Taking a cue from the Brits

Yesterday, George Osborne, Britain's chancellor of the Exchequer, announced his government's plan to attack the country's debt.  The plan is designed to save $130 billion (actually 83 billion pounds) by 2015.  It will impose budget cuts averaging 19% across all government departments, eliminate approximately 500,000 of the current 6 million public sector jobs, limit unemployment benefits and child benefit payments, raise the retirement age to 66 by 2020, and cut various other government and welfare programs.  The cuts will severely impact pensioners, the poor, the military and the middle class.  There will definitely be wailing and gnashing of teeth, but most pundits and economists in the UK acknowledged that the painful steps will have to be taken, because Britain's debt has reached a "crushing" 11.5% of the country's total economic output. 

The Brits' debt-busting plan should be of particular interest to us because our Federal deficit is 10.7% of GDP.  As the Tea Partiers never tire of telling us, we need to cut that sucker - and the sooner the better.  The problem I see is that Tea Party and other candidates of the conservative stripe don't really seem to have any definitive proposals about what we should be cutting.  They keep telling us that we can save "billions" by eliminating waste and fraud in Government programs, but billions - even tens of billions - won't make a significant dent in the deficit problem we have.  So what will we cut?  Tea Baggers and other conservatives apparently wouldn't mind cutting a few hundred thousand public sector employee positions, but wouldn't that just make the unemployment problem a lot worse?  And in which departments and program areas, specifically, should those positions be eliminated?  Shouldn't candidates make some effort to answer these questions before they ask us to vote for them?

And then there's the other piece of the deficit-busting equation: increasing tax revenues.  The British plan includes an increase in taxes on financial institutions: Osborne stated that his government intends to extract the "maximum sustainable taxes" from financial institutions.  He also announced that the Value Added Tax that the British pay on almost all of their consumer goods will be raised from 17.5% to 20% in January - a 14% increase.  (In addition to the VAT, the British pay income tax of 20% on annual income up to $60,000, 40% on annual income between $60,000 and $240,000, and 50% on annual income over $240,000, as well as National Insurance contributions of roughly 11% of annual income, and "Council Tax" (i.e., property tax) averaging $1800 per year.  Can you imagine?)  Well, of course we know what Tea Party and Republican candidates would say about that: they are absolutely opposed to tax increases of any kind.  Come on, folks: how realistic is their position?  If the deficit is that bad, and we're serious about fixing it, how can we not raise taxes?  I'd really love to hear a fact-based, well-reasoned answer to that one, but I'm not holding my breath.