LAFFERING ALL THE WAY:

Recession Upends German Zeal for Fiscal Prudence (NELSON D. SCHWARTZ and JUDY DEMPSEY, 11/11/09, NY Times)

Given the longstanding aversion to borrowing and spending that has shaped German fiscal policy since the great hyperinflation of the Weimar era during the 1920s, Mrs. Merkel and her new finance minister, Wolfgang Schäuble, have set off a fierce debate by proposing to cut taxes by 24 billion euro, or $35.9 billion, in 2010 and 2011, rather than immediately attack the country’s projected budget gap.

“I want us to do everything we can to create the conditions for new, stronger growth,” Mrs. Merkel said Tuesday, laying out her agenda in a speech before the Bundestag in Berlin. “Without growth, there will be no investment. Without growth, no jobs. Without growth, no money for education. Without growth, no help for the weak.” [...]

Indeed, a few prominent German politicians have started echoing the supply-side arguments propounded by former President Ronald Reagan and his economists in Washington in the 1980s and carried forward by the Republican Party ever since.

Even Germans can't be crazy enough to think inflation is the main problem they face.

Posted by Orrin Judd at November 12, 2009 6:30 AM