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U.K. Spreads the Gospel of Austerity

Those who say we can’t get cross party cooperation on tough decisions like budget cuts should take a look at Great Britain, where a coalition of Conservatives and Liberal Democrats have agreed on a tough program of budget cuts and reforms.

The current Chancellor of the Exchequer, George Osbourne, has been visiting the US to share ideas on how this can be done.  As the WSJ reports:

U.K. Chancellor of the Exchequer George Osborne used his trip to Washington for the International Monetary Fund meetings last week to sit down with top U.S. politicians and dispense some advice on deficit reduction.

[…] The U.K. government has pushed a deficit-reduction plan that has been broadly welcomed by ratings firms and the markets. That’s left Mr. Osborne as one of the most eager global advocates of fiscal rectitude. What makes Mr. Osborne especially proud—preachy, his critics, would argue—is that the austerity plan is a political compromise between Prime Minister David Cameron’s center-right Conservatives and the traditionally left-leaning Liberal Democrats.

The results of austerity have been mixed thus far: U.K. borrowing rates have stayed low despite the debt crisis in the neighboring euro zone but growth has ground to a virtual halt in the last six months. Still, U.K. officials clearly feel the two main U.S. parties could take a leaf out of Britain’s book.

While the Conservatives are traditional allies of the Republicans, U.K. Treasury officials acknowledge their deficit-reduction plan is more akin to the Obama administration’s strategy—mixing spending cuts with the kind of tax increases Republicans oppose. Even before he became chancellor, one of Mr. Osborne’s tenants was to never rule out tax increases if the wider principle of fiscal discipline was at stake.

Deficit reduction is not the coalition’s only accomplishment.  They have also made significant steps toward improving educational administration in the U.K.’s government schools by promoting the UK analog to charter schools in the US and making it much easier for schools to ‘go charter’ and for community groups to start new schools to introduce accountability and competition.

If they can cut deficits while investing in the future in the UK, we ought to be able to do something similar here.  Osbourne was meeting with both Republicans and Democrats during his visit; let’s hope his listeners were taking notes.

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  • MarkE

    I like the charter school concept as the embodiment of accountability and competition. We should apply this concept to all the great Federal entitlements such as Medicare, Medicaid, and Social Security. It sounds scarey, but if people felt ownership of these programs they would probably be satisfied with less. It appears that we are going to have to be satisfied with less anyway, unless the competition and accountability elements produced greater efficiency. Hmm…but isn’t that what competitive markets usually do?

  • Jacksonian Libertarian

    In the US the burden of the Federal Government Monopoly has gone from a post WWII average of 18% of GDP to nearly 25% of GDP since the Democrats first budget in 2008. Only by cutting back can the economy regain the growth rates it previously enjoyed. Increased Taxes will only prolong the stagnation and would likely set a low or no growth economy in place for generations.
    You can’t fix the Government Monopoly; it lacks the feedback of competition that makes the free enterprise system so successful. All you can do is limit the damage, by limiting the size of the Government Monopoly as our founding fathers intended when they gave us the constitution.

  • Corlyss

    Methinks the cross party cooperation is because the Liberals dare not do anything that would result in the breakup of the ruling coalition, which is their only shot at a ruling gig. If the coalition fails, the Greens and Labor will be the winners, and personally I think that would be a terrible disaster for all concerned.

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