Deficits in Britain and America

Both countries face “broadly similar deficit challenges,” as The New York Times put it in a recent story.  “Britain aims to close a fiscal gap of about 10 percent of gross domestic product. The comparable figure in the United States is 9.5 percent.”  That’s where the similarities end.

The Conservatives in Britain propose to cut costs and raise taxes, a common sense approach to reducing the gap between income and expense.  But according to The Times, this puts them “markedly to the left of the mainstream Republican position in the United States.”

The Chair of the House Budget Committee, Paul Ryan, “proposes to slash spending by $5.8 trillion but would allow most of the spending reductions to be offset by $4.2 trillion in tax cuts.”  In other words, the Republicans claim that tax cuts will spur growth, and that will inevitably lead to greater tax revenue.  (See, “Pain of British Fiscal Cuts Could Inform U.S. Debate”)

Freshman representative Joe Walsh recently claimed: “Every time we’ve cut taxes, revenues have gone up.”  And it’s not just the newly elected republicans aligned with the Tea Party who think that way.  Last year, Senate Minority Leader Mitch McConnell (R-Ky.) asserted:  “There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue.” (See The Huffington Post.)

But actually there is a lot of evidence — conclusive evidence, as many economists in the U.S. have pointed out, including conservative economists.  The story on The Huffington Post cited Alan D. Viard, a former White House economist under George W. Bush:  “Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that.”  Last year, former Reagan economist Bruce Bartlett assembled the data on his blog to prove that tax cuts do not stimulate greater tax revenue.  (You can check it out by clicking “Republican Tax Nonsense.”)

So how can it be that in America so many politicians make statements that are at variance with their own experts?  Can it be that Americans are more irrational?  Do they have an easier time simply believing what they want to believe?

To be sure there has always been a strain of flamboyance in American politics, but the explanation has to do with our different political systems.  Politicians in America are too busy perpetually campaigning for election.  They don’t really talk to each other — unless behind closed doors.  And the media report everything they say as news, whether or not it makes sense.  Some attention is paid to facts, but most attention is given to what the public comes to believe in response to what politicians say.  As a result, the line between what is really happening in the world and opinion is perpetually blurred.

Politics is an industry in America, one that employs tens of thousands of consultants, lobbyists, advisors, writers, pollsters, staff members, public relations and advertising specialists.  It spends billions yearly.  Dependent upon massive infusions of money to work, it relies on stakeholders who, of course, expect influence in return.  Needless to say, the wealthier stakeholders get to wield the greatest influence.

The scale is different in Britain.  Election campaigns are shorter.  They tend to be local.  Politicians can still talk to each other, and take time to study the issues.

The miracle in America is that government works at all – though there are moments when even the staunchest admirers of the system have their doubts.