We're not Greece

First, we are lucky to have a robust federal government, which the European Union lacks. Early in the recession, the feds were able to offset problems in the country’s most troubled regions with a stimulus program (and also with that auto bailout that so many, including Mitt Romney, opposed). The stimulus should have been bigger, and it should have extended over a longer period. But it helped.

Second, we bailed out our banks right away and also have a more effective central bank. We thus avoided some of the problems now facing Europe, notably in Spain. Again, we need to do more, not less, to deal with the damage caused by the housing bubble, which is especially threatening in parts of California. But the United States bit the bullet immediately to deal with potential insolvency in the banks, and the Obama administration’s stress tests helped restore confidence in the system.

By contrast, Europe created a common currency without a central bank as powerful as the Federal Reserve, and without a continental fiscal policy that cuts across its member states. In a genuine federal system, the better-off states help the states that fall into trouble. Greece needs both reform and large transfers from the wealthier states of Europe — yes, that means Germany — to reverse its economy’s free fall. Our federal system mostly disguises the transfers that take place across state and regional lines. (Many of these, by the way, take money out of California.) Yet because we all think of ourselves as Americans, we don’t usually object to them. It’s not quite like asking Germans to help Greeks or Italians.