Thursday, October 21, 2010

Britain's Budget Cuts--Two Lessons for America

From Yahoo Opinion.

"British budget cuts unveiled today are the most severe in decades, promising to eliminate the country’s deficit in five years. What lessons do they hold for the fiscally challenged United States?

The race to a zero deficit in London is faster than in almost any other Western capital. Indeed, President Obama has warned that cutting too quickly could crash today’s struggling economies in another recession ditch.

But British Conservative Prime Minister David Cameron and his Liberal Democrat coalition partner, Nick Clegg, are willing to take the risk."


"The next five years will show whether they can pull this off safely. But even while that question remains hanging, two big conclusions can already be reached about this British experiment and how it might apply across the Atlantic.

First, it’s clear that where there’s political will, there’s a political way – even on a subject as contentious as reducing government spending."


"The Greek tragedy helped win voter acceptance in Britain, as has a generally even-handed approach to the cuts. No one is spared – not the banks (which will see a permanent tax based on the size of their balance sheets); not middle- and upper-income families (they will lose child benefits). The pension age will rise sooner than expected, affecting everyone.

The second lesson is the strategy of the cuts themselves: a certain fairness in how they're distributed, but with an eye toward increased spending for national priorities and competitiveness."


"...the British budget shows that even sacred cows, such as defense spending, can’t be exempted. Defense Secretary Robert Gates has made it his mission to cut Pentagon costs – hardware that doesn’t align with counterinsurgency needs as well as personnel expenses. He’s gotten some cuts past Congress, but he still has a long way to go.

In the US, nothing is more sacred than the entitlement programs: Social Security, Medicare, and Medicaid. They’re seemingly untouchable, and they’re hugely expensive. Instead of avoiding this debate, lawmakers must embrace it."


"This December, President Obama’s bipartisan commission will deliver its report on how to reduce the national debt. Political leaders from both parties have an opportunity – in this window of relative calm provided by the financial markets – to solve this problem. As in Britain, they can work together to return the country to a more sustainable fiscal path.

And if they act sooner rather than later, they may find they can take that turn on four wheels, instead of two."

Ahhhh...the guys at Top Gear will show 'em how it's done! Yes, Britain, I'm watching on the web, and wondering who the next Stig will be--I understand his cover is finally blown.


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