The rest of the world thinks the fiscal cliff is ridiculous

December 5, 2012

Here in the United States, the fiscal cliff is dominating the news. Most of the headlines are all about the day-to-day negotiations, but there's broad agreement among commentators that Congress and the White House need to figure something out in order to avert doom.


Artists' rendition of international reaction.

So that got us wondering. How are media outlets and editorial pages in other countries covering the fiscal cliff? Here's a small sample of the reactions from abroad:

1) China's official newspaper has started berating the United States. Here's an editorial from the People's Daily, the mouthpiece of the ruling Communist Party. Plenty of hectoring:

A country such as the United States that is accustomed to telling other nations to be responsible, should, on the one big problem concerning the future of the global economy, show itself to be a responsible power. ... 

Although the chance of the United States really falling over a 'fiscal cliff' is not big, frequent political bickering is disturbing the world. ... This proves the U.S. political system has problems and lacks the responsibility that a big nation should have.

2) Some German newspapers have started comparing the United States to Greece: The German press spends an awful lot of time dissecting the irresponsible budgeting practices of the Greek government. So now that the United States is grappling with its own deficit issues, the analogies are all too tempting. Here's Der Spiegel, laying it on thick:

U.S. politicians, no doubt, would not be fond of hearing their country compared to Greece. After all, the heavily indebted euro-zone country was used during the presidential campaign as a caricature for the horrors of European-style socialism. But their current finances are not dissimilar, with one difference being that the US can't count on outside help as the Greeks have received. …

Greece's economic problems and the resulting austerity packages it has passed have plunged the country into five straight years of recession. Germany, Europe and the world are hoping that the same fate is not in store for the U.S.

Is this fair? Plenty of economists would take exception to the idea that the U.S. fiscal situation is anything like Greece's—for one, the United States controls its own currency, which is a major difference. That said, the last part here isn't all that different from what Paul Krugman has argued: Greece should teach us that overly rapid deficit reduction during a period of economic weakness can be a disastrous idea.

3) Other German newspapers point out that a lot of people now freaking out about the fiscal cliff are hypocrites. Here's Mark Schieritz at Die Zeit, as fed through Google Translate:

The fiscal cliff is therefore a nice test of the sincerity of the local economic experts: Who Keynes for a charlatan holds and economic programs for devil, let him please declare publicly that the cuts are not a problem in the U.S. and world financial markets are completely make vain worries. Or shut up.

Not the most elegant translation, but the upshot here seems to be this: If you're worried about the fiscal cliff, that means you're worried that tax hikes and spending cuts will hurt the economy when it's still weak. Which is just another way of saying you believe in basic Keynesian economics. In other words, the fiscal cliff is really an austerity crisis

4) Over in Britain, the Financial Times is blaming Republican intransigence. At least judging by this editorial:

This week Mr. Obama proposed a $1,600bn rise in tax revenues in the next decade and $400bn in cuts to entitlements, chiefly Medicare. He also proposed to make increases in the sovereign debt ceiling automatic. It was a strong opening bid. The Republicans need to think hard about their response. ...

Instead of playing chicken, Republicans should try governing. Polls suggest they have much more to lose than Democrats from going over the cliff. They would therefore have much more to gain from averting it.

European commentators don't seem to be all that sympathetic to the idea that taxes should never go up.

5) Meanwhile, Spanish correspondents are making astute points about the structure of the U.S. political system. Here's Pablo Pardo, the Washington correspondent for El Mundo (this is my clumsy translation from Spanish, so apologies):

The two parties are becoming more European, that is, more ideologically homogeneous. The problem is that the American political system was designed for broad coalitions, not for this. This November 6, Democrats have moved to the left and Republicans have moved to the right. They haven't realized that on both sides there is a fiscal cliff.

This is a point that Ezra has made before. As the two parties in Washington become more unified and ideologically distinct, the structure of Congress (and especially the Senate) makes it harder and harder to get anything done. Which is why lawmakers have to resort to increasingly elaborate "cliff" mechanisms to force themselves to take action. 

So in conclusion, China's outraged, and the Europeans mostly just seem relieved that someone else is suffering through a high-profile crisis thanks to institutional dysfunction. Let us know in comments if you've seen any other interesting tidbits from coverage abroad.

Related: Absolutely everything you need to know about the fiscal cliff, in one FAQ.

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