Nick Clegg 'searched conscience' over spending cuts.

Nick Clegg has told Desert Island Discs that he had to search his conscience when making the cuts in benefits which have caused so much outrage here in Britain.

Speaking about the cuts, he said: "I have spent every day of this process, pretty well every minute of this process, asking myself whether there are pain-free alternatives, whether we are doing the right thing, and I genuinely believe there is no easy alternative.

"I have certainly searched long and hard into my own conscience about whether what we are doing is for the right reasons.

"I am not going to hide the fact that a lot of this is difficult. I find it morally difficult. It is difficult for the country."

Why is it that politicians think that we will feel for them if they tell us that their acts of cruelty were difficult for them to bring about? And why does he imagine that the rest of us would only have accepted "pain free alternatives?"

I should hope, at the very least, that Clegg was tortured before he threw 490,000 public service workers on to the dole, that is the very least he could have done.

And, likewise, one would hope that he felt anxiety before removing benefits from the disabled.

But, missing from all of this apologia is any explanation as to why alternatives were not explored. Why were the rest of us not asked to contribute more? Why was the top rate of income tax not raised? Indeed, why are so many people who earn a good living, like myself, not asked to contribute in any way other than a 2.5% increase in Vat? Why aren't the city bankers, the people who caused this economic crisis more than anyone else, being asked to contribute more than the £2.5 billion scheme which Osborne has conjured up?

Clegg and the Tories can expect little sympathy when they tell us how hard they found it to be so cruel to the sick, the old and the disabled.

The entire budget is a regressive disgrace. It was a genuinely hateful way to address the deficit and revealed the Tories as utterly unchanged from the days when they were known as "the nasty party".

The main difference at the moment is that the Tories have the Liberal Democrats acting as their heat shield, absorbing the public anger and attempting to give the Tories a fig leaf of respectability as they carry out this act of political thuggery.

So, if Clegg is expecting sympathy for how hard he found it to bring himself to agree to what he agreed to, he won't get an ounce of it from me.

As far as I am concerned he, and his party, are dead in the water. They will be slaughtered at the next election because of what Clegg has agreed to, and they will fully deserve it.

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Tags: Nick Clegg, George Osborne, Tories, Liberal Democrats, Con-Dem coalition

Spending review cuts will hit poorest harder, says IFS.

It normally takes the Institute of Fiscal Studies longer than twenty four hours to work out whether or not a budget has been progressive or regressive, but, in the case of George Osborne's latest offering, no such time was necessary.

Osborne, backed by Nick Clegg, has made the ridiculous claim that the rich would carry the burden of this budget much more than the poor. It was a silly claim at the time when they made it, and the IFS has wasted no time in identifying what we all recognised when Osborne was making this silly claim.

Detailed analysis by the IFS undermining the government's case is expected to put intense pressure on Liberal Democrat ministers in the coalition who have stressed the need for tax rises and spending cuts to be progressive.

The chancellor, who acknowledged that his package of £81bn of cuts had involved "hard choices", insisted yesterday that they are fair and would be borne by "those who have the broadest shoulders".

But the IFS said that with the exception of the richest 2% of the population earning more than £150,000 a year, the less well off would be proportionately the hardest hit, with families with children the "biggest losers".

Carl Emmerson, the IFS acting director, said: "The tax and benefit changes are regressive rather than progressive across most of the income distribution. And when we add in the new measures announced yesterday this is, unsurprisingly, reinforced.

"Our analysis continues to show that, with the notable exception of the richest 2%, the tax and benefit components of the fiscal consolidation are, overall, being implemented in a regressive way."

The IFS have also poured scorn on Osborne's claim that his cuts of 19% across all governmental departments is less than the cuts Labour would have implemented.

The IFS challenged Osborne's claim that the government's cuts to those departments whose budgets were not protected averaged 19% compared with 20% implied by Labour's plans.

It said the Osborne's figures failed to take into account the £6bn of cuts already announced by the government this year while the actual figure under Labour would have been 16%.

All in all, the lies told by both Osborne and Clegg have been exposed with almost record speed. That's not really very surprising, as the distance between what they claimed and the truth is actually gargantuan.

Clegg, for reasons I could never work out, kept making the bizarre claim that the cuts would create a "fairer" and "more democratic" Britain. How he imagines punishing the poor brings this about was always lost on me.

The IFS also criticised plans to scrap council tax benefit and replace it with a system of locally administered council grants. It said that it would create a "postcode lottery", providing an incentive to councils to award grants in a way that encouraged poor families to leave the area.

"The incentive it provides to local authorities to encourage low-income people to move elsewhere is undesirable," Emmerson said.

The IFS findings are most damning for Clegg, who continues to insist - to anyone who will listen - that this budget is "fair" and "democratic". As I said a few days ago, I have absolutely no idea what measurement Clegg is using when he makes those claims. But him saying that something is "fair" and "democratic" doesn't make it so. The IFS appear to concur that conclusion.

As the IFS were briefing reporters about their conclusions, both Nick Clegg and David Cameron were answering voters questions in Nottingham. And Clegg was sticking to his script that this budget was fair and democratic.

Fairness was "literally the question I have been asking myself every single day of this very difficult process we have been going through", the deputy prime minister said.

"I honestly would not have advocated this if I didn't feel that, notwithstanding all the difficulties, we tried to do this as fairly as possible.

"Of course I understand people are very, very fearful, and fear is a very powerful emotion and it kind of sweeps everything else aside.

"But I would ask people to have a little bit of perspective: if you look at some of the announcements we made yesterday, and add that to some of the announcements we made in the budget, I think the picture is a little bit more balanced than people are saying."

Clegg appears to think that by securing a pupil premium and protecting overseas aid - both admirable things in their own right - that he has somehow kept the budget "fair" and "democratic". But that's the problem with coalition politics, one is always left celebrating the fact that things could have been much worse than they actually are.

