Lessons from Europe are not just about Greece.  The GOP is so fond of scaring the American public about the size of the debt and warning us we will go Greece's way.  In the long term there is no doubt we must clean up the debt. About 40% of the debt is due to the reduction in income to the Treasury that can be cured by economic growth.
There are three  routes on the table: 1) The Paul Ryan plan as embraced by Mitt Romney except for his Debate #1  revisions of additional 20% tax cuts offset by closing loopholes and deductions which every non ideological think tank said would be inadequate to plug the revenue loss.2) the Simpson-Bowles Commission Recommendations to make two dollars of cuts to one dollar of increased revenue, 3) and the Grand Bargain proposed by Pres. Obama, with even more cuts in ratio to  tax increases. Obama's plan is  based on a  more detailed, revised version of Simpson Bowles. However, it  was immediately rejected by the Tea Party controlled House of Representatives because it violated their member's pledge to Grover Norquist never to raise one penny  of taxes.

 The GOP's belief is that one solves the deficit problem in two ways: cut everything  in the budget   and lower taxes on the upper income brackets so that the wealthy invest and the largess trickles down to the middle class and the poor. To achieve a balanced budget would require a 30% cut in government expenditures, either across the board or taking a meat cleaver to specific programs. That approach is called austerity.

Neither Obama nor the GOP have been purists either way because even the 2009 stimulus contained tax cuts and large cuts to government expenditures are also part of the President's Grand Bargain.  Mitt Romney has proposed increasing the Pentagon budget by $2 trillion over 10 years, reducing taxes 20% across the board, keeping the Bush tax rates for the wealthy.  Just increasing Pentagon expenditures alone would  result as  financier Steve Rattner calculated in the need to cut everything else 40%.  

The lesson to learn from Europe is not that debt is bad; it is the wrong way to solve the debt problem.
Nicholaus Kristoff, writing in the New York Times today made the point that Europe tried the austerity approach while Pres. Obama tried low taxes and  government stimulus programs.  While neither  were robust, the stimulus approach has had better results. "The International Monetary Fund this month downgraded its estimates for global economic growth, with only one major bright spot in the West. That would be the United States, expected to grow a bit more than 2 percent this year and next.
In contrast, Europe’s economy is expected to shrink this year and have negligible growth next year. The I.M.F. projects that Germany will grow less than 1 percent this year and next, while Britain’s economy is contracting this year."

A  couple of  months ago , my husband and I  spent our vacation  in Europe. . I had   only spotty access to the internet and the international version of CNN and England’s Sky News as my English language contact with the world. I expected it would be just a relaxing, leisurely  getaway  . It was,  but it was also  a learning experience  .

Coverage of English  domestic news  was dominated by the the shake up of the Conservative Government of Prime Minister David Cameron, as he sought to change course.  When he assumed office two years ago, his answer to the world financial crisis was  to slash  many  government funded services   with an unabashed program of austerity.  .  The result in the UK was a double dip recession and  continued high  unemployment numbers , a  contrast  with continued, but slow  US growth and decrease in unemployment  from a high of over 12% to  just over 8%. .  Compared to Europe’s stagnant growth, the US has done much better..  We may think of Obama’s recovery  as either tepid or a failure, but  we have come through the economic crash of 2008 in better shape than Europe.

 Cameron’s change of course  could be taken as  a tacit admission that austerity had failed.. Cameron’s   direction  now differs from the US brand  of  conservatism of  small government, reduced taxes paid for by cuts in social programs . In fact, what Cameron  proposes is  to increase government  investment in infrastructure and education  in order to help business create jobs.  Cameron was attempting to stimulate the economy with more active government participation.  Sound familiar? It should. It resembles the Obama approach in his jobs plan rejected by the GOP dominated House.

 To say that the 2012 presidential  election is not about choice   assumes that any other approach would be better than Obama’s.. While we may be unhappy with the Obama recovery . just firing him  does not mean replacing him with GOP trickle down austerity is  better.  It is possible it could be worse.. .  We need to be aware  the GOP approach has a  track record of failures to recover from a financial  sector meltdown, such as we experienced in  the 2008 Crash, similar to the UK’s recent  experience.

How Obama could win the economy argument

My column in the Sky News today:

Is Mitt Romney a sheep in wolf's clothing or putting on an act that he is wolf in sheep's clothing?

Is he looking like a serious conservative or will he govern as an extreme conservative in spite of his supposed inner moderate self? Or is he like a Navajo shape-shifter, taking on the animal form that gets him the most visibility?

Now that the primaries are over, he will have to look more sheep-like to appeal to the swing voter moderates.

Obama's positions on women's rights and a kinder approach to immigration issues have helped his poll numbers. However, he is tied with Romney on the economy. He needs to do more.

A case Obama has not yet made: We do not need to trade away fair social policies for bad economic policies proposed by the GOP. He has a better, fairer plan for both. To make such a case, Obama does not need to be a shape shifter because he is consistent with his past policy priorities, but he also must attack Romney's plans more effectively than he has.

There are those who believe Romney had been appearing as a wolf on social and economic issues to get the support of his party's far right, but he is really a sheep inside that would govern as a moderate once he got elected. Obama can make the point they are fooling themselves. The pressure on Romney from the ultra conservatives dominating the GOP and Congress would make a second term improbable if he flip-flops on tax, health care, immigration and women's issues.

Romney‘s way out of this schizophrenic dilemma to appeal to moderates has been to make the conversation only about the economy, while hoping they forget the bargain he made to with the GOP right wing to support them on social issues. Simultaneously he claims his plan to decrease taxes on the rich and to increase military spending while slashing and burning discretionary programs that benefit the middle class, will be the better route to economic prosperity.

The route Romney has irrevocably tied himself to is the closest version of a European austerity program that exists in the US: the Ryan budget. Even the Catholic bishops opined that the Ryan budget "fails to meet the moral criteria" (to protect the poor) because it takes money away from the safety net. One phrase will come back to haunt him: He called that plan “marvelous” because it would reduce the deficit and create jobs.

This last weekend Obama began to make that case that his plans for the economy would better for America in the future although we may not have climbed out of the economic hole left by the GOP as quickly as we want. So far Obama has relied on reminding us that Romney's sole reliance on budget cuts /pump up the rich plan was a throwback to the policies that never dug us out of the holes in the past, so how could it be better?

That argument is not strong enough: Obama needs to take his attacks to the another level, arguing Romney's plan could even make the economy and debt worse, linking GOP plans to the extreme approach in Europe that led to the rejection of austerity by voters this past week in France and the experience of austerity in the United Kingdom. Obama could now argue that too much reliance on austerity there has led to stagnant growth or a double dip recession, job loss, and higher debt. Those are exactly the opposite results for which the GOP hopes and the Democrats have achieved in part.

The president's moderate, middle way, combining budget cuts, fiscal, tax, and income stimulants, has resulted in GDP growth, steady private sector job creation, and unemployment decreasing significantly. His balanced approach, similar to the Simpson Bowles recommendations, will also improve the debt situation.