At least he tried. British Prime Minister Liz Truss understood that the style of maximum taxation and reasonable cash that had been in place since 2009 had run its course. There was no more cash. The blockades and war in Ukraine worsened the crisis, but it would have happened anyway. You can’t keep creating cash indefinitely that government officials can spend.
In the party’s number one that followed Boris Johnson’s unexpected and temporary resignation, Truss made clear he intended to take up the challenge at its roots, cut taxes and allow interest rates to rise to a more traditionally general level.
Conservative grassroots members approved it and voted for it. But Conservative MPs did not. They blocked his proposed tax cuts, ending his term as minister, the shortest in Britain’s long history.
It is fair to say that, in doing so, they reflected the wishes of their constituents. In Britain, as elsewhere, there is a malicious refusal to deal with the prices of closures. Politicians who say, “We pay other people to stay home. “for the two-year component, and now we have to deal with the accounts,” are outnumbered by those who say, “No problem. The deficit can be compensated by taxing the rich. power companies. “
President Joe Biden is in the field right now. In fact, in a massive violation of protocol, he blatantly criticized Truss’s tax cuts. “I wasn’t the only one who thought it was a mistake,” he said, waving his ice cream cone. (He happens to be holding ice cream on those days. Perhaps this is what the poet meant by “childhood of the moment. “But I’m rambling. )
The president continued, “I think the concept of cutting taxes on the super-rich at a time when . . . He then reminded himself that sitting presidents have no intention of interfering in the internal affairs of allied governments and instead ended without conviction, “I don’t agree with politics, but that should be decided by Britain. “
Let’s put this tax cut for the “super-rich” into perspective, shall we?Truss sought to reduce the most reasonable tax rate from 45% to 40% for other people earning more than £150,000 ($170,000). In the United States, the highest federal tax rate is 37% at $523,600. The “super-rich” in America would pay only 24%. True, there are also state taxes, but only in 3 states the source of income tax exceeds 10%.
These figures may be related to the fact that the United States is richer than Britain. Both countries leveled off their tax rates in the 1980s and saw their profits rise as rates fell. As Prime Minister, Tony Blair kept in place the rates he inherited from Margaret Thatcher. But Gordon Brown, in his final budget, set a trap for his exit, a bit like the retreating Russians in Kherson. He raised the most sensible rate, knowing he would collect Treasury revenues, but also knowing that reversing the increase would be politically unpopular because it would be seen (in Biden’s words) as “cutting taxes for the super-rich. “
Sure enough, the trap exploded, leaving pieces of Truss all over Downing Street. He has become transparent in his six weeks in the workplace that serious spending cuts were impossible. For example, or making sure profits don’t grow faster than wages) has encountered opposition. Labour claimed that seeking to return to a higher level on taxes and spending than the Blair years was extremism, and the electorate agreed.
Are things different in the United States? It seems to me that, all over the world, the electorate prefers sweet illusions to bitter truths. Exit plans and emergency subsidies have turned large sections of the middle class into subsidy addicts. At the same time, many of those who have left the labor market show no interest in returning.
The years 2020 and 2021 saw a faster accumulation of public spending worldwide than any was equivalent in history, adding the two global wars together. These expenditures were intended to be transitory and contingent. But, as after the two global wars, governments today are reluctant to cede the powers they intentionally assumed on an emergency basis. Yes, the permit has been liquidated. But increases in fitness and other budgets are now treated as structural. Instead of returning spending to pre-2020 levels, taxes are emerging to satisfy them.
The history of state expansion is the history of expansion crises. It was the biggest expansion to date, and it’s proving to be the hardest to reverse.