Now I know things are upside down. When the President of the United States is pushing for more spending on make work jobs and the French Socialist party is pairing back spending and reevaluating big projects things are strange indeed. It’s like the bizarro world where superman was the bad guy when even the French Socialist Party understands that massive debt is unsustainable. French President Francois Hollande is specifically targeting high speed rail and other stimulus spending on infrastructure projects of dubious value for massive cuts. Rather than just push ahead with projects to get money flowing and people working, Hollande and his economic advisors are concerned that money only be spent on projects which will provide a real return or are actually needed.
This almost sounds like what I use to think Republicans stood for. According to his Hollande’s economic advisors:
“A stimulus plan focused on infrastructure projects that only makes the deficit worse bears medium-term risks that outweigh the weak boost to growth in the short-term,”
Got it? A think tank advising the Socialist Party President of France said stimulus spending that increases the deficit and only has a marginal effect on jobs is a bad idea. France has a history of plowing more money into infrastructure projects, including bridges to nowhere, than any other developed country. They bought the Keynesian principle of getting money moving to create jobs hook, line and sinker. This is part of their culture and now even they are looking at austerity, or at least pruning back projects and reevaluating those already in the pipeline.
Ironically, Hollande is still calling for massive infrastructure projects to help boost the Eurozone economy; he is just singing a different tune domestically. This tells me economic reality is forcing him to abandon his socialist ideology at home, even as he pushes it internationally since the Germans will foot the bill. Put another way, they know their ideological imperatives are not the best thing for the economy, so they only push them when it will buy them votes or someone else bears the cost.
There are many lessons here we could learn and apply domestically. Our deficit has grown out of control under both parties and we are $16 trillion in debt. Spending as a percentage of GDP is at its highest level ever and entitlements are set to crowd everything else out of the federal budget in a generation. We simply cannot continue down this road. We have two choices, accept some (maybe much) pain now while we fix the problem and get back on the road to solvency, or saddle our future selves and our children with a devastating amount of pain when a Greek like economic collapse forces action upon us. For me I would rather bite the bullet now and retain control of our destiny.