If US President Barack Obama and Congress really cared about fixing the country’s budget deficit problem, they would have enthusiastically jumped off the “fiscal cliff” with its mandated spending cuts and tax increases, not endlessly haggled to circumvent it.
This is just the opposite of what is happening in Europe where German Chancellor Angela Merkel is leading the charge for short-term fiscal pain in pursuit of long-term fiscal gain. Keynesians and supply-siders both disagree but Mrs Merkel is sticking to her guns that Europe can not return to sustainable growth and prosperity without first putting its fiscal house in order – and she is creatively using German money to get the German rules she wants for Europe.
This – plus the fact that she has been both wise and courageous enough to embrace Mario Draghi’s market-stabilising bond-buying program in the face of determined Bundesbank opposition – is the reason why she deserves to be Europe’s person of the year.
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