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Most of Merkel's economic advisers have been raised in the Bundesbank tradition of budgetary orthodoxy and rules-governed "automatic stabilisers" to offset recession, a tradition quite different from French dirigisme with its Keynesian-inspired discretionary remedies for recession.
Josh Bolten, the new budget director, claims the deficit is "manageable", that most of it was the result of spending to offset recession and fight the war on terror (ie, certainly not the result of tax cuts) and that economic growth will spur revenues and close the gap.All these things are possible, but are they credible?
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PARIS — After a first round of costly bank bailouts and stimulus programs came up short, governments in Europe and the United States are moving more forcefully to assure that bailed-out banks lend more money to offset the recession that has engulfed both continents.
It can now run an expansionary fiscal policy that offsets the recession, rather than a tight one that aggravates it, as in Latvia and Lithuania.
Almost none will go into reinvigorating Greece's shattered welfare system or offsetting a recession that, in its seventh year and with GDP down more than 25%, hit depression-era levels long ago.
However, this is not enough to offset the renewed recession in manufacturing.
Leighton, with operations across Asia and the Middle East, was supposed to offset the European recession that thumped ACS and Hochtief.
The other is that the huge budget deficit did not do much to offset the UK recession, for we had the biggest fiscal deficit in the developed world and still had one of the deepest declines in output measured from peak to trough.
Retailers invested more in energy efficiency during the recession to offset declines in consumer spending, take advantage of state and federal tax incentives and meet demands from shareholders to cut costs.
The politics of the issue are playing out against the backdrop of a muddled economic outlook, in which signs of recovery from last year's recession are offset by the stock market's decline and eroding consumer confidence.
The idea was that forecasters would accurately predict business cycles and that timely tax cuts or government spending would offset the effects of recessions.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com