[Archived] Election

[RovertheHill]

Brown had to increase spending during 2008 and 2009 to bail out the banks and pump money into the economy to keep it going in the teeth of the biggest worldwide recession since the 1930s. This is why Britain now has such a large deficit - not because of "spending". Brown's policy was successful and Britain's economy emerged from recession in spring 2009 and has been recovering since then. It is this recovery that is now threatened by Osborne's slash and burn of the public sector. This has been explained on here many times before and is not difficult to understand.

You can see the debt profile in this graph

There was a pretty big, and growing debt pre 2008. In fact, you will see that Brown was "spending" more than the country earned for a considerable period of time. Perhaps that's why its difficult to understand - because it's not true?

[den]

That graph seems to prove otherwise doesn't it RTH?

From 2001 until 2008 [7FY's] it grew by £200bn. From 2008 until 2011 [3FY's], it grew by £450bn.

In fact, that seems to prove that without the increased spending due to the financial recession and the bank bail out, the debt would have been around £350bn lower than it currently is.

[Biddy]

"But the reality is, as a family living in an expensive area..."

Stopped reading there.

If people choose to live in an expensive area then they shouldn't be receiving government hand outs for their kids. If that family can't afford to live in an expensive area without handouts then they need to move.

I haven't got past the first line yet

"It isn't often that even George Osborne feels me with despair"

LMAO

[RovertheHill]

That graph seems to prove otherwise doesn't it RTH?

From 2001 until 2008 [7FY's] it grew by £200bn. From 2008 until 2011 [3FY's], it grew by £450bn.

Hasn't debt grown under every government?

No, I think the graph shows that the government has been spending more than it earns since before the banking crisis. You can look at that site to see how debt has risen and fallen.

Interestingly, if you look at one of my earlier posts, you will see that next year the government will spend £651bn which is £13bn more than this year. And the year after the government will spend £665bn. So I still don't understand where that money has all gone because even with the cuts we will be spending a lot more than we did in 2007 before the crisis?

[Biddy]

It's really, really easy to look at it in this way. Read the rest of the article, avoid the initial reaction, mine was the same, and think about it. You are immediately characterising this family. I agree they should be able to live without state support but it's actually about a lot more than that. It's about division and the reaction to that division and by characterisation you fall into the trap.

No, I'm really not getting it.

She says they had to more to "expensive Cambridge" for his work however the next line says commutes 140 miles a day to Ipswich. Surely then they should have moved to "cheap" Ipswich and saved a bucket load of money?

No, I think the graph shows that the government has been spending more than it earns since before the banking crisis. You can look at that site to see how debt has risen and fallen.

Interestingly, if you look at one of my earlier posts, you will see that next year the government will spend £651bn which is £13bn more than this year. And the year after the government will spend £665bn. So I still don't understand where that money has all gone because even with the cuts we will be spending a lot more than we did in 2007 before the crisis?

Thats one of the problems though. People are saying the Government are cutting too quickly and too steeply, however most are being phased in over the next 4 years. Child Benefit is not going for middle earners until 2013.

[adopted scouser]

If people choose to live in an expensive area then they shouldn't be receiving government hand outs for their kids.

Nonsense, granted they don't need the money but why should funds be denied to working people who have contributed thousands in tax and national insurance, working full time to provide for their families ?

What have the great unwashed contributed to the nation's coffers ?

[den]

No, I think the graph shows that the government has been spending more than it earns since before the banking crisis. You can look at that site to see how debt has risen and fallen.

I don't follow you RTH.

The graph is of debt. Debt soared after the 2008/2009 global financial crisis. Of course spending went up during that period - it went to support the banks and ease the effects of the recession.

Prior to that, debt rose steadily, as it probably has since the end of the war, but wasn't a problem. As for the spending, well investing in public services is good for all isn't it, as long as the country can afford it. That's judged by the level of debt isn't it?

You seem to be implying that spending is always bad, but I might have misunderstood you.

[Biddy]

Nonsense, granted they don't need the money but why should funds be denied to working people who have contributed thousands in tax and national insurance, working full time to provide for their families ?

What have the great unwashed contributed to the nation's coffers ?

And people have to realise that some families budgeted with this money. House prices boomed, to get a three bedroom house (needed with a growing family) cost a fortune and every penny counts. Suddenly, if you have 2 kids and 1 earner, the posh gits (Tory government before someone else reads this wrong) pinch £1500 (Tax Free) away from you a year and you are left with quite a big hole to find. No chance you're going to get a £3000 pay rise to cover the short fall.

