Debate 2 - What would you cut?

[l444ry]

And you problem with any of that is? The state is too big, too powerful and too expensive. When even labour are promising cuts - including Billions in effeciency savings - you still don't see the clear admission that they have screwed up. I also think you do not understand the scale of the mess we are in. Even it tax revenues are back to 2008 levels it will take years to pay down the debt. Interest alone is in the tens of billions. As many millions of us now realise, getting rid of debt is a hell of a lot harder than getting into it. The idea that the Tories will somehow have cash left over is crazy.

How patronising to suggest that you understand the scale of the mess and those with differing views as to the remedy do not.

We haven’t a hope of cutting the deficit significantly by policy measures alone; Osborne‘s proposed measures aren’t just a tiny fraction of borrowing, but are a tiny fraction of the forecast errors for the deficit. Our only chance of getting the deficit down seriously is to grow our way out of it. This requires that the private sector start borrowing again, which means that Tory policies that “encourage saving”, such as the raising of the pension age, might actually raise the deficit.

If the economy does grow nicely, the deficit will take care of itself. And if it doesn’t, we’ll need a deficit to support the economy, and the chances are that global investors’ demand for government bonds will stay high, so we can continue to finance the deficit easily.

Either way, there’s no point jeopardizing people’s jobs through spending cuts that might be unnecessary or perhaps even counter-productive.

This view, though, is just a probability. There’s a risk to it. There’s a danger that bond markets might take fright at borrowing in future, even though they are relaxed about it now. This could happen if we get decent economic growth – which would cause bonds to sell off anyway – which reveals that the structural budget deficit is bigger than thought.

Should this happen, we might need an emergency fiscal tightening – though as this could well be needed only as the economy grows, it might be justified in terms of ordinary counter-cyclical policy anyway.

Plan A, then, should be to relax about borrowing. But we need, as a plan B, a set of fiscal measures that might be necessary to placate the bond markets.

[breadandcheese]

It matters nothing when interest rates are low but when they are 17% it makes a hell of a difference.

I'm not arguing with anything you both have said but to say the Thatchers government didn't make money fron high interest rates is wrong.

No 1, you're probably thinking of John Major's government around the time of the exchange rate mechanism.

No 2, the increasing tax revenues from savings income was dwarfed by the plunging falls in corporate profits and resulting unemployment caused by the high interest rates.

No 3, the government's increased revenue from savers would have been proportionate to those savers benefitting.

[breadandcheese]

How patronising to suggest that you understand the scale of the mess and those with differing views as to the remedy do not.

We haven’t a hope of cutting the deficit significantly by policy measures alone; Osborne‘s proposed measures aren’t just a tiny fraction of borrowing, but are a tiny fraction of the forecast errors for the deficit. Our only chance of getting the deficit down seriously is to grow our way out of it. This requires that the private sector start borrowing again, which means that Tory policies that “encourage saving”, such as the raising of the pension age, might actually raise the deficit.

If the economy does grow nicely, the deficit will take care of itself. And if it doesn’t, we’ll need a deficit to support the economy, and the chances are that global investors’ demand for government bonds will stay high, so we can continue to finance the deficit easily.

Either way, there’s no point jeopardizing people’s jobs through spending cuts that might be unnecessary or perhaps even counter-productive.

This view, though, is just a probability. There’s a risk to it. There’s a danger that bond markets might take fright at borrowing in future, even though they are relaxed about it now. This could happen if we get decent economic growth – which would cause bonds to sell off anyway – which reveals that the structural budget deficit is bigger than thought.

Should this happen, we might need an emergency fiscal tightening – though as this could well be needed only as the economy grows, it might be justified in terms of ordinary counter-cyclical policy anyway.

Plan A, then, should be to relax about borrowing. But we need, as a plan B, a set of fiscal measures that might be necessary to placate the bond markets.

The problem with your plan A is that should it not work, the necessary actions to implement plan B will even worse than it would be to operate plan B now.

Personally, I don't believe your plan A will work as the private sector is already too heavily leveraged, so there is little scope for private borrowing and growth will be slow at best. Public spending cannot take the strain indefinitely.

