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.