The rest of us simply look at the budget - as the IFS has done - as it actually is. And what we see is a regressive budget which attacks the poor, the old and the disabled. It's a disgrace. And the Liberal Democrats should shudder that they were part of the government which produced this travesty. It goes against everything which they claim to believe in. And the IFS have dismissed Clegg and Osborne's claim that it is fair and democratic with almost record speed.

It is not. And that fact should now be beyond doubt. The country's leading tax and spend think-tank have made their view on this abundantly clear.

UPDATE:

Clegg has decided to embark on some cognitive dissonance. The facts are simply too unpleasant for him to deal with.

Nick Clegg, the deputy prime minister, has taken the highly unusual step of attacking the respected Institute for Fiscal Studies, describing its methods of measuring the fairness of the coalition's controversial spending review as "distorted and a complete nonsense".

That's a classic case of "shoot the messenger".

UPDATE II:



Clegg and Cameron attempt to win over a sceptical audience, and fail. Support for the Liberal Democrats is now at a twenty year low.

As I have said ever since he joined this Con-Dem coalition, he is leading his party to oblivion. He will never be forgiven for this.

Click here for full article.

Tags: Institute for Fiscal Studies, Osborne, Clegg, Cameron, Con-Dem coalition, budget

Spending review axe falls on the poor.

I know it's just me, but I found it quite sickening to watch Nick Clegg pat George Osborne's back as he sat down having announced his brutal spending cuts.

Osborne was as smarmy and self pleased as he always is, as clear a product of the upper end of Britain's class system as one is ever likely to see, taking obscene pleasure in removing vital benefits from people in need.

Outlining his long-awaited comprehensive spending review, which will cut £81bn from government spending, Osborne vowed to restore "sanity to our public finances and stability to our economy". Perhaps the most striking of the new cuts announced was a package of £7bn in extra welfare cuts on top of the £11bn already made in the last budget. This will include the withdrawal of £50 a week from the million people claiming incapacity benefit for more than a year.

In a rapid-fire speech to the Commons, Osborne slashed £350m from the legal aid budget, reduced the police budget by 20% over four years, and hacked two-thirds off the £9bn communities department budget, including more than halving the support for social housing over four years. The pension age will rise to 66 from 2018.

Rail fares will be allowed to increase by 3% above RPI inflation from 2012, higher education spending will be cut by 40% – £2.9bn – by 2014/15, and flood defences by 15%. Further education will be cut by £1.1bn by 2014/15 and the "poorly targeted" education maintenance allowance for 16- to 19-year-olds is abolished.

And, most sickening of all, he then reduced the entire process to an Oxford debating society game, by announcing that the extra £7bn savings on tax credits and a range of other welfare benefits had enabled him to limit the overall reductions in the budgets of Whitehall spending departments to 19% over the next four years – less than the 20% pencilled in by the Labour chancellor, Alistair Darling.

If that wasn't an example of pathetic schoolboy one-upmanship, then I don't know what else it could possibly be.

For months he spoke of the need to cut these departments by between 25 and 40%, only, in the end, to play a game where he could score the cheapest of points against his rivals. And that tactic was only made possible by further slashing benefits needed by the poor, the old and the disabled.

Alan Johnson did well to point out the obscenity of what we were witnessing.

"We have seen people cheering the deepest cuts to public spending in living memory," he said. "For some people opposite this is their ideological objective. For many of them, not all of them, this is what they came into politics for."

And that, I think, is what I found the most obscene about the entire process. Had they announced these cuts in a sombre mood one might have deduced that we were witnessing what Osborne has always claimed, a government having to do something because there was no alternative. But what we witnessed was a Conservative celebration. Conservatives cheering to the rafters as they deprived benefits to the incapacitated, and slashed money for social housing. It was quite a sight. To see people actually cheering as they celebrated the loss of 490,000 public sector jobs over the lifetime of this parliament.

And the myth that the deficit will be paid on the shoulders of Britain's highest earners was exposed as the lie it always was. It is the poor, the disabled, the unemployed and the old who will be asked to suffer the most.

Taking the measures one at a time, the first – and the biggest – was to "time limit contributory employment and support allowance" for one year, that is the benefit formerly known as incapacity benefit. What this means is that a disabled or seriously sick person who has a working spouse, however low-paid their job may be, will lose their personal entitlement to benefits after a year.

Singles will be able to fall back on a means-tested safety net, but everyone else will be forced to rely on the generosity of their partner. Expect wheelchairs in Downing Street as the coalition does away with the long-established principle that people who have contributed their own national insurance in the past, and then become sick and disabled, should expect a modest stipend from the state in recognition of this.

On housing benefit, already savaged in June, there was a move to link the maximum rents paid for council and housing association properties to the market rent, something which will further encourage the cleansing of the poor out of central London.

This is what his Conservative colleagues were applauding. Reducing the savings credit, which rewarded pensioners who had saved from seeing their income support entitlement removed pound by pound to, in effect, punish them for their prudence.

How that fits in with the Tory philosophy is simply beyond me, especially as he went to such lengths to placate the equitable life savers of Middle England.

But, as much as Osborne and the rest of them will harp on about the reductions being 19% as opposed to the threatened 25% or 40%, one thing is worth remembering: these are the most brutal cuts in public spending in Britain since WWII.

And they do risk - the loss of 490,000 jobs in the public sector alone highlights the risk - of a double dip recession.

Those who oppose Keynesian economics, as Osborne clearly does, are pinning all their hopes on the Confidence Fairy.

Advocates of austerity believe that mystically, as the deficits come down, confidence in the economy will be restored and investment will boom. For 75 years there has been a contest between this theory and Keynesian theory, which argued that spending more now, especially on public investments (or tax cuts designed to encourage private investment) was more likely to restore growth, even though it increased the deficit.

The two prescriptions could not have been more different. Thanks to the IMF, multiple experiments have been conducted – for instance, in east Asia in 1997-98 and a little later in Argentina – and almost all come to the same conclusion: the Keynesian prescription works. Austerity converts downturns into recessions, recessions into depressions. The confidence fairy that the austerity advocates claim will appear never does, partly perhaps because the downturns mean that the deficit reductions are always smaller than was hoped.

