Fiscal Federalism in the EU: Do Lessons from the US fit with the ideational setting of EMU?
17 December 2012 5:00 pm
Prof. Dr. Sonja Puntscher Riekmann, Jean Monnet Chair, Salzburg Centre of European Union Studies, Universität Salzburg
wiiw, Rahlgasse 3, 1060 Vienna, lecture hall (entrance from the ground floor)
The current economic and debt crisis in the European Union has prompted a number of measures intended to reform the discerned weaknesses of the architecture of the monetary union: while the EFSF and ESM enabled loans, supplemented by austerity programmes, to states facing difficulties in obtaining market financing, the “six pack” and the European fiscal compact introduce stricter enforcement provisions for the Stability and Growth Pact, tighten surveillance mechanisms and aim a strengthening fiscal discipline. This puts renewed discussions about European fiscal federalism back on the agenda and also induces comparison with US fiscal federalism, especially owing to the fact that although public debt and deficit are smaller in the euro area than in the US the viability of the Euro area is increasingly put into question. Authors like Imnan, Rubinfeld or Darvas stress that there are lessons for EMU to be learned from the United States historic and present experiences. The lecturer will aim to critically assess the possibility of drawing lessons from US experiences. Do we really see an ideational shift caused by the crisis, inspiring the “constitutional moment” of fiscal federalism and thus initiating a move from pure monetary policy to fiscal policy? Or can the current EMU reforms be better explained by existing power structures within the Eurozone where a specific “Northern” focus on thrift is imposed onto an allegedly profligate South? To what extent can elements of the US model be transferred to the European context, taking into account the different historically grown structures, institutions and economic concepts? Do we see a generation of a “new body of knowledge” drawing on existing examples of fiscal federalism to find efficient ways out of the crisis or have we to concede in analogy with Reinhart and Rogoff that the conviction that “this time is different” hinders effective learning? And what democratic basis is there for fiscal federalism to be fostered in the EU?