All of this geopolitical toing-and-froing overshadowed some important developments on the economic front. With Japan now firmly on the path to growth, Europe is the world's principal laggard. Treasury Secretary John Snow called upon the European Union to rely less on export-led growth, which adds to America's trade deficit, and to take steps to accelerate domestic demand. But the Europeans are engaged in a blame game. Schröder and Chirac blame the European Central Bank for keeping interest too high, while the ECB blames France and Germany for violating the fiscal rules of the Growth and Stability Pact--and for refusing to reform their labor and product markets. The funny thing is that both the ECB and its critics are probably right--the one-size-fits-all interest rate set by the ECB is too high to maximize growth in France and Germany, and the French and Germans' refusal to institute economic reforms is holding back their economies. The most optimistic forecast is that the European economy will grow at an annual rate of about 1.5 percent this year, about one-third that of the United States. NOT ALL THE NEWS from these meetings is gloomy. The heads of state did manage to pronounce themselves in favor of a resumption of trade-opening talks, and to promise to reduce trade-distorting agricultural subsidies and barriers to access. Whether those pledges can survive the pressures of the American presidential campaign is not certain. Bush is showing commendable courage by defending free trade as a creator rather than a destroyer of jobs, and ridiculing calls to end outsourcing. He has also had the Commerce Department cut anti-dumping duties on Chinese television sets to levels that will have minimal impact on China's TV manufacturers. All of this is a misfortune for John Kerry. His campaign rests on a three-legged stool. The first leg is that Bush is a job-destroyer; but the economy has created almost one million jobs in the past three months, and is probably adding better than 10,000 every day. The second leg is that Bush has antagonized America's allies and is isolated; the 15-0 Security Council vote to recognize the Bush-backed Iraqi government saws that leg off. The final leg is that the Bush tax cuts have been a disaster. Ronald Reagan's death has brought renewed attention to the fact that the late president's tax cuts helped to end the recession he inherited from Jimmy Carter, just as Bush's cuts kept the Clinton recession short and mild. Not a good week for the president's foes, here and abroad. Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.
http://www.weeklystandard.com/Content/Public/Articles/000/000/004/231muvnw.asp?pg=2
And John Kerry's talking about the Great Depression!
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All of this is a misfortune for John Kerry. His campaign rests on a three-legged stool. The first leg is that Bush is a job-destroyer; but the economy has created almost one million jobs in the past three months, and is probably adding better than 10,000 every day. The second leg is that Bush has antagonized America's allies and is isolated; the 15-0 Security Council vote to recognize the Bush-backed Iraqi government saws that leg off. The final leg is that the Bush tax cuts have been a disaster. Ronald Reagan's death has brought renewed attention to the fact that the late president's tax cuts helped to end the recession he inherited from Jimmy Carter, just as Bush's cuts kept the Clinton recession short and mild. Not a good week for the president's foes, here and abroad.