Fall in U.K. GDP Creates Problems for U.S. GOP

Since it was announced last October, the so-called austerity program launched in the U.K. has been repeatedly cited by Republicans as an example of what the United States could and should be doing. Spending cuts were the road to prosperity, they said, and all the U.S. had to do was emulate what the Conservative-Liberal Democrat government in the U.K. was doing.

That position took a drubbing today when GDP in the fourth quarter of 2010 in the UK was reported to have fallen by 0.5 percent. That immediately set off political and economic alarm bells in the U.K. and raised big questions about the wisdom of an austerity program in the midst of a tepid economic recovery. Many were saying that another quarter of falling GDP and you would be able to stick a fork in the austerity program because it would be done.

The GDP results are also a problem…and potentially a huge problem…for the GOP calls for spending cuts in the U.S. Over the past few weeks, House Majority Leader Eric Cantor (R-VA) has repeatedly said that Republicans believe that economic activity and jobs will be created with spending cuts. The U.K. experience now belies that claim and provides Democrats with a strong talking point in response: We want the U.S. economy to grow and the failure of the U.K. austerity program shows that what the GOP wants to do in the U.S. will cause the U.S. to fall back into a recession.

Expect Cantor and other congressional Republicans to come up with a number of creative ways to distinguish what U.K. from the U.S. For example, I expect they say that one quarter doesn’t make a trend and the fourth quarter results were more about the overspending before than the austerity afterwards. I’m also anticipating that they’ll say that the only thing the U.K. did wrong was not cut spending fast enough and that the situation would have been different had they done the equivalent of what the GOP is promising: $100 billion in spending cuts this year.

From a communications standpoint it’s all very predictable. But there’s no doubt that if they have to explain why what happened in the U.K. won’t happen in the U.S. — and that will be the immediate follow-up question from reporters over the next few weeks — the GOP will be in a defensive position and have a much weaker talking point than they had before the U.K. GDP was reported this morning.

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About Stan Collender 126 Articles

Affiliation: Qorvis Communications

Stan Collender is a former New Yorker who, after getting a degree from the University of California, Berkeley, moved to Washington to get it out of his system. That was more than 30 years ago.

During most of his career, Collender has worked on the federal budget and congressional budget process, including stints on the staff of the House and Senate Budget Committees; founding the Federal Budget Report, a newsletter that was published for almost two decades; and for the past 11 years writing a weekly column for NationalJournal.com and now RollCall.com.

He is currently a managing director for Qorvis Communications, where he spends most of his time working with and for financial services clients.

Visit: Capital Gains and Games

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