Osborne’s probably went along the lines of, “damn – why did I ever suggest independent economic analysis”! It is interesting to look at the various reactions by different sections of the political community, as the OBR figures show the economy is not in as bad a state as the ConDems are claiming as they attempt to justify their savage cuts approach to economic ‘recovery’.
So what did the OBR actually report? Well despite rhetoric of how the public finances are even worse than the ConDem’s expected, the budget deficit has decreased and rate of borrowing estimates have thus decreased. Whilst the growth estimates have been revised down, there is no justifiable reason for the ConDem’s to now continue their line that the ideologically driven cuts we are going to see are Labour’s cuts. For one, progressives wouldn’t be cutting in the areas that the ConDem’s are, especially when it comes to influential policies such as the Future Jobs Fund. Secondly, for a progressive left response to the deficit, there should be an emphasis on tax rises – this illuminates the problems with the current 2:1 public spending cuts to taxes ratio that Labour have. This needs to be revised, so that there is more emphasis on tax rises.
These tax rises need to be progressive too, as the ConDems are now taking attention away from these more optimistic figures to concentrate on the structural deficit being slightly bigger than was thought. They are now arguing that we need to introduce very regressive taxations such as increase in VAT to make up the gap. Another missed opportunity to make the system fairer, not as though you would expect anything else from the Tories.
In the panic of justifying their claims, ConDems are resorting to pretty desperate scare tactics. Clegg says:
“Regrettably the problems facing our country are even more serious than we had originally realised…To do anything else would not only be irresponsible; it would be a betrayal of our progressive values. There is nothing progressive about denial. And there is nothing progressive about condemning ourselves and our children to decades of debt, higher interest rates and fewer jobs.”
All this talk around deep public spending cuts somehow being progressive really annoys me. Why is it fair to cut vital services when 0.3 per cent of Britain’s population owns 69 per cent of its land, for example? True progressives would argue for higher taxes for those who are most able to pay for them, such as an introduction of a land tax would target this obscene wealth that a small percent of the population control.
The right-wing press are at least being more open about their actual ideological desire to cut, cut, cut. Take Fraser Nelson’s piece, he admits that the OBR’s findings counteract the claims that the economy is in an even worse situation and in fact says that :
“But, embarrassingly, the economy is not playing along. Things just keep getting better.”
As Nelson remarks on, and as Left Foot Forward did with their interesting piece on the OBR findings, the structural deficit would have gone by 2014 with Darling in place and without savage cuts planned by the Tories. Now Nelson believes that the ‘moral’ argument, as he calls it, should be made for cuts. Of corse, how stupid of me – I forgot how moral it is to implement big public spending cuts on the most vulnerable whilst compromising any chance of making the wealthiest and most able to pay suffer (e.g. watering down of CGT).
These right wing analyses and the ConDem’s response, also forgets that the reason we are seeing the economy recover is because Labour’s investment is paying off – however, with a pursuit of the so-called ‘moral’ argument, the economic finances are only destined to plummet as we are increasingly likely to enter into a double dip recession.
There seems to be no stopping the right in their continual covering up of the true reasons for their cuts. The Times report Osborne bashing the independent advise of the OBR:
“Mr Osborne said that Sir Alan Budd’s OBR panel had “understated” the deterioration in the nation’s finances and that borrowing was less bad than feared, in part because interest rates had fallen as markets became convinced that the deficit would be properly addressed by the coalition.”
Despite the claims that the government will start telling the truth economically, the OBR has just made it harder for them to lie – but it hasn’t stopped them trying.