It was brutal, and there is every chance that it won't work, and yet that was what caused Clegg to reach out his hand and pat Osborne's back as he took to his seat.

That moment truly made me wince. Because it shows that Clegg is not, as some have unfairly suggested, making deals for the sake of achieving political power. He is a true believer. He rejects Keynesian policies as vigorously as Osborne does.

My problem is that I think both of them are terribly wrong. And I fear we will all pay for their mistakes. And no-one, despite the claims of Osborne and Clegg, will pay more in the short term than the poor, the unemployed, the old and the disabled.

Watching Conservatives applaud that yesterday, and watching Clegg pat Osborne's back to celebrate his cruelty, are about as sickening a thing as I have ever seen on the floor of the Commons.

UPDATE:

It's well worth reading Johann Hari on this:

George Osborne has just gambled your future on an extreme economic theory that has failed whenever and wherever it has been tried. In the Great Depression, we learned some basic principles. When an economy falters, ordinary people – perfectly sensibly – cut back their spending and try to pay down their debts. This causes a further fall in demand, and makes the economy worse. If the government cuts back at the same time, then there is no demand at all, and the economy goes into freefall. That's why virtually every country in the world reacted to the Great Crash of 2008 – caused entirely by deregulated bankers – by increasing spending, funded by temporary debt. Better a deficit we repay in the good times than an endless depression. The countries that stimulated hardest, like South Korea, came out of recession first.

David Cameron and George Osborne have ignored all this. They have ignored the warnings of the Financial Times, the newspaper most critical of their strategy. They have dismissed the warnings of Nobel economics laureates like Paul Krugman and Joseph Stiglitz, who have consistently been proved right in this crisis. They have refused to learn from the fact that the country they held up as a model for how to deal with a recession – "Look and learn from across the Irish Sea," Osborne said – has suffered the worst collapse in the developed world. They have instead blindly obeyed the ideological precepts they learned as baby Thatcherites: slash the state, and make the poor pay most.

It's simply never, ever worked before. And yet Osborne, Clegg and Cameron insist that this time it will.

It can't be coincidental that this is being done to us by three men – Cameron, Osborne, and Nick Clegg – who have never worried about a bill in their lives. On a basic level, they do not understand the effects of these decisions on real people. Remember, Cameron said before the election: "The papers keep writing that [my wife, Samantha] comes from a very blue-blooded background", but "she is actually very unconventional. She went to a day school." Osborne is a beneficiary of a £4m trust fund he did nothing whatsoever to earn and which is stashed offshore to avoid tax. Clegg actually thought the state pension was £30 a week, a level that would kill pensioners.

These attitudes have real consequences. We're not in this together. Who isn't in it with us? Them, their friends, and their families.

UPDATE II:

There are two stories in today's Independent which really do perfectly highlight the Tory mindset.

The first tells us that Tory whips had actually warned MP's not to look too happy when Osborne announced the cuts:

Tory MPs had been told by party whips not to cheer the cuts too loudly. The message was that the cuts were a grim necessity, not something to enjoy or do with ideological zeal.

What does it say about the Tories that their own whips actually have to warn them not to look too happy as they make 490,000 people unemployed? And, worse, when they find themselves unable to comply with such a request?

Then tucked away inside is this gem:

The Queen is set to become one of the wealthiest crowned heads in Europe after the future of the British monarchy was secured in a historic deal with the Government that will give the House of Windsor a share of the £210m profits from government estates relinquished by George III.

The Civil List and the parliamentary system for funding the head of state are to be abolished, and from 2013, the Queen will receive her funding directly from the Crown Estate, which owns £6bn of British land and business. The deal means the Queen, and her successors, will not have to dip into her private wealth to help fund her crumbling palaces and staff wages, reducing financial concerns for Prince Charles when he ascends the throne, and potentially leaving him with a vast income.

Nice to know, as Clegg, Cameron and Osborne are so fond of telling us, that we are all in this together. He actually announced this in the same speech in which he took away billions in people's benefits.

Click here for full article.

Tags: Osborne, Clegg, UK politics, recession, austerity packages, public cuts

Clegg struggles to contain his party's 'guilt by association' with Coalition cuts.

Nick Clegg has lost his bloody marbles.

Nick Clegg, the Deputy Prime Mini-ster, yesterday tried to calm jitters among Liberal Democrat MPs about the impact of the cuts – not least on the party's own electoral fortunes. He said: "The spending review provides the best evidence yet of why we are in government – and that we are delivering on our priorities."

He appears to think that the "gains" which he has wrestled from the Tories...

Mr Clegg, who beat off a Treasury attempt to end 15 hours of free child care for all three- and four-year-olds, trumpeted Liberal Democrat "gains" in the spending review – including a £2.5bn-a-year "pupil premium" for children from disadvantaged families; protecting spending on health, overseas aid and infrastructure projects; radical welfare reform; and delaying a decision on whether to renew the Trident nuclear missile system.

... are, in some way, a price worth paying for half a million job losses.

Welcome as the pupil premium and spending on overseas aid is, does Clegg seriously think this will have any impact on the public psyche as Osborne wields his blade across a wide range of public services? Does he seriously think people will say, "Well, it could have been worse, we could be without the pupil premium?" Or, "Thank God they have delayed the decision on Trident!"

Clegg and the Liberal Democrats will be remembered as the co-authors of one of the most brutal assaults on the state in living memory.

And they will be viewed much more harshly than their Tory counterparts because they campaigned on the very opposite of what they are now backing.

In a high-risk strategy, Mr Clegg urged his MPs to share ownership of the cuts, describing them as a "Coalition process and Coalition product".

Admitting that the review involved difficult decisions, he insisted: "These are the right decisions to build a fairer and more liberal Britain."

I've yet to work out on what basis Clegg thinks cuts on this scale make Britain "fairer" or "more liberal". What does he mean by that?

