Republicans Want Us To Be Europe
Michael Grunwald
The party that talks the most about the dangers of America going Continental is the one dead set on making it happen. When it comes to economics, the GOP is the party of croissants and lederhosen
The basic Republican critique of President Obama is that he’s Europeanizing America. In the last campaign, Mitt Romney claimed Obama “takes his inspiration from the capitals of Europe.” Paul Ryan warned “we will turn out just like Europe if we stick with European policies.” Europe’s continuing economic stagnation—12 percent unemployment, near deflation, tepid growth—is certainly an unattractive model for the United States. You can see why conservative cartoonists like to draw Obama in a beret.
But the policies that created the mess in Europe are not Obama’s policies. They are the policies—especially tight money and fiscal austerity—that Republicans have pushed for America. And where economics is concerned, the GOP is still the party of croissants and lederhosen.
The big news in Europe this week was inflation dropping to 0.5 percent, which might sound like good news but isn’t. Yes, too much inflation can be bad, shaking confidence in currencies, hurting the purchasing power of workers and seniors with fixed incomes. But the European Central Bank has an inflation target of nearly 2 percent, and persistent “lowflation,” with a nagging risk of deflation, is exactly what the continent doesn’t need after a severe financial crisis and a brutal recession. It’s terrible for families (and governments) with debts. And it’s increasing the value of the euro, which hurts European exporters and discourages investment. As I’ve tried to explain, in tough times, a little inflation can be a good thing.
The problem is that the ECB—under pressure from the inflation-phobic Germans on its board—has kept its monetary policy much too tight. The Federal Reserve lowered its key interest rate to zero in December 2008 and has kept it there ever since; more than five years later, the ECB still hasn’t quite gotten to zero. The Fed has also engaged in three rounds of “quantitative easing,” buying bonds to try to juice the economy; the ECB has not yet tried monetary stimulus. Inflation in the U.S. is only 1.1 percent, below the Fed’s target, but at least former Fed chair Ben Bernanke and current chair Janet Yellen have tried to do something about it.
Republicans have fought them every step of the way. They have accused the Fed of “debasing the currency,” of fueling the next bubble by printing money, of trying to turn the U.S. into Zimbabwe. In 2011, the top four congressional Republicans wrote Bernanke to demand an end to quantitative easing. Most Senate Republicans opposed Yellen’s nomination, arguing that the Fed has kept monetary policy too much, that it has focused too much on creating jobs and not enough on squelching inflation. The Fed has a statutory “dual mandate” to maximize employment and stabilize prices, but congressional Republicans, led by Paul Ryan, have called for the elimination of the employment requirement, so it would focus solely on inflation. In other words, they want the Fed to be like the ECB.
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http://time.com/49010/republicans-want-us-to-be-europe/
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in the 1890's.
