Daniel J. Mitchell

I’ve frequently commented on Europe’s fiscal mess and argued that excessive government spending is responsible for both the sovereign debt crisis and the economic stagnation that plagues the continent.

But it does seem that things have calmed down, so the readers who have submitted questions about whether the fiscal crisis has ended obviously are paying attention.

I have two responses.

  • My first answer is very mature and thoughtful: HAHAHAHAHAHAHAHAHA, are you ;@($&^#’% kidding me?
  • My second answer is a bit more guarded and circumspect: No. To be more specific, the immediate crisis may have slightly abated, but I have no confidence that the long-run problem has been solved.

But let me start with some good news. Most of the hard-hit European nations have finally begun the cut spending. And when I say cut spending, I mean they actually spent less in 2011 than they did in 2010 (unlike the fake version of spending cuts that you find in the U.S. and U.K., where spending simply grows at a slower pace).

We don’t have data for 2012, but I wouldn’t be surprised if many of the PIIGS nations also cut spending last year as well.

Now for some bad news. Unlike the Baltic nations, the PIIGS dragged their feet and didn’t reduce the burden of government spending until they had no choice.


Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.