Socialist Germany realizes that a welfare state may not work:

German lawmakers yesterday approved a program to boost Europe's biggest economy by pruning cherished welfare-state programs and cutting taxes, reforms championed by Chancellor Gerhard Schroeder.

Schroeder appeared relieved after the series of votes in both houses of parliament, which capped nine months of intense debate about Germany's future since he unveiled his plans in March with the country limping through its third year of economic stagnation.

"One of the most important and biggest reform projects in the history of the country has been carried through," said Schroeder, who had pinned his political future to passing the package by Christmas.

Cutting spending and cutting taxes, what a novel idea.

The deal moves $11 billion in income tax cuts forward by a year to Jan. 1, adding to $7.6 billion previously slated for 2004. To help offset lost revenue, lawmakers cut a popular subsidy for first-time homeowners and pushed up tobacco taxes.

Yet economists cautioned that the tax cuts would have a limited impact on growth with a jobless rate stuck around 10 percent.

A 10% jobless rate? That's almost Jimmy Carteresque.