Here’s another plan: how about no cuts for the poor but £25bn cuts for the super-rich?

It is totally unnecessary and gratuitously damaging to demand wholesale elimination of the structural deficit within a very short fixed period (Osborne’s 2018), and patently wrong if it badly weakens the economy.   The deficit is currently just over 7% of GDP, and before the crash when the economy was growing strongly at nearly 3% the deficit had come down to 2.6% of GDP by 2006-7.   To force the deficit down to 0% within the next 4-5 years if it substantially cuts output, growth and incomes to an extent which is later irrecoverable is frankly irresponsible, if not actually insane – or to put it in more subdued tones, fanatically dogmatic.   Of course Osborne is not clinically insane, merely politically obsessed in his manic conviction to shrivel the State and the public sector to the maximum degree even if it means wrecking the economy in the process.   It is not too strong I think to describe such hysterical lopsidedness as a form of political madness.

The obvious alternative to Osborne’s fixation is to reduce the budget deficit (caused, let me repeat since Labour for some reason won’t say this, not by any Labour over-spend but by the bankers’ bailout) at a pace commensurate with restoring and maintaining steady economic growth, and to do that not by any further benefit or public spending cuts – which are already cutting into the bone and scarcely reducing the deficit anyway – but by public investment in jobs, industry and exports.   That ought to be Labour’s central pitch for the 2015 election.   So why isn’t this centre-stage in political debate now?   Why is Osborne being allowed to get away with grossly narrowing the range of options to either cutting pensioner benefits or loading all the benefit cuts on to working-age claimants, as though no other possibilities existed?

How about the ultra-rich, Britain’s 1,000 wealthiest citizens, contributing just a bit?   Their current remuneration at £86,000 a week is 185 times the average wage, they received a windfall of more than £2,000 a week from the 5% cut in the higher rate of income tax, their wealth was recently estimated by the Sunday Times at just under half a trillion pounds, and their asset gains since the 2009 crash have been calculated by the same source at £190bn.   How did Osborne come to overlook this lucrative source of revenue?   Perhaps the fact that they contribute half of all Tory party funding each year might have something to do with it.   But those of us less encumbered in other parties might be impertinent enough to demand that these persons loaded with the riches of Midas might be expected to contribute a tiny fraction of their wealth in an acute national emergency when one-sixth of the workforce gets less than the Living Wage and a million or more are left utterly destitute deprived of all income by sanctioning.   Just a thought: charging their asset gains since 2009 to capital gains tax would raise more than the £25bn Osborne purports to need.   Just a thought, George.


5 thoughts on “Here’s another plan: how about no cuts for the poor but £25bn cuts for the super-rich?

  1. A random CIF commenter nails it on Tory welfare lies

    Posted on January 11, 2014 by alittleecon

    Just came across this comment under this article by a commenter called “Jack Jazz”. Don’t know who they are, but thought he nailed it with his (?) comment on the real motivations for welfare changes, so thought I’d share it here. I have a slight quibble with the assertion that the rich pay for services for the poor through their taxes, but it’s true the rich want lower taxes, and these are more achievable if the government spends less. Anyway, here’s the comment:

    “The ignorance that lies at the core of Tory welfare policy reform is not an ignorance of unawareness, or an absence of knowledge, but rather one of calculated disinformation. Probably the most disgusting thing about this coalition is the deliberate spreading of lies to facilitate a systematic assault upon the sick, the poor and the disabled. They have lied to and misled the public in order to promote a squalid agenda, an agenda to dismantle the welfare state.

    For those who wish to destroy the welfare state, the first move is to create ‘the undeserving poor’. By constant repetition, they construct a cultural underclass via the media, with the tabloid press, much of it owned by multi-millionaires, at the forefront. Each day they fill their pages with accounts of people “living on hand-outs,” living in ‘mansions’, ‘daring to have children’, ‘laying around doing nothing’, all the while emphasising that it’s your taxes letting these scroungers live in ‘luxury.’ By this drip drip feeding, the words ‘welfare’ and ‘scrounger’ become intertwined.

    The next phase is to question the idea of a universal welfare state itself. As the welfare state is dismantled, as more and more, due to ever greater reductions in funding, the quality of these services deteriorates, the middle classes begin to ask why they are paying into a system that gives them so little back. This gradual exclusion of the middle classes from the welfare state leads to the middle classes being persuaded to seek private options to deal with old age, pensions and health care, urged on by a government that tells them that it is the only solution. And of course, as private provision takes over, the cycle of dismantling can continue. Public services now become a service solely for the poor, as the middle class abandon the system.

