British coalition talks hinge on cutting the deficit

The efforts of the Brits to forget a coalition government is centering, according to this article, on how to drive down the deficit, avoiding another Greek syndrome.  Notice that the American deficit is just as bad, suggesting that cutting budgets and imposing austerity measures will be the task of all responsible governments:

Inside the stately buildings of Whitehall in the shadow of Big Ben, party leaders trying to forge a government hunkered down for talks this weekend with a 167-billion-pound elephant in the room: the British budget deficit.

Investor panic over Greece’s debt problems is engulfing Spain and Portugal, and political officials here are racing to head off speculation that Britain could be next. Thursday's election yielded no clear majority in Parliament, plunging parties into intense rounds of horse-trading to assemble a workable coalition. Their most critical goal: the creation of a government willing to undertake what is set to be the most painful round of spending cuts in Britain since World War II.

The focus of the coalition talks underscores the rising alarm over yawning deficits and crushing debt in developed nations since the onset of the global economic crisis. In Britain, stimulus spending and collapsing tax rolls have left the budget deficit — the shortfall between what the government takes in and what it spends — set to jump to 12 percent of national income this year, the highest in the European Union and roughly on par with that of the United States.

via British coalition talks continue as parties focus on deficit.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Pete

    Perhaps a shortcoming of democracy: If, in a democratic bus, the majority of riders favor a course that will take the bus over a cliff, everyone in the bus will go over the cliff, including the minority who knew all along that it was the wrong course.

  • Pete

    Perhaps a shortcoming of democracy: If, in a democratic bus, the majority of riders favor a course that will take the bus over a cliff, everyone in the bus will go over the cliff, including the minority who knew all along that it was the wrong course.

  • http://brbible.org/from-rich Rich Shipe

    That’s a good point, Pete. I’ll be surprised if they (or any western government) actually gets off the debt addiction without being forced to do it.

    I think we are going to see significant collapse in the bond markets. Greece is the first warning sign.

    Everyone invested in stocks in the late ’90s. That crashed. Everyone said we should put our money in something tangible like real estate. That crashed. Everyone then said we can only be confident in gov’t bonds. Now gov’t bond investment is exploding beyond imagination. What happens when gov’t bond holders start losing confidence that they will be paid back? Crash. But this time there won’t be anything bigger to catch the pieces.

    I believe the leadership in Washington knows we will never pay our debt back and default is their long term solution to crushing debt. At some point the various mega-investors in t-bills will realize there is no turning back and it will be a race to divest from USA bonds.

  • http://brbible.org/from-rich Rich Shipe

    That’s a good point, Pete. I’ll be surprised if they (or any western government) actually gets off the debt addiction without being forced to do it.

    I think we are going to see significant collapse in the bond markets. Greece is the first warning sign.

    Everyone invested in stocks in the late ’90s. That crashed. Everyone said we should put our money in something tangible like real estate. That crashed. Everyone then said we can only be confident in gov’t bonds. Now gov’t bond investment is exploding beyond imagination. What happens when gov’t bond holders start losing confidence that they will be paid back? Crash. But this time there won’t be anything bigger to catch the pieces.

    I believe the leadership in Washington knows we will never pay our debt back and default is their long term solution to crushing debt. At some point the various mega-investors in t-bills will realize there is no turning back and it will be a race to divest from USA bonds.

  • Joe

    That is exactly why our nation was never intended to be a democracy, but rather a republic that employs limited democratic mechanisms. Consider Federalist No 10:

    “A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.”

  • Joe

    That is exactly why our nation was never intended to be a democracy, but rather a republic that employs limited democratic mechanisms. Consider Federalist No 10:

    “A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.”

  • DonS

    Unfortunately, these discussions are not really about addressing or eliminating the deficit spending problem. They are about managing the deficit sufficiently to avert crisis for a time while not materially reducing entitlement benefits as well as pensions and salaries for public sector employees. This is because the politicians, in their quest for election and power, have inculcated an entitlement mentality in the citizenry which will now cause them to resist material sacrifice to the bitter end.

    The politicians recognize this problem, and are too weak-willed to do what they know must be done. As Pete said @ 1, we WILL go over the cliff together. If not now, then eventually. If eventually, then the cliff will be all that much higher because of the delay.

  • DonS

    Unfortunately, these discussions are not really about addressing or eliminating the deficit spending problem. They are about managing the deficit sufficiently to avert crisis for a time while not materially reducing entitlement benefits as well as pensions and salaries for public sector employees. This is because the politicians, in their quest for election and power, have inculcated an entitlement mentality in the citizenry which will now cause them to resist material sacrifice to the bitter end.

    The politicians recognize this problem, and are too weak-willed to do what they know must be done. As Pete said @ 1, we WILL go over the cliff together. If not now, then eventually. If eventually, then the cliff will be all that much higher because of the delay.


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