Austerity makes for bad politics
It looks like the Conservatives in Britain are getting worried that their emphasis on deficit reduction is hurting the party with voters. Labour seems to be catching up in the polls:
The prospect of a hung parliament frightens financial markets, which fear a minority or coalition government would shy away from tough action on the deficit, which is set to exceed 12 percent of GDP this year, a level similar to that of crisis-hit Greece.
Labour plans to halve the deficit in four years with cuts starting next year but says turning off economic stimulus taps now could derail a tentative recovery from a deep recession. The Conservatives say this is too little, too late. They pledge to make an “early start” on deficit cutting if they win power, saying delay could cause a crisis of investor confidence and push up interest rates, but they have not given any figures.
The Conservatives’ uncompromising message on the need for belt-tightening may have turned off some voters, who fear public spending cuts could lead to job losses and poorer services. “The ‘age of austerity’ is a sound bite too far,” said Tim Bale, senior lecturer in politics at Sussex University and author of a recent book on the Conservatives.
Me: A Cameron loss would surely be noted in Washington as another lesson that root-canal economics doesn’t sell. Rather than a Deficit Commission, someone should suggest a Growth Commission to recommend ways to boost long-term economic growth in a fiscally responsible way.