Finally, a politician who makes some sense about the economy (via the WSJ):
The root of the global financial and economic crisis is known to every Swabian housewife, Ms. Merkel said: “You can’t keep on living beyond your means.” A lack of thrift in advanced economies caused the crisis and can’t be its cure, she said.
That’s German Chancellor Angela Merkel. She’s certainly right that government borrowing and spending is not the answer. Unfortunately, she isn’t in favor of tax cuts either:
Ms. Merkel said that her government might consider further fiscal steps early next year if Germany’s existing, modest measures don’t stabilize the economy, saying “all options” are open. But she promptly ruled out the option of broad-based tax cuts next year, which many Christian Democrats want.
Germany’s highest individual tax rate is 45% and could easily be lowered without having a long term effect on tax revenue. Corporate taxes have been reduced but still total nearly 30%. At least Merkel understands that borrowing and spending won’t generate economic growth. That’s a lot more than we can say about our politicians.