France’s election is supposedly a sign of a backlash against austerity. But spending data shows that the French government hasn’t cut spending or implemented serious reforms. Where are the cuts? Where is the austerity? Yet, newly elected president Francois Hollande has announced that he will jump start the economy by spending more and balance the budget with more taxes. It’s a recipe for disaster.
If the economies of Spain, France, the United Kingdom, and other European nations are suffering, it’s not because of “savage” spending cuts. When spending was actually reduced, the cuts have been relatively small compared to the size of the problem and meaningful structural reforms were seldom implemented. It’s because small spending cuts are overwhelmed by large tax increases.