Wednesday, June 23, 2010
The surprises in the budget were the big increase in VAT for next year, and the decision to continue with large cash increases in total public spending over the five year period. The Chancellor, who had said that 80/20 was the right balance for spending cuts and tax increases, settled instead for a 57/43 balance in 2011-12 and for 64/36 the following year. His spending totals are:A slightly expanded comment of mine:
2009-10 (Last Labour year) £669bn
2014-15 £737bn (£68bn or 10% above Labour level)
Cutting CT to 24% brings us back into competitivity but not close to the front runners. Ireland achieved its 7% growth largely by cutting CT to 12.5% which would require a 4% annual drop over 4 years (that would have taken another £5.5 bn in the first year). I can see why that was politically difficult but if it improves growth even a little would have been well worthwhile.
I would like to think that if the Laffer curve means the CT cuts do not cost as much as a strict arithmetical calculation would show that the saved money will be put back into further cuts. If so it would improve investor confidence markedly if the Chancellor was to say so.
Apart from the CT cut it is a budget for fiscal responsibility rather than growth. However putting a tough framework in place while the government's honeymoon period is on is worthwhile (& properly puts the opprobrium on the previous lot).
Having plugged the massive leak in the ship of state I hope the next years will be put towards getting the engine of growth running. China is managing 11%, India 10% & the world average is returning to 5%. There is no doubt that we can do so very much better than 2%. On those grounds I would have liked to see the cuts more targeted on particular, regulatory departments & quangos. 30% across the board does not achieve structural change whereas a 95% cut in the "planning" regulators & "heath & safety" departments would have achieved similar cuts & ended far more economic destruction.
Thank you for speaking out Mr Redwood. It is important that the intellectual opposition to Lib/Con policies does not come exclusively from Labourites. While I think you could have saved us more than £10 billion in government (based on the savings you made as Welsh secretary) the long term effect of there being a more free market option put forward in Parliament may be even greater.
Spiked also has an interesting article on the subject & in particular on the de facto opposition to economic growth of those holding power, of all parties:
Nick Clegg, the Liberal Democrat leader and now deputy prime minister, said on BBC Radio 4’s Today programme as far back as 3 January 2009 that: ‘As we come out of this recession, people will be looking for a Britain which is fairer, which is greener, where a mood of austerity, responsibility and accountability is evident not only in business but also in public life.’There is no excuse for such lies. Politicians of all parties know perfectly well how to achieve high growth. I do not believe I am the only one to have given them a detailed programme & not one of them has felt it possible to dispute that this is perfectly feasible. Any politician saying that growth cannot be massively increased & that this will not solve all fiscal problems is deliberately lying & simply another fascist parasite attempting to increase state power.
David Cameron, then leader of the opposition and now prime minister, also started talking in similar terms in early 2009. He told the Conservative Party spring conference in April 2009 that ‘the age of irresponsibility is giving way to the age of austerity’.
The great tragedy of all of this is that the general fund of our state budget could be cut from $9b to around $2b by first eliminating welfare and wasteful transfers to cities and school districts. Roads are paid for from a separate budget funded by gasoline taxes, and as such would not be affected by such cuts.
If my state were to eliminate welfare we could eliminate the state personal and corporate income taxes, eliminate the state property tax (leaving local property taxes), stop the flow of Mexicans and radically reduce crime.
Reagan was right on this one subject: Government doesn't solve problems, it subsidizes them.
Kelly was actually a cofounder of an umbrella group for the various Tea Party groups founded in the Phoenix Metro Area and was campaigning as an incumbent.
Most of the Tea Party sponsored candidates that ran in AZ lost although there were some victories in other parts of the US.