Austerity prescriptions being pushed here not working out so well in the UK

Daily Kos

Our British cousins, as Anglophiles love to refer to them, are a step ahead of the United States in imposing austerity measures to close the gap between government revenue and government spending. And those who have made the argument to do-it-fast and do-it-big to give the financial markets confidence and boost economic recovery have some early data to show how well things are going:

Retail sales plunged 3.5 percent in March, the sharpest monthly downturn in Britain in 15 years. And a new report by the Center for Economic and Business Research, an independent research group based here, forecasts that real household income will fall by 2 percent this year. That would make Britain’s income squeeze the worst for two consecutive years since the 1930s. 

All of which has challenged the view of Britain’s top economic official, George Osborne, that during a time of high deficits and economic weakness, the best approach is to aggressively attack the deficit first, through rapid-fire cuts aimed at the heart of Britain’s welfare state.

Doing so, says Mr. Osborne, the chancellor of the Exchequer, secures the trust of the financial markets, and thereby ensures the low interest rates necessary for long-term economic growth.

To put its theory into effect, the Tory government has ended several tax credits and imposed $180 billion in spending cuts on programs for children, the disabled, the elderly—in short, a whole boatload of social programs. The Organization for Economic Cooperation and Development predicts this blast of austerity will mean Britain's economic growth in 2011 will be two-thirds less than disaster-struck Japan's.

It could be worse. The Tories could have adopted the Republican budget plan. But they didn't. They mostly kept their hands off the National Health Service, the socialized medicine system that is regularly pilloried by Republicans as if it were second only to al Qaeda as a threat to civilization. In addition, the top income tax bracket remains at 50 percent in Britain, twice the rate Paul Ryan's "roadmap" would set for the United States.
There's a reason for this:

Other notable differences suggest that even Europe’s most conservative party is markedly to the left of the mainstream Republican position in the United States, and in some ways is more liberal than the position Mr. Obama has taken.

As David Dayen remarks, we could take the British outcome (and that in Ireland while we're at it) as evidence that austerity for rank-and-file Americans, particularly in a time of deep economic stress, is a really bad idea. Unless, of course, you're not a rank-and-file American but part of hoi oligoi.

We have two alternatives to the budget plan the House Republicans passed today. President Obama's plan, with details to be worked out. And The People's Budget, developed by the Congressional Progressive Caucus. Building a compromise out of Obama's centrist plan and Ryan's far right-wing plan puts us at a disadvantage from the get-go.

Regardless of today's vote in the House, in which the People's Budget got only 77 votes, it should not be allowed to become an impossible dream those crazy leftists came up with. Whatever you call it, it should be the Democratic budget. The starting point. One way we can press that home is to make good use of the two-week congressional recess now under way. With our Representatives meeting publicly and privately in their home districts, now's the time to buttonhole them on this.

Something else you can do: Encourage the 77 Congresspeople who already voted for The People's Budget by thanking them. You can do that here.