[CosbehFox]

6) Public sector pay freeze for all employees earning more than £30,000. Scaled increases for the next 3 years so people get the actual same cash rises whether they earn £15,000 or £150,000.

This is a more sensible option than that current suggested by the Tories. I am training in a public body and to be honest, if Osbourne gets his way, it would take away a massive amount of desire of staying here to learn my trade when basically I could be a very useful tool for the authority.

[Jon the Hat]

This is a more sensible option than that current suggested by the Tories. I am training in a public body and to be honest, if Osbourne gets his way, it would take away a massive amount of desire of staying here to learn my trade when basically I could be a very useful tool for the authority.

No disrespect, but is a one year pay freeze - and I have no doubt there would be exceptions to this - would demotivate you to that extent then you might be pursuing the wrong career.

[Jon the Hat]

How patronising to suggest that you understand the scale of the mess and those with differing views as to the remedy do not.

We haven’t a hope of cutting the deficit significantly by policy measures alone; Osborne‘s proposed measures aren’t just a tiny fraction of borrowing, but are a tiny fraction of the forecast errors for the deficit. Our only chance of getting the deficit down seriously is to grow our way out of it. This requires that the private sector start borrowing again, which means that Tory policies that “encourage saving”, such as the raising of the pension age, might actually raise the deficit.

If the economy does grow nicely, the deficit will take care of itself. And if it doesn’t, we’ll need a deficit to support the economy, and the chances are that global investors’ demand for government bonds will stay high, so we can continue to finance the deficit easily.

Either way, there’s no point jeopardizing people’s jobs through spending cuts that might be unnecessary or perhaps even counter-productive.

This view, though, is just a probability. There’s a risk to it. There’s a danger that bond markets might take fright at borrowing in future, even though they are relaxed about it now. This could happen if we get decent economic growth – which would cause bonds to sell off anyway – which reveals that the structural budget deficit is bigger than thought.

Should this happen, we might need an emergency fiscal tightening – though as this could well be needed only as the economy grows, it might be justified in terms of ordinary counter-cyclical policy anyway.

Plan A, then, should be to relax about borrowing. But we need, as a plan B, a set of fiscal measures that might be necessary to placate the bond markets.

So your "remedy" is to do nothing? I thought the tories where the do nothing party? Unfortunately the incoming government will not have the luxury of hoping that we see growth, hoping that the bond market holds up without crippling interest rates being paid. They need to show that they can start to address the deficit - and of course 12 years of cumulative spending growth cannot be undone overnight - but they have to start. Even labour admit the need for cuts. Sadly the reaction of the unions to a pay freeze will - as usual - do far more harm than good, and we will see more job losses as a result of that. They have had too much influence the past 12 years and been given what they wanted at every turn - another reason why spending has gone up so much.

[l444ry]

So your "remedy" is to do nothing? I thought the tories where the do nothing party? Unfortunately the incoming government will not have the luxury of hoping that we see growth, hoping that the bond market holds up without crippling interest rates being paid. They need to show that they can start to address the deficit - and of course 12 years of cumulative spending growth cannot be undone overnight - but they have to start. Even labour admit the need for cuts. Sadly the reaction of the unions to a pay freeze will - as usual - do far more harm than good, and we will see more job losses as a result of that. They have had too much influence the past 12 years and been given what they wanted at every turn - another reason why spending has gone up so much.

If you seriously think unions have had too much influence in the last 12 years you must have just returned to earth from an alien abduction!!!

[CosbehFox]

No disrespect, but is a one year pay freeze - and I have no doubt there would be exceptions to this - would demotivate you to that extent then you might be pursuing the wrong career.

Proves how much interest I had in it..... didn't even know it was a one year freeze.

[Jon the Hat]

If you seriously think unions have had too much influence in the last 12 years you must have just returned to earth from an alien abduction!!!

