The New York Times reports that the German government has been rebuked by it’s Council of Wise Men for promising tax cuts without proposing corresponding spending cuts:
The German government drew sharp criticism Friday from its economic council of experts for neglecting the budget deficit and focusing instead on tax cuts, which the experts said would fail to make the economy stronger once it emerges from the worst crisis in decades.
Chancellor Angela Merkel receives the annual report from the chairman of the council of experts, Wolfgang Franz, in Berlin on Friday.
The so-called Council of Wise men, comprised of four men and one woman, said the center-right coalition government, by making promises to cut taxes by €24 billion or $35.7 billion in 2011, would make it much more difficult to curb the budget deficit.
The tax relief “has been promised without addressing the funding,” the council said in its annual report. The government should start to scale back on its fiscal stimulus spending in 2011, the council said.
The debate in Germany over unfunded tax cuts mirrors the split in the U.S. over whether all tax cuts must be “paid for” under the paygo system.
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