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Obama's Challenge to Germany on Austerity a Good Signal for America's Future

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By Ben Cohen: The news that President Obama is set to challenge German chancellor Angela Merkel at the G8 Summit this Saturday on her continued support for austerity in the Euro Zone gives a very strong indication that the Obama administration clearly understands the global economic crisis and plans to campaign on a platform based on spending rather than cutting. Reports the Guardian:

Obama, in a television interview on Tuesday, acknowledged that the crisis could hurt America. "Europe is still weak and that is creating uncertainty for the business community here," Obama said.

White House spokesman Jay Carney also recognised the potential pitfall. At the daily White House briefing, Carney described the eurozone crisis as "one of the headwinds that we face" and that the White House was monitoring it closely.

"It is another reason why we need to take every action that is fully within our control to assist the economic recovery that we've been experiencing, to further insulate ourselves from the kinds of things that could happen globally that could affect our economic growth."

This acknowledgment is an important one. For too long, Obama has tried to play the middle ground by arguing both sides of the debate on how to best confront the global economic crisis. He has supported government spending while committing to huge and damaging budget cuts, asked for too little money for the stimulus package and not been clear about his plan for growth. Now it seems he is firmly committing to a Keynesian approach to recovery and he is pitching it not only to Americans, but to Europeans as well. Why? Because Europe's disastrous austerity policies could hurt America's economy badly, and Obama understands that if the jobs situation gets any worse at home, he could quite easily lose the election this year.

Luckily, Obama has some allies in Europe - the election of socialist Francois Hollande is a big boost when it comes to arguing the case for stimulus spending, and a combined front will put pressure on Merkel to change course or at least relent on the vicious austerity measures being imposed by the German government.  While the US does not have a huge amount of leverage when it comes to dictating European economic policy, he can certainly apply some soft power to cajole Merkel into changing course. The German chancellor knows her position is incredibly unpopular, and coupled with the popular uprisings across the continent, a nudge from Obama may have a significant effect.

If Obama successfully helps negotiate a serious spending package for Europe, it could help shift the argument back at home. If money is injected into the Eurozone it will restore confidence in the economy and could set a path to at least a partial recovery (as it did in the US). Obama can then use that as proof stimulus spending works  and translate it into a powerful campaigning tool. It's one the American public would likely get behind given the sad state of the economy. According to a report on the HuffPost, the popular resistance to austerity in Europe is not going unnoticed by US politicians:

Politicians are fooling themselves if they think some sort of centrist consensus will save their jobs, said Rep. Brad Miller (D-N.C.). "European elections should remind politicians here not to worry about the approval of pampered, pompous Washington pundits who think the middle class just has it too good," Miller said. "Washington pundits love austerity, and they're all clucking with disapproval for European voters. The pundits always think someone else's belt needs tightening, and it's always someone who doesn't go to the same cocktail parties they go to. But there are a lot more middle-class voters than there are Washington pundits."

Popular opinion on austerity is changing rapidly around the globe, and Obama must ride the wave diligently if he wants to capitalize on it. Obama has shown an incredible knack of getting his political timing right,  and now is the time to flex some muscle in order to get what he wants. It is time to paint himself as the second coming of Franklin Roosevelt and discard the budget cutting rhetoric of Herbert Hoover, and he must try to convince the politicians on one continent, and the people on the other.

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