So public sector pay increases have not been part of the massive increase in public spending? The BMA did not negotiate a huge pay rise for doctors? Nurses are not paid more and still struggling along understaffed in dirty hospitals? Civil servants salaries have not caught up and often overtaken private sector pay, and with the final salary pensions still intact? Who do you think has been influencing just about every above infaltion pay rise for the lat 12 years? And why is it Labour could not argue? Now you will no doubt tell me that the Labour party is not underpinned by funding from the unions? Hmmm? At least try and pay attention and look critically at your failing party after so many years of incompetence. What's that? Had to keep up with the cost of living? Well who took mortgages out of the offical measures of inflation? Who kept interest rates artifically low as a result? If you would actually acknowledge any of the failings of Labour you might have a little bit of credibility.

[l444ry]

Mr. Cameron, your speech was hypocritical, hollow and dangerous

Honest Dave started his speech today saying that he was a rather "uncomplicated" man. His personal simplicity is perhaps the one part of his speech that I agreed with. Never have I been so proud of being on the left as when I was listening to him today. Here are just a few reasons why his simplistic agenda fails to come up to scratch:

1) Life is more complicated than "Small Government Good, Big Government Bad." The world has moved on from such dogmatic ideology. As Obama said, it's not the size of the state that matters - it's what works. If you've ever met anyone who's just come out of prison, been long term unemployed or a young single mum you'll know that simply withdrawing state support doesn't work. To get people back into work, people need confidence, skills and training. These things are expensive. You can't just stop investing in people and expect them to give something back. And in a recession, the state may need to pay to create jobs for people to go in to whilst the private sector gets itself back on its feet. Shrinking government now is bad economics.

2) He says that he wants society to take the place of the state, but doesn't say how he is going to create this revolution. Just roll back the state and hope everyone picks up where it left off...? Compare his speech to Brown's policy packed agenda and he goesn't just seem like a novice - he looks hollow.

3) A word about incentives. He claims there is a 96% "tax" on certain groups that go back into work. This twist of logic blows Orwell out of the water by counting past benefits as taxes. Sure, there is a work incentive problem, but there are two ways to solve that. The first is to increase working tax credits, as Labour has done, and the second is to cut benefits. Doing the second just plunges people already below the poverty line further down. "Incentive" in his dictionary, means pulling the plug on the poor. To dress this up as helping the vulnerable, a move which won him a standing ovation, is sickening.

4) Cameron is a hypocrite on the size of the state. If he thinks a surge in Afghanistan and an increase in prison building won't build up this country's debt, he really is simple. The only difference with spending it on jails and bombs is that it doesn't reap back the benefits of reinvestment that spending on health and education would.

5) Absolute inequality did increase under Labour. That is undeniably grim. But do you know what, Labour slowed down that growth in inequality massively compared to Thatcher. Just read King's new book - A Generation of Change, a Lifetime of Difference. It's got all the facts you need.

In short, honest Dave Cameron's over simplistic agenda is hollow, hypocritical and dangerous. Please do us all a favour, Dave, and produce some policies that work, even if - heaven forbid! - they are a bit more complicated.

[Jon the Hat]

Mr. Cameron, your speech was hypocritical, hollow and dangerous

Oh ffs. He is engaging the country before a general election not working through the details. Brown may have had lots of policy detail in his speech but no one was listening. Politics is about communication as well a policies.

If you listened to the Tory policy you would see they are suggesting a that benefits would phase out gradually rather than stop the minute you start earning as they do now. So people could start wth part time work and still see a real cash advantage. You seem to have m ore of a problem with the way it was said that what was said, becuase this effectively does the same thing as a tax credit - but without the tax credit - so is inherently cheaper to administer.

[l444ry]

Oh ffs. He is engaging the country before a general election not working through the details. Brown may have had lots of policy detail in his speech but no one was listening. Politics is about communication as well a policies.

If you listened to the Tory policy you would see they are suggesting a that benefits would phase out gradually rather than stop the minute you start earning as they do now. So people could start wth part time work and still see a real cash advantage. You seem to have m ore of a problem with the way it was said that what was said, becuase this effectively does the same thing as a tax credit - but without the tax credit - so is inherently cheaper to administer.

Yeah, yeah, keep talking, someday you might say something intelligent. I'm sorry, debating with you seems as appealing as playing leapfrog with unicorns.

[Jon the Hat]

Yeah, yeah, keep talking, someday you might say something intelligent. I'm sorry, debating with you seems as appealing as playing leapfrog with unicorns.

