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Comment by daliusd | Hacker News Reader

As far as I know different states in USA have different laws (e.g. in Philadelphia you can't buy single bottle of beer in supermarket). Different states have different taxes. Some laws are nation wide but that's the same in Europe. If country does not put laws into its law base it should pay penalties (and you don't even have to be member of euro-zone for that). The only real difference between USA and EU is language however even that is not big problem (e.g. my country lost about 18% of population because of emigration to richer EU countries).

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You are missing the elephant in the room. The US federal government spending accounts for around 20% of the GDP. A large portion of the automatic stabilisers including social systems (as limited as they are in the US) is shouldered by the federal government.

This is a huge stabilising momentum for the economy, because the government does not have to (and indeed it should not) reduce its spending due to financial pressures. There are no financial limitations to how much money the US federal government can spend.

(There are other considerations - in real terms, i.e. real capacity of the economy - that put a limit on how much spending would be wise, but since utilisation drops in an economic crisis, the room for additional non-inflationary government spending actually increases.)

None of this exists in the Eurozone. All spending within the Eurozone is done by actors that are financially constrained, and therefore there is much less momentum to carry on stability in case of a crisis.

Your answer is really good. Therefore I have dig a little bit deeper.

"As of September 2004 the U.S. Congressional Budget Office reported that federal government spending for 2004 was projected to be $2.293 trillion, or slightly less than 20% of the GDP. Of that, $159 billion was for net interest, $486 billion for defense, $492 billion for Social Security, $473 billion for Medicare and Medicaid, $191 billion for various welfare programs, $136 billion for "retirement and disability" benefits, and $64 billion was projected to be spent elsewhere." (from http://en.wikipedia.org/wiki/Government_spending)

Therefore your numbers are correct. It is big work to find numbers for the same year but for example military spending between EU and USA can be compared:

"The combined defence budgets of the 27 EU member states in 2008 amounted to €284.9 billion ($406,7 billion). This represents 1.63% of European Union GDP[2], second only to the US military's €477.4 billion ($620.5 billion) 2008 defence budget, which represents 4.5% of United States GDP." (http://en.wikipedia.org/wiki/Military_of_the_European_Union)

In this case we still have different agents but military spending has indirect economic effect on different EU countries (e.g. military airports in countries that do not even have its own war air planes).

Still your argument is really strong having in mind social security of federal budget's spending. Europe Union has its own budget as well but it is way smaller compared to US federal budget (about 1-2% of EU GDP vs 20% of USA).

Finally it is not very good to mix EU and Euro zone (because not all EU members have Euro).

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