You seem to be thinking of how Europe (Western Europe) WAS and not how things have been going. Major new neo-liberal rules have been gradually slipped into place or are being slipped into place, each one in an interlocking fashion. Many have already started to bite hard (rapidly rising inequality, declining security, cutbacks in social services and benefits, growing "financialization" of business, declining reward for actual production, diminishing ability for the public to regulate the economy). Further deterioration is in the pipeline (the Bolkenstein Directive, Chirac on the length of the workweek and reduction in vacations, Blair on the privatization of health care, Shroeder on pensions, Burlesconi with a package that even the neo-neo-fascists could not tolerate). And worse is on the horizon.
Indeed, even the "social welfare" figures Wojtek cites: 30% Europe vs 16% US were produced by EuroStat (a EU Commission neo-liberal bastion in many areas) and widely used precisely to show that Europe "can not compete" unless it cuts back on social spending. http://epp.eurostat.cec.eu.int/cache/ITY_OFFPUB/KS-DC-05-001/EN/KS-DC-05-001-EN.PDF
[It is all very misleading, including the name EuroStat gives to the contrived category: "Social Protection". The figures include govt expenditure on health, pensions and everything else "social". Total public and private expenditures would show the Europeans ARE competitive since in the US these are private expenditures but spent nonetheless. What the figures DO show is that Europe has an efficient - but public - health care system that does not leave out the poor and that pensions are used to redistribute income rather than shelter taxes. Of course this exactly what the recent proposals seek to modify.]
BUT Wojtek should look at the country breakdowns. Sweden now spends about 31% of GDP on "social protection" which is down from about 37% eight years ago (a massive and unprecedented change since it is 6% of an entire national economy). The other EU 'high-flyers' - Finland, Denmark, Netherlands - came under similar pressure and had to cutback to what was then the EU "norm". Now come the new members. Estonia, Latvia or Lithuania spend about 14% of their GDP on "Social Protection"; Poland, Hungary, Czech Rep, Slovakia, and Malta all spend less than 20%.
In itself, this would likely trigger a new round of deteriorating social standards in the better off countries like that experienced by the 'high flyers' in the '90s. Remember the current EU rules are DESIGNED to create a lowest common denominator adjustment -- there is nothing like the US Federal standards established by the New Deal. And that is what the Constitutional debate is about.
BUT there are new EU rules afoot to radically further exacerbate the lowest common denominator approach. For example, under previous rules Estonian wages, benefits, and legal protections only applied to Estonian workers in Estonia (if they worked in say Sweden all workers had to be given Swedish standards). Under the Bolkenstein Directive, Estonian workers will be given only Estonian standards IN SWEDEN -- so long as they are employed under a "service" arrangement (such a contract to an Estonian firm, or a "temp" agency incorporated in Estonia, or even just a one-person contract such as a local plumber). You can imagine how this will affect the job prospects and bargaining leverage of Swedish labour. Of course Swedish companies will stampede to put all in-house work under the fig leaf of an arms length 'service' contract.
In short the European 'social' model is widely considered by Europeans to be in great danger.
Does a Constitution matter in all this? The key to neo-liberalism in Europe has been to use the European Union to leverage these changes onto an unwilling population. At the national level (as per Chirac, Blair, Shroeder and Burlesconi) resistance has been enormous - as Wojtek rightly points out ordinary west Europeans do not want this. In Europe, as almost everywhere (outside the U.S.), neo-liberalism has ONLY been possible through the use of extra-national powers set up to exclude democratic processes (the IMF, World Bank, WTO, "Free Trade" Treaties, etc). In Europe there is also the attraction progressives have to building some sort of Union (the issue being what sort), just as NAFTA carried an internationalism for some US liberals. 10 or 15 years ago, most Europeans assumed the neo-liberal inroads would be limited, worth paying the price and could later be revised.
Most of the worst rules of the EU would now be enshrined - in specific detail - in the 100 page Constitution (limits on spending, the specific prohibition on Keynesian fiscal policy, the specific prohibition on a Keynesian monetary policy by the "independent" ECB; etc). Plus there are a few new and additional rules. And there is NOTHING given to the other side.
The 'powers that be' do want/need a new decision process for the expanded EU. The opponents of neo-liberalism want to avoid 'locking into' a constitution rules that they have never wanted AND feel they should be given a chance to renegotiate those rules in return for the new political structure. They also further calculate that given the proposed structure and composition of the new EU this may be their last best chance.
Paul
PS Two further points:
If the goal is to rival the US, it is hard to see how neo-liberalism is compatible. Number 2, 3, or 4 powers have never risen that way ('the strong get stronger...'). And there is a reason why #1 powers (the U.K. in its time) fight for laissez-faire. Even the positive EU examples Wojtek cites for emulation all involve state regulation and state sponsored investment - not likely to continue in a neo-liberal framework.
As for Wojtek's "some looney lefties" -- in a more sexist time they asked 'Can 20 million Frenchmen be wrong?'. In fact, the vast majority of the 50+ % "NON" voters are center-left Socialist Party types and only the center-right voters support the constitution by a majority. Look at the polls. http://www.lemonde.fr/web/article/0,1-0@2-631760,36-654247@51-632576,0.html