Losing the argument can hurt can't it.

[Zingari]

Losing the argument can hurt can't it.

not as much as playing leapfrog with unicorns

it takes quite an imagination to come up with that metaphor ( if that is the correct term )

[FilboFox]

Labour have lost it. They don't have the support of the country and even if they are doing some good things and getting the economy back on track, doing all the right things to sort this mess out, they are completely cast aside by the sheer determination of the public to oust them as soon as possible as they see it as the only way to get change.

The Tories have come in looking organised and like they know what they are doing and like they are the government in waiting, but it'll be more of the same if they get in. They may portray an image of change and being a fresh new party, but you only have to look at who they'll have in their cabinet to know damn fine that nothing will be changing. Yet the MAJOR problem is that this, for the overwhelming majority of the public, the Tory party is the only party that can be voted for if they want Labour out...

... leaving the Lib Dems who would be the REAL change from the two big parties and could be just the fresh start we need. They have some excellent politicians in their benches who would do a fantastic job, yet because they are seen as being the fringe third party of the country, people just don't even consider them as a possibility like they should. Although it seems like they don't know where they stand, that just isn't true, they've given away just as much of what they'd do in office as any of the other two parties and clearly pointed out some big changes they'd make too.

I for one will seriously consider voting Lib Dem in the next election as I see them as a real change from Labour and I know damn fine that it wouldn't be like taking the risk of letting the Tories back in to reek havoc once again.

[Jon the Hat]

not as much as playing leapfrog with unicorns

it takes quite an imagination to come up with that metaphor ( if that is the correct term )

It take a similar imagination to think Gordon Borwn is the man to lead the country of the mess he made.

[Jon the Hat]

... leaving the Lib Dems who would be the REAL change from the two big parties and could be just the fresh start we need. They have some excellent politicians in their benches who would do a fantastic job, yet because they are seen as being the fringe third party of the country, people just don't even consider them as a possibility like they should. Although it seems like they don't know where they stand, that just isn't true, they've given away just as much of what they'd do in office as any of the other two parties and clearly pointed out some big changes they'd make too.

I for one will seriously consider voting Lib Dem in the next election as I see them as a real change from Labour and I know damn fine that it wouldn't be like taking the risk of letting the Tories back in to reek havoc once again.

Are you mad? Excellent politicians? Where??

[Dr The Singh]

Are you mad? Excellent politicians? Where??

I think he's talking about Keith Vaz!

[l444ry]

Losing the argument can hurt can't it.

Just saying you’ve won the argument on debt over and over again doesn’t mean you’ve won the argument. It means you’re like a small child not getting her/his way.

Every sane economist disagrees with Conservative policy on the national debt. See The Economist, or the Financial Times, or Sam Brittan, or Paul Krugman or Giles Wilkes.

http://www.economist.com/opinion/displayst...ory_id=14548881

http://www.ft.com/cms/s/0/82a549f0-b11b-11...?nclick_check=1

http://www.ft.com/cms/s/0/4679c2be-aed0-11...144feabdc0.html

http://www.nytimes.com/2009/10/02/opinion/...rss&emc=rss

http://freethinkecon.wordpress.com/

[TrickyTrev]

Am not conviced on the first point - the idea that taking away child benefit from people earning over £50k a year would mean starving kids is nonsense. Also bear in mind the implications of a guaranteed allowance that increases the more kids you have. There need to be limits.

The second point is valid though. If we are going to have a suite of means tested benefits, then there needs to be a central database of income and eligibilty. It almosts exists anyway through the HMRC (tax) office - just align adresses so you can view the total income of a household and jobs a goodun. Thracian idea of spending £5Bn to means test Child benefit is a waste to me - too high admin overhead. I would rather it relied as it doesn now on the majority of people who do not need it not claiming - either becuase it is not worth it, or becuase they feel morally they shoudl not accept handouts.

I thought we were should scrap all government IT projects?

