Posted 5:30 p.m.
News Alert: White House predicts record $1.47 trillion deficit
03:07 PM EDT Friday, July 23, 2010
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The federal budget deficit, which hit a record $1.4 trillion last year, will exceed that figure in 2010 and 2011, according to a White House forecast released Friday.
The $1.47 trillion budget gap predicted for 2010 represents a slight improvement over the administration’s February forecast, but the outlook for 2011 has darkened considerably, primarily due to a drop in expected tax receipts.
For more information, visit washingtonpost.com:
http://link.email.washingtonpost.com/r/C7I8XW/WL1C4B/2OAMF3/EP3ZNG/9QBG0/ID/t
Posted at 10:30 a.m.
Michael Gerson opined today in the Washington Post that if British Prime Minister David Cameron’s approach succeeds to budget reduction that also enables economic growth, “he will provide a model for Republican victory in the 2012 U.S. presidential election.”
Most Democrats and Republicans fear our unprecedented debt. What’s the solution of Britain’s newly elected conservative leader?
Gerson says:
Cameron’s June 22 emergency budget proposed the deepest, most sustained reductions in British spending since World War II. Health programs and foreign assistance are fenced off from cuts. But other government departments will see an average of 25% reductions over the next five years….
Cameron’s austerity has the virtue of economic responsibility. It is easy to close the budget deficit with massive new taxes–but it is also massively destructive to economic growth. So Cameron has proposed about 4 pounds in spending reductions for every pound in tax increases. A recent study of 44 major fiscal adjustments in developed nations since 1975 found that a one–percentage point increase in taxes as a portion of gross domestic product cuts annual economic growth by an average of zero. Nine percentage points. Reducing government expenditures by one percentage point, in contrast, increases average annual growth by 0.6 percentage points.
If Cameron’s approach works–dramatically cutting deficits without stalling economic growth–it will be an obvious, powerful example for America and other nations.
Cameron’s progress offers two other lessons that some Republicans may be less willing to acknowledge.
First, Cameron’s austerity measures have succeeded (so far) in the context of a coalition government with Liberal Democrats–Britain’s centrist third party. This alliance of the middle has made Cameron’s government less dependent for support on the extremes of either party, resulting in a truce on divisive issues….
Second, Cameron makes clear that austerity alone is not a sufficient message for a political party. He calls deficit reduction in his “duty.” He refers to his social agenda– “the Big Society”–as his “passion.” Cameron has paired his emergency budget with a series of measures designed to encourage localism empower local communities, create charter schools, reform welfare and fund the work of private charities….
I’m not sure I agree, or disagree. I want to see what happens and how the ensuing unemployment will be resolved that will come the British government’s 25% reductions in spending.
A few minutes ago, I forwarded Gerson’s full column to some of the moderate, very discouraged Republicans I know as an encouragement that there may be a blueprint for them to shake off the Tea Party and religionists and offer an alternative worth considering.