By John C. Dyer, UK Correspondent
(John Dyer is a Public Policy "wonk" with over 34 years public service experience, over 17 as state level policy counsel, legislative advocate and analyst. Writer. Poet. Dual citizen relocated to UK 2010.)
On Wed, 25 May 2011, President Obama entered Parliament, escorted by a shyly grinning, cherubic Speaker of the House of Commons, John Bercow. BBC replayed the moment every half hour throughout the following day.
The mood was, in a word, special. It would not be an exaggeration to say that the British public and leaders treat the President with an interest bordering on the adoration generally reserved for the Queen. Nor would it be much of an exaggeration to say that not a few in leadership would love to be leading the 51st state of the Union. Many (albeit not all for sure) hang much hope and longing onto the so-called “Special Relationship.”
But as the President addressed Parliament with his usual polished charm, there were elephants in the Commons.
The UK in serious social and economic upheaval
The UK is in serious economic and social upheaval. That sliding category, “Unemployed and Still Seeking Work,” stands at somewhere around 2 3/4’s million people. Youth unemployment is 20%. Economic growth has flat-lined. The Bank of England and the Business Secretary, Vince Cable, warn in dire tones that the next two years are going to be ugly painful.
Politicians, economists, and pundits all say the 2008 bursting of the mortgage bubble, and the subsequent melt-down of the financial markets were the root. Perhaps, but that is just the beginning of the analysis.
The UK Conservative-Liberal Democratic Coalition argue that at the root of the root is a “dole” culture economically based in government debt financing. They blame Labour for spending the Treasury Dry. They personalize it as all about former Prime Minister Gordon Brown’s dithering and irresponsibility.
Labour argues that they had everything under control until the Coalition took over in May, 2010. They argue that the current maladies are exacerbated by the “austerity programme” introduced by the Coalition, personalizing it as all about Chancellor George Osborne’s ideology.
So far the themes may be familiar, but the approach taken by the US differs markedly from the approach taken by the Coalition. I will not rehash all the specifics here, but summarize.
The basic facts
First the basic facts: The UK budget deficit at the end of Labour’s time in office was £176 Billion ($287.3 Billion US). The US deficit for the comparable period was $1.42 (£.868567Trillion. The UK national debt was £760 Billion ($1240.66 Billion US). The US deficit was $14 Trillion (£8.576 Trillion).
The US deficit continues to rise. The US strategy has been to employ “quantitative easing” and grow the economy. The US plans to cut $38 Billion (£23.27 billion) from its $1.42 Trillion (£.869 Trillion) deficit this year and reduce the National Debt $4 Trillion (£2.45 trillion) over the next 12 years.
The contrast is dramatic. The UK intends to eliminate its deficit by 2015. To do so it has slashed public services, transferred ultimate financial responsibility for higher education from the government to the student, jerked the reins hard on benefits of all kinds. Even Labour would have halved the deficit by 2015.
The IMF's "European plan"
The Coalition strategy owes what decreasing credibility it has to the International Monetary Fund. The UK is voluntarily following the so-called “European Plan” - “austerity” cutting of public services coupled with privatization of government services.
The IMF imposed this plan on insolvent nations receiving IMF brokered bail outs. As the Coalition took office, its officials chorused the IMF’s judgement that the UK “has no credible plan to reduce the deficit” as the Coalition imposed its draconian cuts. The Coalition argued (and continues to argue) there is no alternative.
Recently an IMF official has kind of tentatively offered the same comment on the US plans. Niall Ferguson, the philosopher-historian who mentored both the Conservatives in the UK and former Presidential candidate John McCain observed on the BBC”s “Question Time” that the hour glass was running down on the President’s strategy. Republicans began an attack on the President’s handling of the deficit and on Medicare expenditures.
But these forays seem muted compared to the UK's Conservative-Liberal Democratic rhetoric and actions. The US seems to remain committed to the President’s focus on economic growth first, deficit reduction second. Certainly, there is no hint of the US eliminating its $1.42 Trillion deficit in the next 4 years.
Why the difference between the UK and US approaches?
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