€urosclerosis: The Portuguese are revolting!

They’ve lived beyond their means for years, and now they are upset that they can’t do that anymore. From


Portugal Hit by Strike


By Patricia Kowsmann

LISBON—A nationwide strike against austerity measures froze public-transport services, shrank hospital staffs and disrupted trash collection across Portugal on Thursday, but there were signs that fewer people joined in the protest than in the previous stoppage late last year.

CGTP, Portugal’s largest confederation union, was the sole organizer of the general strike, after the second-largest group, UGT, declined to join.

The two confederations differed over how to deal with the effects of the €78 billion ($103 billion) bailout program Portugal is under. UGT signed a labor pact with the government earlier this year.

The labor-reform agreement, a key demand under the bailout, makes it easier and less costly for employers to fire workers. The government said it should make Portugal’s products and services more competitive with those of other countries. CGTP, which refused to sign the pact, said there was a strong response by workers to the strike.

The Keynesians would say that Portugal’s response is all wrong: they should borrow even more, to stimulate their economy, and grow their way out of the problems. The trouble with that is that no one is willing to lend them any more money without European Union loan guarantees.

Austerity is tough, but it’s the only path left. Austerity means reducing the role of government spending in the economy, reducing the unpaid-for benefits that the people receive, and eliminating the goods and services the public receive for which their productivity cannot pay. Things are tough in the United Kingdom, and elsewhere: Belgium, Greece, Italy, Netherlands, Portugal, Slovenia and Ireland are all in recession right now, and Dublin has asked the European Central Bank to delay the payment on an installment, on a €67.5 billion bailout deal from 2010, which is due at the end of this month.

It’s difficult, and it’s a real blow to the European economies which lived beyond their means for so long, but the European economies have to adjust to the new reality, the reality that they can’t live beyond what their production justifies.

And we can’t either. The Portuguese are revolting because they have to take deep cuts to stave off bankruptcy, because that’s what the Eu creditors are demanding to try to soft-land their economy. They have the choice, now, of living with the harsh measures, or going bankrupt and seeing things get much worse. The Irish and the Greeks are facing the same tough choices.

The United States isn’t in their situation, yet, but we are headed in that direction. Secretary of the Treasury Timothy Geithner, in a rare moment of candor — the fact he was testifying under oath might have had something to do with his honesty — admitted to Representative Paul Ryan (R-WI), Chairman of the House Budget Committee, that the Obama Administration had no plan, no plan at all, for dealing with the long-term national debt problem, saying, “We’re not coming before you to say we have a definitive solution to that long-term problem. What we do know is we don’t like yours.”

In the competition of ideas, actually having an idea is superior to not having one at all. It can be argued that the Ryan plan is not perfect, but we are facing a debt crisis which would put Greece’s to shame, and there’s no one who can bail out the United States. If it’s a choice between the Ryan plan and no plan at all, the Ryan plan wins, period.

Barack Obama has been President of the United States for over three years now. He has the resources of the entire federal government available to him, he has the experts at the Treasury Department and the Office of Management and Budget at his beck and call, and they have managed to put together, each year of his Administration, a complicated and detailed proposed budget for the upcoming fiscal year. Yet, after all of that time, even with a presidential election looming, the President and his Secretary of the Treasury and his Administration have not been able to come up with a reasonable plan to deal with our long-term debt problems, have not come up with a plan to keep the United States from going the way of Portugal and Italy and Greece. It’s one thing to come up with a plan with which not everyone will agree; it’s something entirely different to not have any flaming idea what you will do, period. The President has been, quite simply, derelict in his duty.

How can the Democrats seriously ask us to vote for a President and a Party which will not do their jobs?

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