Wednesday, May 25, 2011

Obama's failure to endorse government's economic plan isn't good news for the left

There is much crowing from the left that Obama has failed to endorse the Coalition's plans to reduce the deficit by saying lines such as "Our different countries will need to take different paths". However perhaps they should consider that he may not be willing to support our plans because they aren't as quick as his, rather than the other way around.

As the Spectator has shown in this graph, the "Obama plan" sees public spending reduced by a larger percentage in 1 year than we're doing over an entire Parliament.

So why has he been saying this different paths line? Well either
1) He wants to ensure that the Republicans can't accuse him of wanting to go back on what he has already agreed (i.e. not cut as quickly) or;
2) The Coalition (who surely had sight of his speeches and remarks beforehand) didn't want to embolden those on the right who are saying we should be going much quicker than we are, or do any damage to the public's view that we want to go quicker.

Either way, his comments certainly don't endorse the Labour Tax and spend approach, if anything it says the opposite.

I've just seen the transcript of the joint press conference where Obama says:

"And obviously the nature and role of the public sector in the United Kingdom is different than it has been in the United States.  The pressures that each country are under from world capital markets are different.  The nature of the debt and deficits are different.  And as a consequence, the sequencing or pace may end up being different."

The role and nature of the public sector in the US is that it provides much less to it's citizens than ours, therefore they can cut quicker than we can here, is my reading of that.

Interestingly the PM said:

"But each country is different, but when I look across now and see what the U.S. and the UK are currently contemplating for the future, it’s actually relatively similar program in terms of trying to get on top of our deficits and make sure that debt is falling as a share of GDP...."

"...So as he said, we may take slightly different paths but we want to end up in the same place."

So there's that different paths line again, clearly an agreed line between them.

Update 2:
From the transcript of Obama's speech in Westminster:

"Having come through a terrible recession, our challenge today is to meet these obligations while ensuring that we’re not consumed with a level of debt that could sap the strength and vitality from our economies. That will require difficult choices and different paths for both of our countries."

Also notice his focus on debt, which is a major issue in the US, unlike our debate here on the deficit.

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