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John Rentoul

John Rentoul is chief political commentator for The Independent on Sunday, and visiting fellow at Queen Mary, University of London, where he teaches contemporary history. Previously he was chief leader writer for The Independent. He has written a biography of Tony Blair, whom he admired more at the end of his time in office than he did at the beginning.

"The Independent's must-read man" - Daniel Finkelstein

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Balanced Budget Democrats

Posted by John Rentoul
  • Tuesday, 15 September 2009 at 08:32 pm
Now to the substance of David Aaronovitch's column in The Times (as opposed to the historical curiosity). The Great Debunker makes the point that it is all very well everyone agreeing that public spending has to be cut, but almost nobody is going to like it when it happens.

Very true, but Aaro fails to argue for the corollary, which is that taxes will have to rise. (Unless he thinks that we can sustain government borrowing of £175bn a year indefinitely.)

Similarly, my esteemed colleague Steve Richards makes a very good point in The Independent today, which is that it wasn't Boredom Brown's crabby obsession with dividing lines that created the dividing line between Labour and the Conservatives on fiscal policy. It was David Cameron and George Osborne that chose to stop copying the Government's spending plans; and they decided to oppose the VAT cut.

Yet Aaronovitch, Peter Mandelson and Richards (in alphabetical order) seem to assume that all right-thinking people hold the truth to be self-evident that a big, early reduction in public borrowing is a Bad Idea.


A Balanced Budget Democrat

Well, that ain't necessarily so. There are still some of us Balanced Budget Democrats who accepted the wisdom of a fiscal stimulus (the VAT cut) as a precaution against deflation, but who are worried about the deficit.

Now that a depression has become less likely, and it seems that we are going through an "ordinary" recession (possibly quite a short, if sharp, one), attention has to switch to closing the gap between revenue and public spending. 

Yes, we Balanced Budget Democrats are worried about jobs in the short term. But, with the threat of a global depression lifted, we are becoming more worried about unsustainable public borrowing. At this level, the deficit itself becomes a threat to jobs in the medium term.