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Germany Vows To Cut Spending, Balance Budget

From the UK’s Financial Times:

Germany defies calls for stimulus

By Quentin Peel, Hugh Carnegy and Peter Spiegel | March 14, 2013

(Financial Times) — Germany has ignored calls from its eurozone partners for more economic stimulus by tabling plans to cut spending and balance its budget ahead of schedule on the eve of an EU summit dedicated to growth.

Either the reporters for the Financial Times don’t know what "tabling" means in America, or they want to confuse their low information readers, who won’t read further.

But Germany is not "tabling" plans to cut spending. On the contrary, they are going full steam ahead with them.

Wolfgang Schäuble, German finance minister, said on Wednesday that his budget for 2014, involving spending cuts of more than €5bn [$6.47 billion] to trim the total below €300bn [$388.68 billion], was "a strong signal for Europe".

The plan means Germany will reach budget balance in 2015, a year earlier than required under the "debt brake" written into its constitution.

Notice that Germany has written a balanced budget amendment into their constitution. Isn’t that crazy?

He described the 2014 spending plan as "growth-friendly consolidation", intended to prove to the rest of the eurozone that "consistent sustainable budgeting and growth are not mutually exclusive".

You mean that you can still grow the economy even if you reduce government spending? That is more crazy talk.

Philipp Rösler, economy minister, said Germany’s public finances were the "envy of the world".

Publication of the budget was deliberately brought forward by a week to bring out the figures before the EU summit, according to German officials. In spite of tough cuts for health, social security and environment, the plan was rushed through the cabinet well ahead of schedule.

Did you ever think you would live to see the day when you would envy Germany’s government?

It could scarcely have come at a more sensitive moment, with other members of the eurozone, led by France and Italy, looking for relaxation of the tough budget guidelines laid down in the stability and growth pact that underpins the euro…

Meaning, they want to backslide and return to the profligate spending that got them where they are today.

In any case, this means we may get to see the different approaches between US Republicans and Democrats played out in Europe. Which should be instructive.

This article was posted by Steve Gilbert on Thursday, March 14th, 2013. Comments are currently closed.

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