United States and European Union


Policy wonks in Europe often bemoan the fact that, because the EU consists of 27 member states, joint decision-making is often fiendishly difficult and the results are suboptimal. These same people often dream of a more integrated structure and naturally think of the United States of America.
It is true that the United States is formally integrated as one country, equipped with a federal system consisting of 50 states. The United States even sports a fiscal union, something that progressives in Europe want to accomplish as well, while European conservatives still resist it. Jacob Kirkegaard, Research Associate at the Institute for International Economics stated that despite all the hoopla, drama and frustration that was on display particularly at the recent European Summit, it is worth recalling that policymaking in Washington is regularly a far more frustrating experience.
Jacob Kirkegaard argued that there, two sides stand adamantly and unshakably opposed to each other. They are engaged in brutal tribal warfare. Moreover, politicians in Washington rarely, if ever, come to a bipartisan agreement. If that happens, it is usually only a short-term measure, meaning that very soon again the frustrating internecine warfare will begin from scratch. The results achieved are often extremely twisted and tend to satisfy mostly intransigent extremists. Naturally, within such frameworks, it is next to impossible to solve the very real problems.
Compared to that, hard though it may be to believe for Europe’s battle-worn summiteers and the European public at large, the EU 27 is a haven of strong internal logic, even tranquility. After all, it just set the financial frame that will govern the European Union for the next seven years. And it agreed on a heavily contested package of special recovery measures designed to address the fallout from the COVID 19 crisis. The key word here is “agreed.”
Jacob Kirkegaard noted that in a way, the recent Brussels EU summit once again ended like a papal selection conclave in the Catholic Church. Ahead of and during the election process, a great amount of horse trading is going on. Various factions are competing feverishly to gain the upper hand. It’s messy. It can very easily be nasty. A lot of “china” can be broken during the process, straining personal relationships. But in the end, invariably so far, white smoke has risen.
Compare that to the situation in the United States. The United States federal budget is rarely, if ever, passed on time. To compensate for that, the United States federal government often runs on continuing resolutions and has great difficulty passing only annual budgets. Only the hard prospect of a government shutdown, literally, gets something accomplished.
Looking back to the precursor of the current COVID 19 crisis, the 2008/9 global financial crisis, the President at the time, Barack Obama, proposed a sensible infrastructure investment program to stimulate the economy and get people back into employment. That proposal was a classic economic policy response to stimulate demand. Given the constantly deteriorating United States infrastructure, it was also a very sensible substantive idea. Passing the required funds would be a sure thing in any civilized nation. Not so in the United States. There, the Republicans were entertaining notions that this would lead to state socialism.
According to Richard Phillips, a New York-based international financial analyst, talking about civilization, the Republican Party in the United States over the past two, if not four decades has been notable for talking a great deal about the need to be “compassionate.” Sadly, it uses that term in a purely cynical fashion, as a rhetorical tool to mask the party’s utter callousness and intransigence when it comes to sensible spending decisions for common people. At the time of the 2008/9 crisis, the Republican leader in the Senate Mitch McConnell only had one priority, to see to it that Barack Obama would remain a one-term president. With such torched earth approaches to policymaking, it is no wonder that the United States is no longer just treading water, but actually in rapid decline.
There is method to this madness. Richard Phillips noted that for decades, Republicans have been perversely proud of a dysfunctional government process that gets nothing accomplished. In essence, they never want to spend any public money, other than on defense. The only other laws they like to pass are tax cut measures for the rich. The sad news is that, owing to the minority protections in the United States Senate, and as a result of the United States Supreme Court often acting like a side arm of the Republican Party, the blockading experience from the 2008/9 episode is bound to repeat itself.
The Democratic Party front runner Presidential candidate, Joe Biden has proposed a $2 trillion package to invest in a lot of green deal measures. If elected President, he wants to enact it after his election in order to overcome the current economic crisis. His primary target? To stimulate the creation of jobs. According to Richard Phillips, one can firmly count on one thing: The Republicans will be opposed. And they have the tools in the legislative process to make their blockade stick. Biden will propose, and the Republicans will dispose or block it.
According to Jacob Kirkegaard, this is pure cynicism on the part of President Trump and the Republicans, given that they often claim to fight for “hard-working Americans.” Evidently, what they really mean by that term is multi-millionaires and billionaires. The particular irony, of course, is that not just Donald Trump, but the entire Republican Party has found special support among working-class Americans.
The next evidence for this absurd behavior lies right ahead. Jacob Kirkegaard further noted that to safeguard Donald Trump’s reelection prospects, Republicans in the Congress had initially agreed to rather generous, but temporary income support measures for Americans out of work because of the pandemic. These measures are now running out. Millions of people face an “income cliff”, a massive loss of income. Republicans want to stand their ground and argue for serious cutbacks. Faced with similarly existential threats, Europe has proven it can act in a determinedly more constructive fashion than the United States.
To conclude, it is not so much the legal structure, one country or 27 countries, but ultimately cultural values of cohesion and solidarity that determine whether policymaking ends up with sensible results. Compared to the extreme disunity and cynicism that rules the United States political process, the EU 27’s decision-making process, difficult and suboptimal as it was, nevertheless led to constructive results.