Most likely scenario under this regime is, lose your job, House has negative equity, you're stuck. But at least you now get dole money and Child Benefit back. Wow I'm a pessamist.

I don't follow you RTH.

The graph is of debt. Debt soared after the 2008/2009 global financial crisis. Of course spending went up during that period - it went to support the banks and ease the effects of the recession.

Prior to that, debt rose steadily, but wasn't a problem. As for the spending, well investing in public services is good for all isn't it, as long as the country can afford it. That's judged by the level of debt isn't it?

I wouldn't call "ever increasing" debt not a problem. At some point you have to pay it back. If I were to continue putting money on my credit card every year not paying off the balance I think I'd be in the deep stuff and very depressed.

[RovertheHill]

I don't follow you RTH.

The graph is of debt. Debt soared after the 2008/2009 global financial crisis. Of course spending went up during that period - it went to support the banks and ease the effects of the recession.

Prior to that, debt rose steadily, as it probably has since the end of the war, but wasn't a problem. As for the spending, well investing in public services is good for all isn't it, as long as the country can afford it. That's judged by the level of debt isn't it?

You seem to be implying that spending is always bad, but I might have misunderstood you.

Den - here's the debt graph for this last century

I think where we disagree is whether the level of debt pre-banking crisis was acceptable in the way it was rising. I don't believe it was because you cannot continually spend more than you earn without consequences. And those consequences really hit home when something unexpected happens. Like a recession. Or the banking crisis. And there are some public services that I would count as investment, and some that I wouldn't. So I don't necessarily believe it's good for all. Just my view though

[adopted scouser]

the posh gits pinch £1500 (Tax Free)

No. The 'posh gits' are entitled to child benefits that they have contributed to, and already paid for. Necessity is debatable, entitlement is not.

[den]

I wouldn't call "ever increasing" debt not a problem. At some point you have to pay it back. If I were to continue putting money on my credit card every year not paying off the balance I think I'd be in the deep stuff and very depressed.

It was only after the 2008 financial crisis that it became a problem and no, there isn't a point where you have to pay it all back, because all major countries use debt. So in that respect it's nothing like credit card.

2008 was the turning point where it had to be addressed, everyone agrees on that. It's the method and timescale of paying off the excess debt that is the debate - and whether hitting the poorest the hardest is the fair way - and the right way - and the only way to go about it.

[Biddy]

No. The 'posh gits' are entitled to child benefits that they have contributed to, and already paid for. Necessity is debatable, entitlement is not.

I meant the "posh gits" meaning the government, not people paying the taxes.

It was only after the 2008 financial crisis that it became a problem and no, there isn't a point where you have to pay it all back, because all major countries use debt. So in that respect it's nothing like credit card.

2008 was the turning point where it had to be addressed, everyone agrees on that. It's the method and timescale of paying off the excess debt that is the debate - and whether hitting the poorest the hardest is the fair way - and the right way - and the only way to go about it.

OK, I know it would never all get paid back, but my point was it was always rising. That is a worrying trend.

[den]

Den - here's the debt graph for this last century

I think where we disagree is whether the level of debt pre-banking crisis was acceptable in the way it was rising. I don't believe it was because you cannot continually spend more than you earn without consequences. And those consequences really hit home when something unexpected happens. Like a recession. Or the banking crisis. And there are some public services that I would count as investment, and some that I wouldn't. So I don't necessarily believe it's good for all. Just my view though

You're talking to a financial lightweight here RTH, but again that graph shows, to me at least, that debt as a %age of GDP up until 2008 [best I can tell from that graph] was pretty well as low as it's ever been. In fact it looks to me as though the 11 years of debt through the previous government, leading up to 2008, it was the lowest since 1900.

[RovertheHill]

You're talking to a financial lightweight here RTH, but again that graph shows, to me at least, that debt as a %age of GDP up until 2008 [best I can tell from that graph] was pretty well as low as it's ever been. In fact it looks to me as though the 11 years of debt through the previous government, leading up to 2008, it was the lowest since 1900.