It's simply not fair that the poorest members of our society should pay more of a price than the banking community for a crisis caused by their greed; nor is it, in any way that I can measure, more "liberal".

Indeed, it's hard to think of anything less fair and less liberal than asking the poor to pay for the mistakes of the country's wealthiest bankers.

As I say, Clegg has simply lost his marbles. He appears to think that him saying that something is "fair" and "liberal" makes it so. But the rest of the nation has eyes, we can see what is happening. And Clegg's rampant bullshit won't blind us to what he has signed up to.

He has sold his party - and the people who voted for him - down the river. He should be ashamed of what he has done.

Click here for full article.

Tags: Nick Clegg, Con-Dem coalition, Tories, Osborne, spending cuts

Prominent Tory donors among business leaders who backed Osborne's cuts.

I said yesterday that I suspected the business leaders who had written to The Telegraph insisting that Osborne must stick to his guns regarding the Tory planned cuts would turn out to be Tory supporters.

Today's Independent:

The 35 businessmen warned against delaying cuts in a letter to the Conservative-supporting Daily Telegraph drawn up by Lord Wolfson, chief executive of Next. He has donated £293,250 to the Conservatives since 2006 and was made a Tory peer three weeks after the May election.

Another signatory, Sir Christopher Gent, non-executive chairman of GlaxoSmithKline, has given £113,400 to the Conservative Party since 2003, while Aidan Heavey, chief executive of Tullow Oil, has donated £5,500.

Seventeen of the 35 chairmen or chief executives who signed yesterday's letter were among the businessmen who endorsed a similar round-robin before the May election backing Tory plans to reverse Labour's proposal to raise national insurance contributions by 1 per cent. Mr Osborne later cancelled it for employers but retained it for employees.

It really says everything about the relationship between the Conservative Party and these business leaders that they will send round-robin letters at a moments notice backing Tory policies. And it's notable that, when they asked the Tories to reverse Labour's plans to raise national insurance contributions by 1%, that Osborne raised it for employees, but not employers.

One of these same business leaders who is demanding that welfare be slashed and social services axed - rather than see a rise in taxation - earns £6.5 million a year.

Now some economists have spoken out about the twaddle these supposedly impartial business leaders are spouting:

Christopher Pissarides, Britain's new Nobel laureate in economics and professor of economics at the LSE, said: "I am rather puzzled as to why big companies think the private sector will create jobs if the cuts are immediate rather than spread over two or three years, to give the private sector time to plan ahead. The situation is not so grave; there is no big risk premium of government debt as in Greece or Spain. I see a lot of confidence in the ability of the British Government to control the deficit. That confidence will remain if there is a well-arranged plan over the next few years rather than the next few months."

David Blanchflower, a former member of the Bank of England's Monetary Policy Committee, said of the letter: "It's a terrible, terrible mistake. The sensible thing to do is to spread [the cuts] over a long time. Clearly you have to deal with the deficit, but there is no economics that says you have to deal with it in a week or a month."

Stephen Alambritis, chief spokesman for the Federation of Small Businesses, said: "Large companies can take these cuts in their stride. The City will reward them with a higher share price if they reduce their workforce. But the Chancellor should not be emboldened by these business leaders.

"Some small firms rely on public-sector contracts for 50 or 60 per cent of their turnover. If the cuts are swingeing and overnight, these companies will be lost to the UK economy forever."

As I've said a thousand times, no-one is suggesting that we don't need to do something about the deficit, but there really is no need to pay off the mortgage in five years rather than twenty five.

People should remember that we finally paid off our WWII debt during the premiership of Tony Blair. And, that shortly after WWII, with debts far greater than the ones we currently face, we built a welfare state and much of our social housing.

All of this undermines Osborne's fallacy that he has no choice other than the one he is proposing. He's doing this because he wants to slash the cost of the state, not because it is the only possible solution to the situation we currently face.

Click here for full article.

Tags: Osborne, Con-Dem coalition, cuts

Business backing for George Osborne's spending cuts.

Well, here's a surprise:

The leaders of 35 of the UK's biggest companies have expressed their support for the government's plans for spending cuts running into billions of pounds.

The bosses of Marks and Spencer, BT and GlaxoSmithKline are among those to have signed a letter to the Daily Telegraph.

They write that it would be a "mistake" for Chancellor George Osborne to water down his programme for reducing the budget deficit.

Mr Osborne will announce details of the Spending Review on Wednesday.

The bosses wrote in their letter to the Telegraph that there was no reason to believe Mr Osborne's approach would undermine any recovery.

They said: "Addressing the debt problem in a decisive way will improve business and consumer confidence.

"Reducing the deficit more slowly would mean additional borrowing every year, higher national debt, and therefore higher spending on interest payments."

"The private sector should be more than capable of generating additional jobs to replace those lost in the public sector," the signatories also claim.

So, a group of Conservative supporting business leaders think it's a great idea to slash welfare rather than increase taxation. Who could have seen that coming?

And they also think that the private sector is "more than capable" of replacing jobs lost through Osborne's cuts. Let's see how that works out.

And, as Robert Peston points out, one of their comments borders on the laughable.

The 35 also make one statement that will amuse many economists. They say "everyone knows that when you have a debt problem, delaying the necessary action will make it worse not better".

That may be true of individuals and even for most businesses. But there is a whole school of economists, largely those who call themselves Keynesian in some way, who would describe that statement as laughable.

They would argue that it was the application of prudent principles of personal finance to the level of the state that was to a large extent responsible for the severity of the Great Depression of the 1930s.

The unions are dead set against it, and the business leaders are writing to the papers announcing their support. It's like we are back in the eighties. There must be a Tory government in power.

Click here for full article.

Tags: Tory cuts, Con-Dem coalition, recession, Osborne

Americans' Incomes Sank After Bush Tax Cuts.

Visit msnbc.com for breaking news, world news, and news about the economy

So, were people better off after the Bush tax cuts? Did the tax cuts provide more jobs and increase people's wages as Bush claimed they would?

