The Tories and the deficit
The Tories seem to have got themselves into a muddle here. As far as I can see the problem is that they want to cut the size of the state, and yet everyone who knows anything about it is telling them that to do so significantly early on would send the economy back into recession.There seems to me two coherent ways out of this). One, they could cut government spending by (say) equivalent of 2-3% of GDP (or 1% or 5% of whatever they want) in their first budget, and cut taxes by the same amount. This would leave the deficit unchanged but meet their objectives of reducing the size of the state. Or two, they could keep spending and taxation the same, but alter its composition. This would be to reduce spending on things that are ongoing, i.e. salaries, and increase it on things that can be reduced more easily; this might be direct consumption spending but in practice I think it'd be easier to do transfer payments. So sack X% of the public sector workforce or scrap Trident and give every citizen a one-off £500 (or whatever is is). This would keep the deficit the same and the 'size of the state' but make it easier to cut in future.
I'm not saying these policies would be better than the current policy or easy to implement, but I think it would show an understanding that the deficit and the size of the state are related but distinct things.
ps 24/02/10: Policy Exchange catches up!
Labels: deficit
posted by Matthew @ 2/06/2010 10:12:00 PM
Comments: 1
