In what Rupert Murdoch’s Sun newspaper headlines ‘It’s Mutiny,’ Britain’s naval chief warns that budget cuts may render support for the Libyan war impossible after September. In communities across Britain, local governments have cut garbage collection to once every two weeks, at risk to public health.
What appear to be savage reductions in public expenditure is in fact a very nasty game of politics that bodes particularly ill for America.
Rather than tighten belts and “ave a cuppa tea, luv, an’ just get on with it,” Britain’s governmental entities have begun slashing only those public service that mean the most to the public and its elected leadership while leaving the administrative waste untouched.
This will be familiar to many Americans. When long ago my wealthy Michigan community refused to raise property taxes to pay more for an already-generous education budget, the elders refused to lay off even one superfluous administrator and instead axed the high-school football team, the band and the drama club to ‘punish’ the electorate and intimidate them into forking over more cash.
For some budgetary perspective, we turn to London’s respected Adam Smith Institute (ASI):
“Our budget deficit this year is just under £150bn. That means that the government is borrowing almost £20m per hour, every hour, throughout the year, just to finance its ongoing expenses. And we’re already spending £120m per day paying the interest on debt we’ve already built up. Without spending cuts, Britain would be facing the same kind of fiscal meltdown that has already hit Greece, Ireland, and Portugal.
We also need to remember that the coalition’s spending plans are not that radical. Adjusting for inflation, they are only set to reduce total spending by a few percent over the next five years. To put it another way, we’re going back to 2008 levels of spending. It’s hardly the public service apocalypse some people suggest.”
Meanwhile, the left-wing and perpetually-indignant Guardian newspaper reports on axed public projects that hardly seem necessary and barely begin to reduce Britain’s unnecessary government: Refugee Action ‘one-stop’ advice service, and Playing for Success in London; The Northern Ireland Music Therapy Trust; the Devon Conservation Forum; the Potteries Museum in Stoke-on-Trent. If we had high-school cheerleaders, they’d be next.
However, anticipating cuts to come (which some UK economists think may eventually require shrinking the public sector by 40 percent to achieve full solvency), many public entities have gone on the defensive by threatening or cutting important services in order to make people suffer, or to endanger national priorities (however misplaced, as in Libya) to make people howl, and encourage their elected leaders to abandon fiscal probity or to cut budgets elsewhere. In Britain’s public sector it’s every man for himself, and the cruel collective strategy is more effective politically than a few thousand selfish students and government employees marching in London.
Prime Minister David Cameron’s Conservative-led coalition government is increasingly betrayed by their Liberal Democrat partners, whose rank-and-file is far to the left of its power-hungry leadership. So, the coalition has retreated almost entirely, starting with a volte-face on privatizing commercial forests to recently abandoned plans to reform the National Health Services (patients get better public cancer or heart treatment in countries where one dare not drink the tap-water).
Britain may have only one chance to get its finances on track before inflation and other problems intervene. With a relentless onslaught from the BBC and other leftish media; with the public sector imposing genuine health risks as well as (perceived) harm to a costly military; with a failure to explain to the public just how unsustainable is the present largesse; there is a grave risk that the middle classes decide to give up on reform. Yet Mr. Cameron—a posh, former financial public-relations artiste—is on his motorcycle and headed like Evel Kneivel toward the fiscal Snake River Canyon, but going nowhere fast enough to make the jump.
On his recent visit to Europe, President Obama bordered on threatening those governments even half-heartedly trying to reduce deficits, demanding that they pump more and more borrowed or printed money into their economies as the US is doing at home. Although the US recovery seems to be wholly caused by ‘quantitative easing’ and shows few signs of business-led sustainability, Mr. Obama wants Europe to follow blindly. Nothing annoys a violent drunk like someone trying to give up the bottle.
This should be writing-on-the-wall to American conservatives. Britain owes up to $500,000 per household and America’s full debt, public and private, may be grossly underestimated (some credible economists place it up to 8 years of GDP) while the demographic peril of ageing populations has yet to begin. Whether it is now or sometime after Mr. Obama’s reelection, cuts must come to America.
Britain may flunk the test even before America takes the exam. Generations of socialism, and clever but predatory politicians, have made even the British middle-classes happy peons of the servile state. American middle-classes are less cosseted with subsidised education and social services than are their British cousins, but the difference is not as vast as many may think. American middle-class addiction to Medicare is just one pervasive example.
But it can be done. Tiny Latvia “abolished 30 percent of public sector jobs, and the wages of government employees who remain has been cut by 28 percent. A government deficit of 20 percent of GDP has been transformed into a surplus of 8 percent in just 2 years,” says ASI. But those who suffered poverty, communism and Soviet subjugation may be hardier than we.
It will be interesting (as the Chinese say with irony) how America reacts to the privations and challenges ahead. Has it still got “the Right Stuff,” or was that buried with its grandparents?
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