It's no surprise that the answer is in the negative.

What is surprising is that there are so many high income earners who want to be taxed more.

Asked "Do you think - raising income taxes on households making more than $250,000 should or should not be a main part of any government approach to the deficit," 64% of respondents whose household income topped $250,000 answered yes. That's the same percentage of affirmative responses from families earning under $50,000.

Not all wealthy people are as greedy as the Republicans it seems.

Tags: Bush tax cuts

President Obama to Hedge Fund Manager: Taxing You More Like Your Secretary is Not Anti-Business.

Obama insists that it is not "anti-business" to demand that Hedge Fund managers pay the same rate of taxation as their secretary.

It came after he was read this outrageous quote from Steve Schwarzman, the CEO of Blackstone.

"It's a war," Schwarzman said on the struggle with the administration over increasing taxes on private-equity firms. "It's like when Hitler invaded Poland in 1939."

Obama responded:

Well I don't know where that comes from. That's my point... I guess. It is a two way street. If you're making a billion dollars a year after a very bad financial crisis where 8 million people lost their jobs and small businesses can't get loans, then I think that you shouldn't be feeling put upon. The question should be how can we work with you to continue to grow the economy.

A big source of frustration, this quote that you just said, this was me acting like Hitler going into Poland had to do with a proposal to change a rule called carried interest which basically allows hedge fund managers to get taxed at 15% on their income.

Now everybody else is getting taxed at... you know, a lot more. The secretary at the hedge fund is probably being taxed at twenty five, twenty eight, right? And these folks are making... getting taxed at fifteen. Now there are complicated economic arguments as to why this isn't really income, this is more like capital gains and so forth, which is a fair argument to have. I have no problem having that argument with hedge fund managers, many of whom I know and went to school with and I respect their business acumen, but the notion that somehow me saying maybe you should be taxed more like your secretary when you're pulling home a billion dollars or a hundred million dollars a year, I don't think is me being extremist or being anti-business.

Where do these whining buggers even get the gall to put forward the arguments which they are currently making? What sense of overwhelming entitlement would one have to possess to argue that paying the same rate of taxation as one's secretary is akin to Hitler invading Poland?

Tags: Anthony Scaramucci, Barack Obama, CNBC, hedge funds, John Harwood, Taxes, Wall Street

House prices slide as banks reject first-time buyers.

Is it any wonder that the British housing market is almost stillborn at the moment?

House prices fell to their lowest level for 15 months in August, a survey published today reveals, as the number of potential buyers continues to be limited by a shortage of mortgage finance.

The Royal Institute of Chartered Surveyors (Rics) says a greater number of surveyors reported falling prices last month than those that saw increases, with an index of views dropping by eight points to minus 32, the lowest level since May 2009.

The fall is a result of an increased number of sellers, coupled with fewer new buyers, creating a larger pool of available property and, consequently, lower prices.

Rics' update comes a day after the Council of Mortgage Lenders (CML) reported a continued reluctance among mortgage providers to lend to first-time buyers. Despite the overall number of home loans increasing by 7 per cent in July, compared to June, the number of mortgages written to first-time buyers fell by 2 per cent.

First-time buyers were on average being asked for deposits of 24 per cent in July, up from 21 per cent in April and May. Overall, the CML said that mortgage volumes "still represent a very weak market".

Where, especially in London, are first time buyers supposed to find a deposit of 24%? That's a huge amount of money.

As long as lenders are making these ridiculous demands, we will never see this market become buoyant again.

This seems to be the story of this recession. We bailed out the banks and are waiting for them to start loaning the money we gave them. But they are attaching so many ridiculous preconditions to obtaining a loan that nothing is happening.

Click here for full article.

Tags: UK housing market, first time buyers, recession

Union leaders warn of strikes to oppose cuts.

It doesn't surprise me in the slightest that Unions see a winter of discontent approaching over George Osborne's planned cuts.

The government will face co-ordinated industrial action and civil disobedience once the true scale of its budget cuts becomes clear, union leaders warned today as they claimed 150,000 public sector job losses are already in the pipeline.

Police forces, councils, courts and hospital trusts are laying off workers even before the bulk of the spending cuts are announced in October's comprehensive spending review, research by the GMB union suggests.

And in a sign that mainstream Labour's attitude towards the cuts is hardening, Harriet Harman, the deputy leader, said the party felt "militant" against extreme cuts. She defended unions' right to strike, though she insisted that nobody wanted to see people's lives disrupted.

Every time the conservatives come into power they cause large unemployment at the same time as they attack benefits. It's almost tailor made to lead to industrial action.

And, this time, they are using the economic downturn as a fig leaf to cover actions which they always wish to do every time they are elected.

Only a fool would buy their reasoning.

Paul Kenny, the GMB general secretary, said: "Current job losses already announced in the public sector of nearly 150,000 are just the top of the iceberg heading for our services and our economy when the comprehensive spending review finally hits home next month. Unemployment and cuts in public services follow the appointment of a Tory-led government like night follows day.

"The ideology of the Tory party is for a smaller state and they are hellbent on using the recession to impose these needless and ideologically driven cuts in public spending."

Harman told the BBC: "Well, we feel very concerned indeed, yes, about threats to jobs, and we don't accept the argument that somehow this is entirely necessary to cut the deficit at this speed. We think it's actually a threat to the economy. And the arguments that the big society can take the place of public services we think are disingenuous. So to that extent, yes, we do feel militant about it. We're concerned about the effect on people."

She said that no one wanted to see strike action, but unions had the right to strike. She added: "But as far as actual public services are concerned, I think we will see trade unions campaigning alongside local communities when vital public services are threatened."

I think pandemonium is going to break loose once the true scale of what Osborne is proposing becomes clear. It's been thirteen years since the Tories were in power and I honestly think people have forgotten just what inhumane bastards they actually are.

Come the October spending review, Osborne is going to remove the scales from most people's eyes.

