Thursday, January 12, 2012

A Modest Proposal to Solve Europe’s Debt Crisis

The New York Times today outlined one of the major uncertainties facing the global economy this year: The more than $1 trillion dollars of debt that countries like Italy and France need to sell just this year, in order to finance their current deficits and roll over existing debt.  Amidst sluggish to non-existent economic growth and entitlement policies that are at best marginally sustainable, many European economies face challenges in finding buyers for their debt auctions.  Observers have said Europe faces “enormous” risk as a result, and the Times article suggested that dealing with the debt problem “may take several, more drastic approaches” than those currently on offer.  In reality, however, solving Europe’s debt crisis need not involve drastic new approaches so much as it requires a modest one:

Congress can solve Europe’s debt crisis once and for all – just by requiring all Americans to purchase European debt.

The policy is not nearly as far-fetched as it sounds.  The Administration has endorsed a mandate requiring all individuals to purchase a product – health insurance – for the first time ever, and the Justice Department has stated that the executive branch does not need to define a limit on where the federal government’s “power to require a specific purchase would stop.”  All agree that a fiscal and banking crisis in Europe would harm the American economy. (The Administration also thinks Europe is “the single most important factor that will determine [Barack] Obama’s re-election chances,” but who’s counting?)  So why shouldn’t Congress use its power under the Commerce Clause to force all Americans to fund the debt of countries like Greece, Spain, and Italy?

Treasury Secretary Geithner has been attempting to co-ordinate policies with his European counterparts, and a new mandate for Americans to purchase European debt would give him and the Administration the tools to export the policies that have brought economic recovery to Americans beyond their wildest dreams and expectations.  It’s also obvious that forcing Americans to buy into Spanish, Italian, and Greek economies represents a sound investment, given their economic activity, dynamism, and engaged populations.  And why wouldn’t Americans support bailing out countries with unsustainable levels of spending and debt?  After all, nothing else promotes “spreading the wealth around” like sending American treasure off to far-flung countries.

It can’t fail!  Just like Obamacare can’t fail.  Right…?