Skip to main content
Part of complete coverage on
 

The only swing state that really matters in 2012

By David Frum, CNN Contributor
June 12, 2012 -- Updated 1946 GMT (0346 HKT)
German Chancellor Angela Merkel talks with students during a discussion about Germany's future on June 6 in Berlin.
German Chancellor Angela Merkel talks with students during a discussion about Germany's future on June 6 in Berlin.
STORY HIGHLIGHTS
  • David Frum: Whether Germany saves the euro is key to 2012 U.S. election
  • He says Merkel has power to ease crisis, boost world economy
  • America's economy is poised to grow sharply, if uncertainty over euro is eased, he says
  • Frum: Obama's re-election could hinge on the actions of the German government

Editor's note: David Frum is a contributing editor at Newsweek and The Daily Beast and a CNN contributor. He is the author of seven books, including a new novel, "Patriots."

(CNN) -- You could say there is only one swing state that really matters in 2012: Germany.

Whether (and how and when) Germany acts to save the euro will exert huge influence over the U.S. economy, too, and thus over the outcome of the presidential election.

Next question: How much influence?

Everybody agrees that the troubles in the eurozone hurt the U.S. economy. When your trading partners slump, you slump with them. Everybody agrees that the uncertainty over the future of the euro currency worries U.S. financial markets. If the currency fails, European banks plunge into a crisis that would be a replay of the shock of 2008.

David Frum
David Frum

But what remains deeply uncertain is the upside of the equation: How much benefit would the U.S. gain, if Europe did somehow find a solution to the euro problem?

It's clear that German Chancellor Angela Merkel has the power by saying "no" to lose the presidency for Barack Obama. Could she win it for him with a "yes"?

By the trade numbers, faster growth in Europe would seem relatively unimportant to the U.S. economy. Trade accounts for only about a quarter of the U.S. economy, and trade with the entire European Union represents less than a fifth of that one-fifth.

Now remember that the European Union includes a number of important countries, such as the United Kingdom, that do not use the euro. And the largest economy in the eurozone, Germany, continues to buy and sell strongly. A fillip to the economies of Spain, Italy and France would be welcome news but hardly decisive to a U.S. economy still recovering from its own financial crisis.

How economy may impact Obama in election
Satire novel exposes hypocrisy in D.C.

Yet trade numbers may understate the story.

Here in the U.S., the raw materials for recovery are all at hand. U.S. corporations are earning record profits. They have accumulated vast reserves of cash. They are investing, and they have begun to hire, too.

As Obama likes to note, more people are at work today in the U.S. private sector than on the day he took office. (He does not add that far fewer were at work when the recession began in December 2007.)

In aggregate, though, the pace of recovery continues weak. The rocket is lifting off, but it is not achieving escape velocity. Something more is needed!

The program needed to save the euro could provide a piece of that "something." To save the euro, Germany will have to agree not only to a financial rescue of other countries' banks but to a big program to stimulate the German economy, still one of the world's top five.

Somebody has to buy, and with China and India slowing down, Germany -- a much richer country -- would emerge as what the U.S. was in the early 2000s: the world's consumer of last resort.

Over the horizon, we can see the dawn of the next great chapter of U.S. economic expansion: the conversion from coal-fired electricity to a new energy economy based on the exploitation of the vast quantities of natural gas entrapped in U.S. shale formations.

Gas emits only about half as much carbon dioxide per unit of energy as coal, so it is more environmentally benign as well as cheap. The conversion process will be a vast undertaking, putting money and people to work.

To close the gap from here to there, though, the U.S. needs a jolt. Could a euro rescue administer it?

Follow @CNNOpinion on Twitter

Join us at Facebook/CNNOpinion

The opinions expressed in this commentary are solely those of David Frum.

ADVERTISEMENT
Part of complete coverage on
August 21, 2014 -- Updated 1842 GMT (0242 HKT)
Retired Lt. Gen. Mark Hertling says he learned that the territory ISIS wants to control is amazingly complex.
August 21, 2014 -- Updated 1450 GMT (2250 HKT)
David Weinberger says Twitter and other social networks have been vested with a responsibility, and a trust, they did not ask for.
August 21, 2014 -- Updated 1410 GMT (2210 HKT)
John Inazu says the slogan "We are Ferguson" is meant to express empathy and solidarity. It's not true: Not all of us live in those circumstances. But we all made them.
August 20, 2014 -- Updated 1951 GMT (0351 HKT)
Cerue Garlo says Liberia is desperate for help amid a Ebola outbreak that has touched every aspect of life.
August 21, 2014 -- Updated 1742 GMT (0142 HKT)
Eric Liu says Republicans who want to restrict voting may win now, but the party will suffer in the long term.
August 21, 2014 -- Updated 1538 GMT (2338 HKT)
Jay Parini: Jesus, Pope and now researchers agree: Wealth decreases our ability to sympathize with the poor.
August 21, 2014 -- Updated 1200 GMT (2000 HKT)
Judy Melinek offers a medical examiner's perspective on what happens when police kill people like Michael Brown.
August 19, 2014 -- Updated 2203 GMT (0603 HKT)
It used to be billy clubs, fire hoses and snarling German shepherds. Now it's armored personnel carriers and flash-bang grenades, writes Kara Dansky.
August 20, 2014 -- Updated 1727 GMT (0127 HKT)
Maria Haberfeld: People who are unfamiliar with police work can reasonably ask, why was an unarmed man shot so many times, and why was deadly force used at all?
August 18, 2014 -- Updated 2152 GMT (0552 HKT)
Ruben Navarrette notes that this fall, minority students will outnumber white students at America's public schools.
August 19, 2014 -- Updated 2121 GMT (0521 HKT)
Humans have driven to extinction four marine mammal species in modern times. As you read this, we are on the brink of losing the fifth, write three experts.
August 19, 2014 -- Updated 1158 GMT (1958 HKT)
It's been ten days since Michael Brown was killed, and his family is still waiting for information from investigators about what happened to their young man, writes Mel Robbins
August 18, 2014 -- Updated 1242 GMT (2042 HKT)
The former U.K. prime minister and current U.N. envoy says there are 500 days left to fulfill the Millennium Goals' promise to children.
August 20, 2014 -- Updated 1738 GMT (0138 HKT)
Peter Bergen says the terror group is a huge threat in Iraq but only a potential one in the U.S.
August 18, 2014 -- Updated 2006 GMT (0406 HKT)
Pepper Schwartz asks why young women are so entranced with Kardashian, who's putting together a 352-page book of selfies
ADVERTISEMENT