He will propose, as Thatcher did before him, to throw hundreds of thousands of people's lives on to the economic scrapheap, and he will do it without a sliver of pity. This is who they are and this is what they do.

Once people understand the full extent of Osborne's savagery, I fully expect all Hell to break loose.

Click here for full article.

Tags: Osborne, spending review, unions, strikes, winter of discontent

Osborne Cuts as Obama Invests.

Here is the difference between the way the United Kingdom are approaching the economic crisis and the way Obama and the US are approaching it.

In the UK:

Millions of London Underground passengers face disruption throughout the day because of strike action.

The first in a series of 24-hour walkouts began at 1700 BST on Monday with maintenance staff walking out. Drivers, signallers and station staff stopped working four hours later.

They are unhappy about plans to cut 800 jobs in ticket offices and say security could be at risk.

In the US:

President Barack Obama has called for a new comprehensive infrastructure plan as part of efforts to jump-start the spluttering US economy.

The plan will invest about $50bn (£32.5bn) in roads, railways and airports as well as high-speed rail and the creation of an infrastructure bank.

US infrastructure has long been considered underfunded and receives poor grades from government agencies.

The move comes amid signs that the US economy is faltering.

The strike by the underground workers is surely only a sign of what is to come when Osborne attempts to cut public services by between 25% and 40%.

Obama is going the other way and investing in new jobs in the hope of jump starting the US economy.

Over the next six years, we are going to rebuild 150,000 miles of our roads - enough to circle the world six times," Mr Obama told an event in Milwaukee marking the Labor Day holiday in the US.

"We're going to lay and maintain 4,000 miles of our railways - enough to stretch coast-to-coast. We're going to restore 150 miles of runways and advance a next generation air-traffic control system to reduce travel time and delays for American travellers - something I think folks across the political spectrum could agree on."

"All of this will not only create jobs now, but will make our economy run better over the long haul," Mr Obama add.

The difference between the two could not be more stark. Obama seeks to put people to work, whilst Osborne seeks to make people unemployed. How does making people unemployed help in any situation where the main problem is that not enough money is circulating around the system? The more unemployed you have, the less money runs around your system.

Obama is following strict Keynsian economics whilst Osborne is ignoring Keynes and running the risk of what Keynes warned of: the double dip recession.

The message of John Maynard Keynes's General Theory of Employment, Interest and Money (1936) comes in three parts. First, the community's level of income and output is determined by the level of aggregate demand, or purchasing power. Second, consumer demand, especially investment demand, can fall short of the supply of goods, so that the community's available stock of labour and plant can exceed the demand for their services. Third, this situation can continue indefinitely, in the absence of an outside stimulus to replace the missing private sector demand.

Now compare what happened in 1929-1932 (the Great Depression) and what has happened since 2008 (the Great Recession). In both periods the world economy declined at the same rate for five quarters. But whereas the Great Depression economy went on declining for another seven quarters, the Great Recession economy's decline stopped after five quarters, and there has been a very modest recovery. Almost all analysts agree this was because this time, unlike in the earlier period, governments all over the world poured a huge amount of extra money into their shrinking economies. Many allowed their deficits to expand from about 2 per cent of GDP to 10 per cent; and their central banks flooded the banks with new money.

This was good old fashioned Keynesianism. In a slump, Keynes said, governments should increase, not reduce, their deficits to make up for the fall in private spending. Any attempt by government to balance its budget in a slump would only worsen the slump.

Compare this to the key sentence on the first page of HM Treasury's Budget 2010: "Reducing the deficit is a necessary precondition for sustained economic growth" – an almost exact reversal of Keynes's theory.

Obama is following Keynes to the letter, whilst Osborne takes reckless chances and ruins people's lives in the process.

The tube workers are only the first to strike because of plans to make swinging cuts of the size Osborne is demanding. One can only imagine that we are heading for a winter of discontent as more and more British workers realise the scale of cuts which Osborne intends to implement.

Tags: Obama, Osborne, UK, US, Keynsian economics, recession

Budget hits the poorest hardest, says IFS.

This should come as no surprise to anyone who has been paying the slightest amount of attention to what George Osborne is up to.

The new coalition government's emergency Budget announced in June has hit the poorest families hardest, a leading economic think tank has says.

The Institute for Fiscal Studies (IFS) said the measures announced in the Budget were "regressive".

Its analysis suggests the poorest households are set to lose the most as a percentage of net income due to benefit cuts announced in the Budget.

The Treasury said it did not accept the "selective" findings of the IFS.

The IFS had already challenged the government's claim that the Budget was "progressive".

Its report concluded: "Once all of the benefit cuts are considered, the tax and benefit changes announced in the emergency budget are clearly regressive as, on average, they hit the poorest households more than those in the upper middle of the income distribution in cash, let alone percentage, terms."

I have pointed out before that this budget seeks to reduce the deficit by a ratio of 77% of spending cuts and an increase in taxation of 23%.

That fact alone tells us that the poorest, those most dependent on benefits, are the people who Osborne has decided should make the largest contribution to wiping out a deficit run up by bankers gambling with other people's savings.

The report said: "Low-income households of working age lose the most as a proportion of income from the tax and benefit reforms announced in the emergency budget.

"Those who lose the least are households of working age without children in the upper half of the income distribution.

"They do not lose out from cuts in welfare spending, and they are the biggest beneficiaries from the increase in the income tax personal allowance."

I am honestly not remotely surprised to hear this. I thought this at the time that the budget was announced. This is simply what Conservative government's do.

Nor am I surprised to hear that this government does not accept this reading of the figures.

The shadow work and pensions secretary Yvette Cooper accused the government of carrying out a "shocking and unfair attack on children and families".

"The idea that the poorest families with children should end up being hit hardest is appalling and gives lie to George Osborne's claim it was a progressive budget," she said.

Osborne, like most Conservatives before him, loathes the poor and those dependent on benefits. This heir to the Osborne baronetcy, a man born into a life of wealth and privilege, cannot imagine a world in which people need help. He possibly imagines that he is deserving of the wonderful lifestyle which he has been born into, that he had something to do with the winning lottery card which life dropped into his lap, and this has left him with only disdain for others born not as lucky as he was.

