Britain Bites the BulletLike many Western nations, Great Britain has rolled up an enormous amount of deficit spending and public debt, its massive government framework resting in economic quicksand. Unlike most of its counterparts who face the same bleak financial future, though, London is taking decisive action to combat it. It should inspire the United States to follow a similarly aggressive fiscal strategy. The coalition government of Conservative Prime Minister David Cameron and Liberal Democrat Deputy PM Nick Clegg this week announced the U.K.'s most substantive budget cuts in decades — 83 billion pounds, or about $130 billion U.S., by 2015. Some 500,000 public-sector jobs will be eliminated, and spending at government agencies will be reduced by an average of 19 percent. The defense budget will be slashed by 8 percent, its biggest cut since World War II. Not since Margaret Thatcher pruned the British welfare state in the late 1970s/early '80s has Britain embarked on such a retrenchment in spending. The move wasn't a surprise — 10 Downing Street had been preparing the nation for this for the last several months, including soliciting public opinion on what should be trimmed. Nevertheless, it's good to see politicians follow through on their rhetoric. Instead of mouthing platitudes about how deficit spending "can't go on forever," Cameron and Clegg are rolling up their sleeves, grabbing chain saws and going to work. Expect to see paroxysms of pain and anguish from the usual places (witness the riots in France over raising the retirement age from 60 to 62).
However, those levels of deficit spending and mounting debt are unsustainable, and the global economic slump has accelerated them toward the tipping point. The New York Times reports that Britain's public deficit is one of the highest among developed economies — 11.5 percent of total economic output. The United States' isn't far behind, at 10.7 percent. (Note, though, that Germany's is half that: 5.4 percent.) These fiscal policies of higher taxation and endless borrowing strangulate the private sector, reducing the amount of capital available to invest in commerce and employment. Eventually, the host weakens and there is insufficient blood to sustain the parasite. How far is Britain — or for that matter, the United States — from reaching that point of collapse? Economists believe it's difficult to measure. But there is no denying the trend arrows are pointing in the wrong direction — Thelma and Louise mashing the accelerator while hurtling toward the canyon's edge. Could a nation even pull back from the brink if it doesn't know where the brink is? The prudent action is to reverse course now. REPRINTED FROM THE PANAMA CITY NEWS HERALD DISTRIBUTED BY CREATORS.COM
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