There are going to have to be 'savage cuts' to use the popular phrase. That means stop spending money on stuff we might want but can't afford. It doesn't mean magically finding money that doesn't need to be spent and calling it 'waste.' Whenever I hear that word and 'red tape' I know that a politican has no clue of how he is going to generate the money he says he is. They are buzz words that politicans like to use because they are popular, give off the impression that we can have the same stuff whilst paying less, that it is all so simple. Truth is if you cut quangos you have to hire more civil servants to do the same, for the most part vital, jobs. Thats why every politican since Thatcher has promised a burning of the qunagos and none of them have delivered it. If you cut civil servants you have to give huge pay offs and generally end up hiring them again when you realize that you can't actually implement changes in the national curriculum without a team of consultants to schools.

Things that I think could go.

The pledge to do rebuilding work on every secondary school in the country is bonkers, not even the schools want it. The changing of the pension age needs to be brought forward, restoration of the link to earnings as an aspiration not a pledge. Real wage pay freeze on all public sector workers earning over 40k a year, real wage decrease for any public sector worker earning more than 150k. Government really needs to get its Royal Mail reforms through. Trident scrapped, ID cards scrapped, OFSTED scaled back (Wow I'm burning a quango), pledge to get 50% of 18 year olds into university needs to be replaced with a policy that focuses on everyone getting post-16 education of some form, including better entry roots into business and industry and uses the private sector to finance such schemes. Works in Germany and it can work here.

[breadandcheese]

Just saying you’ve won the argument on debt over and over again doesn’t mean you’ve won the argument. It means you’re like a small child not getting her/his way.

Every sane economist disagrees with Conservative policy on the national debt. See The Economist, or the Financial Times, or Sam Brittan, or Paul Krugman or Giles Wilkes.

http://www.economist.com/opinion/displayst...ory_id=14548881

http://www.ft.com/cms/s/0/82a549f0-b11b-11...?nclick_check=1

http://www.ft.com/cms/s/0/4679c2be-aed0-11...144feabdc0.html

http://www.nytimes.com/2009/10/02/opinion/...rss&emc=rss

http://freethinkecon.wordpress.com/

That's simply untrue. In fact all three political parties are aligned on this issues so Labour agree with the Conservatives. You may not hear Gordon Brown saying it, but check the last budget and see the savage spending cuts planned for the next parliament. These savage spending cuts will make Maggie look positively generous.

[FilboFox]

Are you mad? Excellent politicians? Where??

Nick Clegg, Vince Cable, Chris Huhne, Charles Kennedy, Menzies Campbell, Chris Fox. All of whom are very good politicians who could easily formulate good well considered policies... and they certainly can't be any worse than the current crop from the two big parties.

And if you don't agree, name some who are so much better from Labour or the Tories then... I very much doubt you'll be able to come up with any names who stand head and shoulders above them.

[FilboFox]

That's simply untrue. In fact all three political parties are aligned on this issues so Labour agree with the Conservatives. You may not hear Gordon Brown saying it, but check the last budget and see the savage spending cuts planned for the next parliament. These savage spending cuts will make Maggie look positively generous.

Yet those cuts are to cut the deficit that everyone agrees needs to be slashed in the coming years. What the conservatives were arguing was that they should just let the recession ride itself out and not invest in the economy to try and save it... that is what every sane economist and all of the western countries bar the conservatives, agreed on which is why they are now all coming out of the recession... unlike what Britain would have been doing were the conservatives in power now.

[Head Honcho]

Nick Clegg, Vince Cable, Chris Huhne, Charles Kennedy, Menzies Campbell, Chris Fox. All of whom are very good politicians who could easily formulate good well considered policies... and they certainly can't be any worse than the current crop from the two big parties.

And if you don't agree, name some who are so much better from Labour or the Tories then... I very much doubt you'll be able to come up with any names who stand head and shoulders above them.

Charles Kennedy is an old soak!

He couldn't start the day without half a bottle of whiskey in his cornflakes.

[Guest Bilo]

Nick Clegg, Vince Cable, Chris Huhne, Charles Kennedy, Menzies Campbell, Chris Fox. All of whom are very good politicians who could easily formulate good well considered policies... and they certainly can't be any worse than the current crop from the two big parties.

And if you don't agree, name some who are so much better from Labour or the Tories then... I very much doubt you'll be able to come up with any names who stand head and shoulders above them.

Nobody has spoken more sense on the recession than him in my opinion.