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IBD | Europe’s Double Dip Teaches A Lesson About Taxes

The eurozone has officially slipped back into recession, and America could  soon follow if it takes President Obama’s route of cutting deficits mainly  through tax hikes.

The news this past week from across the Atlantic poses a lead-or-follow  choice for the U.S. The nation can either pull the rest of the world back into  prosperity, or it can sink with it.

And it will be making that choice soon, in how it decides to deal with the  tax hikes (huge) and spending cuts (not so huge) due to hit at the start of  2013.

One option is President Obama’s plan to raise taxes by about $1.6 trillion  over the next 10 years.

The other is the Republican idea of holding the line on tax hikes while  rolling back future spending with entitlement reforms. To see which plan would  work better, it’s instructive to take a look at Europe.

Eurostat, the European Union’s statistical service, has made it official: The  common-currency zone of the Continent has slipped back into recession after  three years of weak recovery. The core economies, France and Germany, continue  to grow but not by much.


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