Slashing Budgets Across the Pond

by Heather Wilhelm “Britain announced a far-reaching deficit-reduction plan Tuesday aimed at saving billions of dollars over the next five years,” reports today’sWashington Post, “becoming the latest European nation to slash spending amid increased worries about rising public-sector debt.” The austerity measures include $145 billion in cuts to public-sector spending (including a two-year freeze on...

by Heather Wilhelm

“Britain announced a far-reaching deficit-reduction plan Tuesday aimed at saving billions of dollars over the next five years,” reports today’sWashington Post, “becoming the latest European nation to slash spending amid increased worries about rising public-sector debt.”

The austerity measures include $145 billion in cuts to public-sector spending (including a two-year freeze on public-sector salaries above $31,000 a year) and almost $43 billion in tax increases.

With much of Europe facing fiscal chaos, it seems like a reasonable move.  Except, of course, to the spending-laden U.S. government:

The move comes despite a plea last week from President Obama for the Group of 20 governments to hold back on fiscal tightening until the global economic recovery strengthens. Leaders from the G-20 are scheduled to meet in Toronto this weekend, and the talks are expected to highlight growing differences between the United States and Europe over the timing of budget cuts.

In a letter to G-20 members on Friday, Obama urged them to avoid “consequential mistakes of the past when stimulus was too quickly withdrawn.”

We’ll see which strategy works better in the long run…and whether or not Britain’s measures, now labeled “drastic,” are just the beginning.