore budget discipline as deficits soar to record levels.

The current account deficit, reflecting international trade, reached more than $166bn in the second quarter of this year, and some experts predict the total for the year could be as high as $600bn.

Europeans suspect that the US government has deliberately allowed the dollar to slide in order to finance its deficits and sustain exports.

[NCjim]

I keep wondering why these people keep believing that we care what they think...

[zahal724]

Well, the real thing to say is, why is German unemployment at 9% and ours ir 5.4%? Anyone? No one? My thoughts exactly.

[Mr Ramsbotham]

As remarked by Lord Melchett in a Blackadder episode: "I'm indebted to you for that advice ... and I shall, of course, follow it to the letter, the day I get my brain replaced by a cauliflower."

[Prime Choice]

Dear Germany,

When we want advice on how to be a Second-World has-been nation like yours, we'll look you up.

Until such time, if we want any of your lip, we'll rattle our zippers.

Sincerely,

Joe American
"We kicked your butt in World War II just to get your attention, Herr Koch-Schmoker."

[aliquis]

With the state of economy as is it in Germany, they are not in a position to speak.

[VaBthang4]

STUCK PIGS SQUEAL

[Clemenza]

A German giving a lecture on fiscal responsability is like a Klansman giving a lecture on racial tolerance.

[Gingersnap]

He's worried about OUR economy?

[baltodog]

Especially him...

Who's calling the kettle glass on the other foot here, or something like that...

[Notwithstanding]

THE PERFECT RETORT!

http://www.opinionjournal.com/forms/printThis.html?id=110005242

    

REVIEW & OUTLOOKEurope vs. America
Germany edges out Arkansas in per capita GDP.

Sunday, June 20, 2004 12:01 a.m.

The growing split between the U.S. and Europe has been much in the news, mostly on foreign policy. But less well understood is the gap in economic growth and standards of living. Now comes a European report that puts the American advantage in surprisingly stark relief.

The study, "The EU vs. USA," was done by a pair of economists--Fredrik Bergstrom and Robert Gidehag--for the Swedish think tank Timbro. It found that if Europe were part of the U.S., only tiny Luxembourg could rival the richest of the 50 American states in gross domestic product per capita. Most European countries would rank below the U.S. average, as the chart below shows.

The authors admit that man doesn't live by GDP alone, and that this measure misses output in the "black" economy, which is significant in Europe's high-tax states. GDP also overlooks "the value of leisure or a good environment" or the way prosperity is spread across a society.

But a rising tide still lifts all boats, and U.S. GDP per capita was a whopping 32% higher than the EU average in 2000, and the gap hasn't closed since. It is so wide that if the U.S. economy had frozen in place at 2000 levels while Europe grew, the Continent would still require years to catch up. Ireland, which has lower tax burdens and fewer regulations than the rest of the EU, would be the first but only by 2005. Switzerland, not a member of the EU, and Britain would get there by 2010. But Germany and Spain would need until 2015, while Italy, Sweden and Portugal would have to wait until 2022.

Higher GDP per capita allows the average American to spend about $9,700 more on consumption every year than the average European. So Yanks have by far more cars, TVs, computers and other modern goods. "Most Americans have a standard of living which the majority of Europeans will never come anywhere near," the Swedish study says.

But what about equality? Well, the percentage of Americans living below the poverty line has dropped to 12% from 22% since 1959. In 1999, 25% of American households were considered "low income," meaning they had an annual income of less than $25,000. If Sweden--the very model of a modern welfare state--were judged by the same standard, about 40% of its households would be considered low-income.

In other words poverty is relative, and in the U.S. a large 45.9% of the "poor" own their homes, 72.8% have a car and almost 77% have air conditioning, which remains a luxury in most of Western Europe. The average living space for poor American households is 1,200 square feet. In Europe, the average space for all households, not just the poor, is 1,000 square feet.

So what is Europe's problem? "The expansion of the public sector into overripe welfare states in large parts of Europe is and remains the best guess as to why our continent cannot measure up to our neighbor in the west," the authors write. In 1999, average EU tax revenues were more than 40% of GDP, and in some countries above 50%, compared with less than 30% for most of the U.S.

We don't report this with any nationalist glee. The world needs a prosperous, growing Europe, and its relative economic decline is one reason for growing EU-American tension. A poorer Europe lacks the wealth to invest in defense, a fact that in turn affects the willingness of Europeans to join America in confronting global security threats. But at least all of this is a warning to U.S. politicians who want this country to go down the same welfare-state road to decline.

Copyright © 2004 Dow Jones & Company, Inc. All Rights Reserved.

    

[international american]

It is called Projection 101. "My economy sucks, so I will blame it on America"

[HisKingdomWillAbolishSinDeath]

Will the Euroweenies ever quit whining? I doubt it.

[Notwithstanding]

Tomorrow I lecture students at a nearby German University on US criminal law.

I can't wait for them to give me suggestions about improving our system....

[Hank Rearden]

He's got a point about our obscene deficits? Why doesn't Bush have the least bit of fiscal discipline or conservative values when it comes to Big Stupid Government?

Why won't he veto a damn thing that hits his desk? He's pissing away our kids' futures.

[Desdemona]

And the Germans have such a great economy that we should care? They're going bankrupt.

[rotstan]

And don't forget that they have repeatedly violated the budget deficit limit that the Euro community agreed to several years ago.

[sawmill trash]

My sentiments exactly.

[Notwithstanding]

[Hank Rearden]

Period, not question mark, at end of first sentence. Sorry.

[Hank Rearden]

That graph is strange. D.C. produces nothing but burdens; are they measuring GDP on the basis of how much money those parasites piss away?