By Teresa Welsh |
Massive deficits and political discord on both sides of the Atlantic threaten the global economy. This summer, an intense showdown between Democratic and Republican law makers over raising the debt ceiling ended with a deal criticized by both sides of the aisle. The compromise created a so called debt “super committee” responsible for slashing over a trillion dollars from the budget before the end of the year. Many are skeptical that the bipartisan group of lawmakers will come up with a solution, as the issue of raising revenues continues to divide Democrats and Republicans.
Meanwhile, in Europe, the debts of Greece, Italy, Portugal and others weigh heavily on the euro, the currency shared by 17 countries. Many fear that if Greece and the other troubled countries default on their loans, they will have to exit the eurozone, throwing the entire group into chaos. The countries had seemed to have had settled on a deal that would help bail out Greece. However, markets crashed when the Greek prime minister suggested he would put the measure up for a national referendum. He has since called off the vote, and has made way for a deal with the opposition party to approve the rescue plan. But as many of the European countries involved met international leaders at the G20 summit, doubts lingered that the eurozone will be able to resolve the crisis.
Europeans and Americans are quick to criticize one another over their handling of their respective financial crises—though both sides admit neither debt problem has been resolved particularly well. Most agree that Europe’s situation is more dire than that of the United States. Moreover, Europe’s situation is also more challenging as it requires 17 separate legislatures to work together, while the United States only needs to reconcile the views of two political parties to move forward. Here is the Debate Club’s take on who is handling their debt crisis better.
United States – U.S. Should Learn from Europe's Welfare State Mistakes
Daniel Mitchell Expert at Cato Institute