Grassley: Tax increases, not austerity, are the real problem in Europe

Europe's economy is struggling because of higher taxes, not supposed cuts to government spending, according to Senate Judiciary Committee ranking member Chuck Grassley.

Speaking on the Senate floor Monday, Grassley (R-Iowa) said many European countries are still spending more than they were before the economic crisis, even though they might have made small reductions since then. He said that fact belies arguments that "savage" spending cuts in Europe are killing the eurozone economy.

"So just how deep did these countries of Europe cut? Spain increased spending after the recession started, then implemented some modest cuts, but is still spending more than it did before the recession," he said. "Britain and France have continued to increase spending.

"So much, then, for savage spending cuts," he added. "The fact that there have been no serious spending cuts in these supposedly pro-austerity countries is enough to dismiss the accusations that spending cuts are the cause of Europe's current troubles."

He said arguments that economies must choose either more government spending and more growth, or less spending and less growth, is "absurd." And, he called on Europe to examine the record of the United States, which has spent billions of dollars but is still struggling with elevated unemployment.

"I would say to all those across the Atlantic in Europe calling for new stimulus spending: we tried it, and it didn't work."

While spending has not been cut, he noted that Europe has tried to raise taxes to make up for the fiscal shortfall.

"To us here in the United States, that sounds a lot like what Democrats have been calling a balanced approach," he said. "And so it is, just like giving a patient an equal dose of medicine and poison would be a balanced approach.

"To the extent that austerity really means big tax increases rather than serious spending cuts, I think it identifies a big part of Europe's fiscal and economic problems."

---