So, seeking to balance the books, he savagely attacks those on benefits, and possibly imagines that he is helping them as he does so. After all, he has never had to ask for government help, so why should others?

Of course, he's also never had to work a day in his life thanks to the fabulous wealth of his family, but he probably flatters himself that he had something to do with that.

I am speculating, of course. But that's the only way I can imagine that anyone could come up with the budget which Osborne came up with. How else could he justify making the poorest in society contribute the most to wiping out a debt run up by banker's greed?

Click here for full article.

Tags: George Osborne, Tories, Budget, regressive

Pass The Buck.

Here is the Tories latest attempt to push the blame for "the deepest cuts of modern times" on to the Labour Party.

Of course, it was the Tories - backed by the Liberal Democrats - who decided to do the equivalent of paying off your mortgage in five years rather than twenty five, so their charge is an utterly false one. All parties agree that the deficit must be reduced, but the Tories - always keen to slash public services which they do not believe in - were the ones who decided that the cuts must be savage and are now desperately trying to assign the blame for that to the Labour party.

To that end they are desperately releasing what they claim are examples of Labour's "culture of excess".

Among the expenses revealed was £1,673 to a company called Stress Angels, which offers massages, acupressure, Indian head massage and reflexology.

Significant amounts were spent on improving the mental faculties of employees – £3,450 went on a session with Improwise, whose techniques include using a live jazz quartet to demonstrate different skills, and £1,000 to Illumine, a company which helps workers improve their practical skills.

Then there was £626 on a trip to a nature reserve in Nottingham and £539 on an awayday to Blackpool Pleasure Beach. Accommodation at a hotel – the Rubens, opposite Buckingham Palace – cost £17,000. Another £3,670 went to Halfords cycle shop.

Quite what one is supposed to feel about these piddling little amounts of money is simply beyond me. Perhaps Pickles hopes that this will generate another expenses scandal and fatally damage brand Labour. I wouldn't hold my breath if I were him.

The outrage people will feel will come in October, when the Con-Dem coalition finally reveal just what these cuts are going to look like.

They are carefully attempting, even as early as today, to make their savagery the result of thirteen years of Labour. But I don't think that is going to wash.

These are Tory cuts carried out with the backing of the Liberal Democrats. It was both of those parties who decided to cut the deficit by spending cuts which outweighed tax increases by a ratio of 77% spending cuts to 23% tax increases.

This was their decision. They have decided to reduce the deficit by making the poorest members of our society pay the largest and most painful price. For example, most of us will contribute by paying an extra 2.5% Vat on certain items when shopping. Other than that, I seriously can't think of another way that the government is asking the majority of us making a decent wage to contribute.

But, for those at the lower end of the wages scale, there is going to be Armageddon. That decision easily fits in with Tory thinking. So, this is not a response to a deficit, this is a decision to use that deficit to push through Tory ideology.

People will see that for what it is.

Tags: Labour, Tories, Liberal Democrats, Con-Dem coalition, deficit

Beck reacts incredulously to Pelosi's accurate statement that unemployment benefits stimulate the economy.

Beck finds it simply incredulous that Pelosi could believe unemployment cheques stimulate the economy.

The people who agree with Pelosi are economists:

In a January 14 report on "Policies for Increasing Economic Growth and Employment in 2010 and 2011," the nonpartisan Congressional Budget Office (CBO) stated:

Policies that could be implemented relatively quickly or targeted toward people whose consumption tends to be restricted by their income, such as reducing payroll taxes for firms that increase payroll or increasing aid to the unemployed, would have the largest effects on output and employment per dollar of budgetary cost in 2010 and 2011.

According to a table in the report, CBO estimated that increasing aid to the unemployed would have the greatest effects on GDP per dollar of budgetary cost and the second highest cumulative effect on employment of the policy options considered.

If you want money to move around the system, it makes sense to give some to people who have to spend it.

Tags: Glenn Beck, Nancy Pelosi, economy, unemployed

House prices fall as spending cuts see economy stall

The UK is beginning to feel the first effects of Osborne's budget and his plans for cuts in public spending and the expectations of widespread job cuts in the public sector.

Government austerity measures are already plunging the British economy into reverse according to figures published today which reveal sagging high street sales and renewed falls in house prices.

Expectations of widespread job cuts in the public sector have begun to discourage households from moving home or buying "big ticket" items such as furniture and carpets, with spending going on essential items and replacements only, said the British Retail Consortium. One of the worst-hit sectors is big-screen flat televisions, where sales have slowed markedly, but the BRC also noted year-on-year falls in items such as shoes. It said that high street sales are running 0.5% higher than last year on a like-for-like basis, with the small rise largely due to food price inflation. "Talk of public spending cuts is unsettling consumers and they are concentrating on essentials," said the BRC director general, Stephen Robertson.

The property market is also suffering a fresh downturn, said the Royal Institution of Chartered Surveyors in a report today, with valuers across the UK blaming the decline on anticipated public sector job losses. The RICS housing market survey found that house prices fell in July for the first time since July 2009, with a continued lack of mortgage finance also deterring first-time buyers.

Some surveyors and valuers told the RICS survey they had been staggered by the ferocity of the market downturn since the coalition government's emergency budget in June. One firm in Shropshire said: "The market is the worst it has ever been. The government's determination to balance the books has undermined confidence," while another in Lincoln said: "The large number of redundancies expected has had a negative impact on the market."

Markets need confidence in order to flourish. Osborne and the Tories, by promising with glee that they are going to slash budgets and fire public service workers, have devastated UK confidence.

Who is going to spend large amounts of money at a time like this? When the government are almost enjoying telling us how severe things are going to get?

They were warned that this might happen. They were told that we should spend our way out of this. But, because of their rigid ideology, they went ahead and did it anyway. They tightened our belts further.

Now there is no confidence and little money making it's way around the system as everyone holds on to what they have.

