Germany sets an example

The Post and Courier, Charleston, S.C.: The strength of Germany’s economic performance over the last year stands in stark contrast to the weakness of America’s “jobless recovery.” That difference suggests that reducing deficits does not slow economic growth — and may help it.

The message from Germany takes on particular weight in light of warnings from Moody’s Investor Services and Standard & Poor’s rating agencies that the United States might lose its top credit rating as soon as two years from now if it does not take strong steps to reduce the deficit.

Germany posted the strongest economic growth in 20 years, its Gross Domestic Product rising at 3.6 percent in real terms and its unemployment falling to around 7 percent. That is a dramatic contrast to the U.S., which experienced slower economic growth and much higher unemployment in 2010.

Germany achieved its growth while keeping a tight rein on deficit spending, which never rose above 3.5 percent of GDP, while the U.S. borrowed large sums to “stimulate” the economy. Federal deficits for fiscal years 2009 and 2010 were 9.9 and 9.1 percent of GDP.