All or Nothing for the Eurozone

By Preston Cooper

I apologize for not being on Red Slate during the past several days. The reason for my absence was a conference on financial relationships between the US and Italy in Venice, which I was fortunate enough to attend. One of the principal issues discussed over a plate of pasta and soporific Italian wine was the impending Eurozone crisis brought on by irresponsible budgeting and regulation by several of the currency zone's members, such as Italy and Greece.

In the coming months, the countries of the Eurozone will have to decide whether to centralize several aspects of financial regulation such as deposit insurance and currency supervision. If they want the Euro to survive, this is pretty much their only option. When the actions of a government in one country, such as Greece, bear on the state of all other countries which share the currency, there is a big problem, as those other countries have no control over Greece's actions. Greece could, and will, drive the Euro into the ground, with the rest of the continent powerless to stop it.

The other option, of course, is to dismantle the Euro entirely. When Greece returns to the drachma and Italy to the lira, their economies will undergo a fair amount of tumult; however, it is impossible to predict just how much their domestic crises will bleed into the other EU countries. Eventually the former Eurozone will stabilize; but the continent will have lost the advantage of a single, strong currency, which has mobilized Second World countries such as Slovakia and Latvia to whip their economies into shape for the chance of joining it. It would be a shame to lose the Euro, seeing how far it has come.

Centralization, then, is the best way forward. As a conservative, I am skeptical of centralized regulation, but a single currency warrants it. There is a reason why the US has a Federal Reserve (albeit an over-empowered one) rather than fifty State Reserves. Fifty different economies, all regulating the dollar with little coordination between them, wouldn't work in America, and there's no reason to think it will work in the Eurozone.

Europe must establish a single deposit insurer, a single banking supervisor, a single currency regulator, and expand the powers of its existing central bank. The ECB should issue a "Euro-bond" to finance the deficits of the Eurozone's seventeen countries. And most importantly, each nation must submit its annual budget to a centralized council for approval. Irresponsible budgeting will not be tolerated.

For the Eurozone, it's all or nothing.

The Only Thing We Have to Fear...Is Extreme Carbonation

Walker Victory Underscores the Need for Wider Reforms

By Preston Cooper

Courtesy of CNN

A few moments ago, news networks projected that Scott Walker, the embattled Governor of Wisconsin, would survive the recall effort against him. We could talk a while about the implications of these results - how they put Wisconsin in play for electoral battles in the fall, how labor unions may grow frosty towards President Obama after he failed to campaign for their candidate, how recall may grow more common as a political tactic - but I'll leave that to the pundits. Instead, I'd like to open up a conversation on what this election means, in plain terms, for the future of the American economy.

Today, the Congressional Budget Office came out with a report reaffirming the severity of the debt crisis and the need for serious reform. Public debt, they said, will double over the next quarter-century if current budgeting policies are extended. Not only will the level of debt become unsustainable as borrowing costs soar, but the economy will feel shockwaves born of the government being in hock up to its eyeballs. Growth will taper off by double digits.

Many of the world's most powerful nations have collapsed for economic reasons. The most recent example is the Soviet Union, which succumbed to debt crisis and economic meltdown brought on by powerful special-interest groups, namely, the gas companies. There is even an economic term - sclerosis - for the strangulation of an economy by special interest. And as long as I still draw breath, I will not allow sclerosis to happen to America.

Across the country, state governments are doing battle with unions - a powerful kind of special interest group - in a desperate attempt to balance their budgets and bring stability to their economies. Scott Walker's survival of the recall election is a victory for fiscal sanity, and a blow against these special-interest groups.

But unions are not the only source of sclerosis in this country. Oil and gas companies, which receive billion-dollar federal subsidies for no apparent reasons, are also culprits here. Our tax code, riddled with loopholes and special rates for capital gains, is a breeding ground for sclerotic interests. Every earmark ever passed is a check against fiscal responsibility.

While balancing the federal budget and bringing down the debt will require more action such as reforming entitlement programs and streamlining defense spending, we cannot put ourselves on the path to solvency without taking on special interests. Few politicians have the courage to do it. But by cleansing our budget and tax code of items that do not benefit the country as a whole, we will achieve the goals of both parties - raising revenues and cutting spending.

A government's responsibility is to provide things that will benefit all of us, like national defense, education, and infrastructure. Governor Walker's victory should be a call to arms against the special interests who keep dipping into taxpayer pockets with one hand and strangling the economy with the other. I say it's time to take them on.

The (Second) Most Important Election of 2012

scottwalker.org

 
By Preston Cooper

Forget Romney vs. Obama for a moment. Forget Brown vs. Warren in Massachusetts and Mourdock vs. Donnelly in Indiana. Tomorrow, a historic gubernatorial recall election in Wisconsin will feature Scott Walker vs. Tom Barrett.

But this vote is really about Responsible Budgeting vs. Sclerotic Labor Unions.

The recall election is the child of a stormy affair last year between pro-union activists and a governor trying to balance his state's budget. Last year, Governor Walker limited collective-bargaining rights for public-sector unions, sparking a wave of protests and the walkout of fourteen Democratic state senators from Madison. Eventually Walker and his allies prevailed and forced the unions to take their cuts, but not without inciting the ire of the left wing.

If Walker loses the election, then the union bosses, who have scores of Democratic lawmakers firmly in their pockets, will get their way and demand outrageous benefit packages at the expense of Wisconsin taxpayers. Even more importantly, other fiscally responsible governors across the country may be reluctant to take on unions to balance their budgets, lest they befall the same fate as Scott Walker. The outcome of tomorrow's election may well determine the paths of state governments across the country.

There was a time when unions stood up for workers in a real way, protecting them from companies who tried to take unfair advantage. But now many unions, especially those in the public sector, have gotten out of control. An obscure law, the Davis-Bacon Act, mandates that government projects be contracted with unionized labor. With no competition, unions demand outrageous sums of money from the government in order to finance too-generous pension packages, leaders' salaries, scores of lawyers, and the campaigns of Democratic politicians. It's not about the workers anymore; it's about the power.

In the end, though, unions will become their own worst enemy. There will come a time when state governments simply lose the ability to write checks, because there is no money left and the debt has gotten too huge. And the unions will collapse of their own greed, dragging down workers with them.

That's why tomorrow's election is so important. Scott Walker wants the unions to take a little austerity now to avert the ax-stroke of crippling spending cuts when inaction inevitably forces them. I don't think that's unreasonable.

Snow White and the (Rielle) Hunter

I don't really have any words for the Edwards campaign-finance scandal besides these...