The housing market stagnates. High Street sales shrivel.

Osborne's budget, as predicted, has made things much, much worse.

Click here for full article.

Tags: UK, Osborne, Con-Dem coalition, house prices

Deficit Frauds Boehner And Pence Can’t Answer How Tax Cuts For Wealthy Will Be Paid For.

The Republicans are all for reducing the deficit, unless that means stopping the tax cuts for the rich where they are quite happy not to say how they will pay for these tax cuts.

Neither Boehner nor Pence manage to supply an answer here. They are all for using borrowed money to finance a tax cut for the wealthy.

Tags: Boehner, Pence, tax cuts, deficit

Obama Pushes Through His Agenda.

Obama is notching up his third big victory. But The New York Times appears to think that he has pushed things as far as he can:

If passage of the financial regulatory overhaul on Thursday proves anything about President Obama, it is this: He knows how to push big bills through a balky Congress.

But Mr. Obama’s legislative success poses a paradox: while he may be winning on Capitol Hill, he is losing with voters at a time of economic distress, and soon may be forced to scale back his ambitions.

The financial regulatory bill is the final piece of a legislative hat trick that also included the stimulus bill and the landmark new health care law. Over the last 18 months, Mr. Obama and the Democratic Congress have made considerable inroads in passing what could be the most ambitious agenda in decades.

Mr. Obama has done what he promised when he ran for office in 2008: he has used government as an instrument to try to narrow the gaps between the haves and the have-nots. He has injected $787 billion in tax dollars into the economy, provided health coverage to 32 million uninsured and now, reordered the relationship among Washington, Wall Street, investors and consumers.

But as he has done so, the political context has changed around him.

The problem, as far as NYT are concerned is unemployment and the way the Republicans are able to argue that government is the problem rather than the solution. I am puzzled when I read this logic.

Only the government could have delivered near universal health care and only big government could have reformed the financial sector. Why is Obama's success in doing what he set out to do somehow the proof that the Republicans are right and big government doesn't work?

I actually admire the fact that Obama is not being driven by the polls and is doing what he promised that he would do.

“You know, sometimes these pundits, they can’t figure me out,” the president said last week, campaigning in Kansas City, Mo., for the Democratic Senate candidate there. “They say, ‘Well, why is he doing that?’ That doesn’t poll well. Well, I’ve got my own pollsters, I know it doesn’t poll well. But it’s the right thing to do for America.”

The NYT compare this comment to George W. Bush's insistence that he was not going to be persuaded by the polls to abandon his unpopular war in Iraq. However, there is a major difference between these two presidents. Bush did not campaign promising to invade Iraq, unlike Obama who is simply doing the things which he promised to do if he were elected.

And people are right to be worried and upset over rising unemployment, and they have the right to be upset that Obama hasn't done enough to turn the situation around, but I don't accept the NYT's logic that concern over unemployment means that Obama should not have reformed healthcare and the financial system.

And I feel like screaming when I read the NYT saying this:

Part of the problem for Mr. Obama is that he came to Washington vowing to change the partisan tone in the capital, something he has thus far been unable to do.

The NYT should lay the blame for that squarely where it belongs; at the feet of the Republican party.

Yet, for Thursday’s final Senate vote on the bill, 60 to 39, just three Republicans joined 57 Democrats to support reform. In the House, only three Republicans voted for the bill when it passed that chamber in June, 237 to 192.

Republican opponents would have you believe that lack of bipartisanship was evidence of the bill’s unworthiness, but the margin of victory was really about partisan politics and not the bill’s content.

As was the case with last year’s economic stimulus and this year’s health care overhaul, Republican opposition to the bill was primarily an attempt to drag down Mr. Obama by killing any legislative accomplishment.

The Republicans don't seem to accept that their policies and their ideologies were completely rejected by the public.

And the New York Times are being faint hearted to argue that public anger over unemployment means that Obama should abandon the things he was elected to achieve.

The Republican "no" to all things Obama is so knee jerk and automatic that it should reflect badly on them and no-one else.

He certainly should not adjust his course at this point in time to accommodate them.

Click here for full article.

Tags: Obama, finance reform, Democrats, Republicans, mid term elections

They rarely say it this plainly.

This is remarkable as far as examples of Republican thinking go.

"[Y]ou should never raise taxes in order to cut taxes," Jon Kyl said on Fox News Sunday. "Surely Congress has the authority, and it would be right to -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans."

So, you have to state how you are going to fund things like social security, but one should never have to cost tax cuts, especially tax cuts for the rich.

Imagine talking this way about any other programme? You would literally be laughed out of the room if you stated that, as a point of principle, you did not think that the cost of that programme had to be accounted for.

Fire Dog Lake:

So what we’re seeing is an organized Republican campaign to extend the Bush tax cuts for the wealthy, implicitly relying on the same Keynsian stimulus rationale they’ve violently argued against when it comes to spending to save teachers, rebuild infrastructure and rescue the unemployed.

So Republicans claim they want to eliminate the budget deficits, because deficits are per se a threat to the economy and responsible government, and because they just cause jobless people to be lazy and cause states to hire too many firemen and police and teachers . . . but the deficit hysterics make an exception for that part of deficits caused by the Bush tax cuts, which are, uh, different, because you can never give too many entitlements to the wealthy.

The stimulus failed in the eyes of the Republicans, but it will work if the deficit is increased by continuing Bush's tax cuts for the wealthy.

As Tomasky points out here, they rarely say this as clearly as Kyl is stating it here.

As you probably know, Republicans in Congress having been blocking the extension of unemployment benefits for 1.2 million Americans on the grounds that doing so would increase the deficit. All spending, they insist, must be offset by like-sized cuts so that everything washes out as deficit neutral.

Turns out there's an exception to this, and it's guess what? Tax cuts for the rich.

So much for their concern about the deficit.... that goes out the window when it comes to giving the richest people in society tax breaks.

Tags: Republicans, greed, deficit, economy, Kyl