Protecting the Stability Pact

Some critics have attacked the European Union’s Stability and Growth Pact claiming that its deficit ceiling of 3 percent of gross domestic product is hindering governments from dealing with the protracted economic meltdown. This newspaper has a different opinion. The 3 percent limit is an anchor of stability. First, it’s the only criterion that is still in force. The other two, which seek to control member states’ public debt and inflation, have been left to the discretion of national governments. Second, the pact allows states to exceed the 3 percent threshold for one or two years (albeit under stricter supervision). Third, if Europe’s big member states are allowed to relax their fiscal discipline, the implications for Greece’s economy will be disastrous. A weaker euro will certainly have an impact on the Union. Greece is no stranger to chronic deficits. A liberal policy dictates strict management of fiscal resources. Claiming the «right to spend» (at the expense of our children, of course) is deep conservatism, even if it comes dressed in a leftist cloak.

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