Fiscally conservative Romney-Ryan ticket: Does it appeal in Germany?

Germany has promoted austerity as central to fixing eurozone woes. So is there any resonance between Chancellor Merkel's views and the Romney-Ryan ticket?

With America's election day getting closer, Germans are following the tightening race between President Obama and Republican challenger Mitt Romney with increasing enthusiasm. Four years after Mr. Obama entered the White House he is still highly popular. But could Germans' interest in Romney rise with Paul Ryan on his ticket?

Consider: Romney, like German Chancellor Angela Merkel, is a fiscal conservative. In a time of global economic crisis, his support for spending cuts in the federal budget could in theory prove highly popular especially with “Madame No,” the power player in the euro crisis. Meanwhile, Obama's heroic status has inevitably come down to earth overseas. A Pew Research study from June 2012 shows that global approval of the policies Obama has promoted has declined significantly since he first took office, though in Germany, 87 percent of participants still expressed confidence overall in the president.

Stimulus packages

But throughout the economic crisis, the Obama White House was encouraging Germany to support more debt-increasing stimulus packages. Germany resisted, with Mrs. Merkel arguing that decreasing the debt was the solution for regaining political authority.

“Superficially, one could argue that Romney and Merkel share the same economic interests,” says Josef Braml, Program Officer USA/Transatlantic Relations at the German Council on Foreign Relations (DGAP) in Berlin.

But Romney may still face an uphill battle in winning the hearts and minds of Germans and their leader.

Romney didn’t help himself with his Europe trip earlier this month, facing criticism for the countries he chose to visit and a number of his remarks. Then there is his economic philosophy.

The German and American definitions of conservative diverge sharply. Being conservative in Germany does not automatically mean promoting deregulation. “In Germany, it is hardly imaginable to reduce the role of government in the way Romney/Ryan want to do it. The state and some regulation on the market play a bigger role in Europe,” says Mr. Braml.

Little social security

Merkel's politics are based on the social economic market, an economic model most political parties have followed since World War II. It's a compromise between social democracy and economic liberalism, combining private enterprise with government regulation to establish fair competition. “Extensive cuts in social benefits, like Paul Ryan’s proposal to privatize Medicare, are not part of her political vision,” says Henriette Rytz from the German Institute for International and Security Affairs in Berlin. Germans have questions about how a Romney-Ryan team would cut government spending while expanding the military budget. And experts raise concerns about more social cuts in a system that – compared to Germany ­– has little social security.

Moreover, whoever wins the presidential race in November is going to face a tough economic outlook for 2013. According to the Congressional Budget Office, the first half of 2013 will be difficult if currently planned spending cuts and tax hikes go into effect, with US GDP shrinking by 2.9 percent, followed by a second half growth rate of 1.9 percent.

This outlook will influence US foreign policy, Braml says. “Neither a Democrat nor a Republican will have a lot of leeway. Because of its own economic problems, the USA will try to shift much of the burden onto its allies in Europe and Asia.”

Austerity policy

Looking at this global crisis, Merkel favors an austerity policy but also promotes a regulation of the financial sector and a financial transaction tax, something Romney would most likely not agree on.

“Given his campaign promise to repeal Dodd-Frank [Wall Street reforms], Romney is likely to object to government intervention in the global financial sector,” says Mrs. Rytz.

Merkel might give a future president Romney a warm welcome as a sometime-fellow conservative, but the differences in their economic policies would not likely translate into an immediately tight-knit relationship. And at any rate, for the next year, with an election looming, Merkel's main preoccupation jibes more closely with Obama's: getting reelected.