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America-as-Europe Argument Might Resonate

Until about a month ago, if you put a gun to my head and made me predict this year’s election outcome, I’d have said, “Shoot.”

Now, I say “Romney.”

It’s not mainly because of lagging job growth, tightening polls, GOP super PAC money advantages or President Barack Obama’s “the private economy is doing fine” gaffe.

And it certainly is not because Mitt Romney has become a more likable candidate or has a compelling vision for the country’s future.

It’s Europe. The Eurozone’s daily flirtation with economic collapse cannot continue much longer.

And when the collapse comes — whether it’s because countries abandon the euro, there’s an unstoppable run on banks or nations default on their debts — it’s going to trigger a global recession (or worse) that will cascade into the United States.

Though Obama won’t be responsible for the decline of growth and the spike in unemployment, he’ll be blamed politically.

It seems unfair, but there will be some rough justice if Obama loses this way.

The key factors causing Europe’s crisis — huge public debts, unaffordable social welfare benefits, over-leveraged banks — also plague the United States, albeit in lesser measure.

And Obama has done little to lead this country away from Europe’s model.

To the contrary, he is on his way to doubling the national debt. He refuses to reform Medicare, Medicaid or Social Security and sought to add a huge new benefit with the 2010 health care law.

The Dodd-Frank financial services reform passed with his blessing is horrendously complicated but does not solve the basic problem of banks growing too big to fail, taking excessive risks and expecting taxpayers to bail them out.

Europe’s crisis is unfolding because Germany — the continent’s one efficient, productive large economy — does not want to endlessly prop up Greece, Italy and other countries where people do not pay taxes, where governments lie about their indebtedness and citizens expect cradle-to-grave public support.

In a similar vein, Obama says he wants to keep teachers, policemen and firemen working in cash-strapped cities and states — a worthy enough aim.

But the reality is that much of the money he’d dispense would go to entities (such as California and Illinois) that have refused to reform public employee benefit plans that represent Europe-like sinkholes.

Liberal commentators, including Princeton economist Paul Krugman of the New York Times, contend that what Europe and the U.S. need is not more “austerity” but more public spending and monetary easing to induce “growth.”

That would make sense if the spending and easing actually led to sustained growth. But the record under Obama and Ben Bernanke’s Federal Reserve suggests that both fiscal stimulus efforts and money-printing produce only “sugar highs” that don’t last.

It might make sense for Germany to launch a “Marshall Plan” to save Europe if the other European countries would reform to become more like Germany.

But France, for one, elected a new Socialist government that lowered its retirement age instead of raising it. Greece wants to loosen the terms of its bailout package without instituting wholesale financial reforms.

Similarly, it would make sense to help cities and states keep teachers and police working if they all instituted Wisconsin- or Indiana-like reforms.

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