    Why dismantle the welfare state? Who benefits from this progressive degradation of the welfare state? Obviously not the lower classes. But nor do the middle classes, as the new private systems are more expensive, often of poorer quality, and invariably far more complicated than what existed previously.
    No, the real reason behind the cuts is simple.

    The real beneficiaries are the very rich, who no longer have to pay for services they never used anyway.

    And all the cuts are ideologically driven. None of it is to save money. The welfare reform bill won’t save a penny, because the costs will just be passed onto somewhere else. It’s all about crushing the welfare state. The Tories have for years hated the fact that ‘their’ taxes should be used to help the sick and the poor. Based upon no evidence whatsoever, they truly believe there is a vast horde of scroungers out there who are living a life of luxury on benefits. The most shameful thing about the Tories, though, is that to promote this idea, they peddle downright lies as truth and feed it to the masses, who regurgitate this bullshit ad infinitum, no doubt much of which has been posted on forums like this by people like you!”

  2. Great stuff from alittleecon. I’d like to add in the concept of increasing the ‘precariousness’ of the work, which in turn lowers wages which are the biggest expenditure for corporations.

    The attacks on benefits; migrant workers; lack of investment and job creation; removal of employment legislation; legal aid; the running down of NHS/schools; pensions reform, scarcity of housing; increased rents and so on, all make life more precarious and workers less likely to strike/demand increased wages.

  3. Dear Mr Meacher, you ask us why the Labour leadership is not hammering the Tories for the lies they spout… could you not just ask the boss himself ? There are Millions of us out here in the real world who would love to know.

  4. It’s pretty clear why Milliband nor any other front-bencher will raise the point of the bailout. They’re as cap-in-hand to the bankers as the tories.

    Just like Ed on Syria, he was happy to go along with it until the wind changed.

    Same old New Labour I’m afraid.

  5. I posted this rider to the original post that Jeffrey Davies used as his first comment:

    “Really good analysis of the process, and really well written but I would take issue with the conclusions. To say the real beneficiaries are the rich, who ‘no longer have to pay for services they don’t use’ is a misunderstanding of how our economy works. They are huge beneficiaries of the services for which they pay proportionately very little.

    Firstly the rich send their children to public schools which have ‘charitable’ status, subsidised with tax breaks to over £1 million a year. Obviously teachers pre tuition fees were trained at the expense of the state, now subsidised by the state.

    Doctors and nurses, educated by the state, trained by the NHS. Indeed many ‘private’ doctors are in the NHS as their main employment, minimising private sector employment costs. Many private facilities are based in NHS hospitals, their rentals being minor costs compared the the built infrastructure costs of the NHS. Insurance premiums for health are held artificially low by this process, as private health care becomes effectively a ‘top up’ not a real cost. Anyone in a serious accident or collapsing in the street with a heart attack isn’t asked first ‘do you have private insurance’, they are simply taken to an NHS A&E. (Many private hospitals are not equipped for major trauma cases.) They will be transferred to their private service once they are well enough. NHS bears the major cost and major risk.

    Housing and investment generally is massively subsidised by the state. At the moment our interest rates are being held artificially low. Catastrophic for pension funds and savers, bonanza time for property investors (and home owners) – for those with the purchasing power, ie the rich. Although they double benefit from the ability to clean up when interest rates rise and ordinary people can no longer afford their mortgage payments and have to sell cheap or get repossessed. They benefitted enormously from the sale of Council property. Most tenants in the early days bought very cheap and sold – many under market values. Some didn’t even actually buy for themselves but were effectively scammed out of their homes by companies or individuals offering to buy on their behalf. The buyer got the property, the tenant got a pay off. Most Council leaseholders are now buy-to-let landlords. Many buy on mortgages, rent to cover the mortgage and until recently were happy to receive housing benefit as payment. A subsidy of untold billions from the state. Council property, of course, having been built by the state originally.

    Tax pays for subsidies to employers in the form of working tax credit and housing benefit, driving down employment costs. The state pays (at a bare minimum) to keep the workers alive so they can be hired and fired at will.

    PFI agreements in the public sector provide business for private companies to the tune of hundreds of billions of pounds.

    The rich will continue to benefit massively from the destruction of the Welfare State as well. They always benefit. From everything. That’s why they are rich. They just don’t pay for anything. In fact these days there seems to be truly no jeopardy in their dealings, as we have privatised the profit and nationalised the debt in everything from the banks to the Royal Mail sell off…….”

    But I have to ask the same question as everyone else: why don’t we see the Labour leadership coming out with huge fundamental positions on these issues, rather than languishing in response-to-the-Tory-agenda mode. And why don’t you ask the leadership yourself and give us some answers rather than just posing the question? I don’t think any of us understand why not.

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