Europe dodged a bullet last week in its efforts to manage its debt crisis, which is now in its third year. The Greek election kicks the can down the road a bit, and gives the eurozone a chance to focus on other pressing problems. It looks like the European endgame is to muddle through the succession of challenges posed by the common currency while the Continent prepares for a more disciplined fiscal union. The economic imbalances in Europe are seemingly too severe and intractable to do much else. It is not clear whether Greece, for example, will be able in the long term to both remain in the eurozone and meet its obligations, but at least the day of reckoning has been put off for a while.
The inexorability of the debt-driven economic turmoil on the other side of the Atlantic suggests that there may not be a practical political solution to what is fundamentally an economic crisis. The best that can be done is to hope that it can be managed in a way that minimizes collateral damage to the global economy. There is a lesson here about the limited effectiveness of short-term political intervention in the operation of economic forces - call it the ineluctable modality of the political. Unfortunately for the United States, that lesson seems to be lost on Washington.
Over on this side of the Atlantic, there is a collective delusion about these events that makes European leaders look positively Olympian. The United States is borrowing and spending money at an unsustainable pace, on the pretense that the same laws of economics that threaten Europe don’t apply here, even though a case can be made that here is where it all started. Now we even hear thebizarre notion that European “headwinds” are interfering with the administration’s initiatives to revive the economy and threatening the president’s prospects for re-election. It is not his fault, he suggests.
The chattering class jumped right in. The Eurostorm could cost Mr. Obama the presidency, warned Niall Ferguson in Newsweek. In The Washington Post, Dana Milbank coyly suggested we ask Europeans who will win the election. Politico’s Ben White lent his political support to the theory, noting that the president even had learned the proper pronunciation of “Hollande,” the family name of France’s new chief executive. Last, but not least, Ezra Klein announced in his blog that he had long been in sympathy with the theory that a handful of Euroleaders could decide the 2012 U.S. election. If lemmings had a theme song, it would surely sound like this.
The irony of it is, well, delicious. Could it be that the American liberal establishment thinks that the very continent that fell in love with Mr. Obama and helped validate him four years ago is now trying to sabotage his re-election? Can it be that the lifelong proponents of Eurocratic-style government solutions for the excesses of our undisciplined - but heretofore productive - economy are now blaming Europe itself for the fact that their policies are neither working nor popular? Or is it simply another case of losers making excuses and finding scapegoats? Perhaps it is now time to roll out the malaise speech and find out.
Fundamentally, it is all nonsense, of course. The hard facts are that the economic turmoil in Europe has brought a measure of relief to the American middle class that the condescending neglect of the Obama administration could not. As funds have flowed into the relative safe haven of Treasuries, long-term rates have fallen and the housing market is finally showing some signs of stabilizing. And the relative appreciation of the dollar and the economic stagnation in Europe have combined to bring some much-needed relief in energy prices to the American consumer. Without Europe, gasoline was headed to more than $5 a gallon. Obama administration policies have hurt both housing and energy, and the Europeans may have rescued the administration from the effects of those policies. Those are hardly headwinds. But bad news on jobs makes for desperate excuses.
The scariest part of the delusion about Europe is the knee-jerk response to the crisis. In the face of the glaringly obvious failure of debt-financed public-sector spending as economic strategy in Europe, there are those who clamor for even more borrowing and public spending in the United States. As the story goes, that will help isolate this country from the effects of the European recession. There is admittedly a perverse logic to this seemingly irrational notion. If we create our own sovereign debt crisis in the United States, it certainly cannot be said that we were undone by Europe’s. We need to create our own fiscal disaster, thank you very much. If liberalism is to commit suicide, then it must be done American-style, so that we can take the rest of the world with us. Apparently, that is the new ideal of American leadership.
A word of caution may be in order to all the former Europhiles inside the Beltway. Be careful what you wish for. If Europe manages its way through this crisis and brings fiscal discipline to that fractious continent, it will have succeeded in accomplishing what the Obama administration has not even attempted to do here. It is not the case that it cannot be done, as the Simpson-Bowles and Ryan plans prove. It is rather the case that the current commanders of the all-powerful federal establishment lack the discipline to do it. They would rather lay the burden of their fecklessness off on the next generation of Americans and blame foreigners. It might be good politics, but it’s irresponsible policy. If the global economy begins to turn its attention to the United States, our leaders could well wake up to the self-evident conclusion that their position is both untenable and unsustainable. What will be done then? There will be nobody else left to blame.
Warren L. Dean Jr. is a lawyer and an adjunct professor at Georgetown Law Center.
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