Well you and me both. I think what it says is that we finally finished paying for two world wars by the 80's which is staggering, but back to the present I still think that we were on a worrying debt trend upwards. In fact didn't Brown break his own golden rules, or at least change the goalposts on them? Time will tell I guess how this all pans out. There is still much I don't understand about this

[grizfoot]

I've studied Economics and all the theories that come with it. But at the end of the day nobody knows exactly what's going to happen as a result of all these cuts, I'd go as far as to say that Economics in general is just a completely flawed subject because it's all based on empirical study. Not to mention the massive amount of assumptions that go along with a lot of the theories. There's small and unpredictable ways in which individual people can have an affect on the economy as a whole. The general understanding is that increasing aggregate demand within an economy is the best way to get out of a recession (exactly the reason why the government decide to pump so much money into the banks to try and stimulate the economy). Whilst these harsh cuts will almost certainly have the opposite effect and the economy will contract. The obvious aim is to try and bring down the massive national debt but whether attempting to do so this quickly is the right solution remains to be seen. But it was blantantly obvious that public sector cuts were always going to hurt the poorest people in the country hardest, then again I'd expect nothing different from the Tories.

[jim mk2]

h. I think what it says is that we finally finished paying for two world wars by the 80's

The final instalment of our debt to the US for the second world war was finally repaid in December 2006 - by Gordon Brown.

Moving on, the IFS, Britain's most respected independent tax and spend monitor, has debunked Osborne's claims that the spending review is fair and progressive, and confirmed that the poor and not the rich will be hit hardest by the cuts.

http://www.guardian....ew-fairness-gap

[RibbleValleyRover]

The final instalment of our debt to the US for the second world war was finally repaid in December 2006 - by Gordon Brown.

Moving on, the IFS, Britain's most respected independent tax and spend monitor, has debunked Osborne's claims that the spending review is fair and progressive, and confirmed that the poor and not the rich will be hit hardest by the cuts.

http://www.guardian....ew-fairness-gap

Err Jim, from that very article:

"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."

Another article by the Grauniad:

Spending review cuts will hit poorest harder, says IFS

"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".

So the richest (people earning over £150,000 a year) will be hit the hardest, not the poorest...

Looks like the Grauniad is using selective quoting to generate headlines they want.

[Paul]

RVR I haven't read that particular article but the point being made by those who believe the poorest will be hit hardest will be:

In real terms losing 5% of your income if you earn £10000 is far more damaging than losing 6% of £150000. figures for example only.

% means nothing, though it's the argument the government uses, it's real cash that counts. You can't buy anything with a %.

Basically if the top 2% have £150000 income losing a small % means nothing and is very affordable. Take 5% of an income of £10000 and the impact is very considerable. Statistics will tell you anything you wish for. £ notes are real life

[Flopsy]

Does the IFS figures take into account the tax threshold rises or IDS's benefit changes ?

Also if you read the IFS report there are lots of ifs, buts, maybes & no ideas in there.

On a brighter note, the book that all the nations tax payers have funded by paying the MP for Kirkaldy to skulk at home writing it instead of doing the job he was elected to do. Is now on Amazon to preorder. I strongly recommend that you don't.

Oh re the deficit & debt

Brown ran a deficit from 2000 onwards, during one of the country's biggest booms. That's right, he added to the national debt during the good times, instead of saving something so when there was a recession we wouldnt need to borrow as much.

Also, removing the10p tax bracket had done more to screw the low paid than these cuts will do

[den]

The bottom line is this.

The Tories come to power and give themselves a 5 year term. They decide to sort out the debt in 4 years. They realise that to win the next general election, that they must win back the middle classes, or middle England [as do all parties to be fair]. So they hit the poor quickly and hard, while leaving the middle classes [or middle earners] and the rich, relatively free from any kind of real hardship.

They have done this, not with the sole intention of reducing the debt, but in a claculated way that enhances their chances of re-election in 5 years time. They didn't have to hit the poorest people in society so hard, they could have used the tax system along with cuts, to spread the pain much more fairly.

They know exactly what they're doing and why.

All in my opinion, of course.

[Paul]

Applauds.

[thenodrog]

Moving on, the IFS, Britain's most respected independent tax and spend monitor, has debunked Osborne's claims that the spending review is fair and progressive, and confirmed that the poor and not the rich will be hit hardest by the cuts.

Quite right too. Anything else would be biting the hand that feeds them and betraying the faith of their staunchest supporters. Those poor people hardly constitute Tory heartland support do they?

Now Jim I'd like you to take a step back, a big breath and consider the following.

I'm absolutely certain that the Tories would not want to take unpopular measures at all if the economic state of the country did not require it. Such measures are always going to be unpopular and no government in a minority position dares trifle with unpopularity. There is everything to lose and nothing to gain.

You obviously disagree Jim, so can you explain why and what the Tories have to gain by having to make such swingeing cuts and alienating so many future voters?

[thenodrog]

And people have to realise that some families budgeted with this money. House prices boomed, to get a three bedroom house (needed with a growing family) cost a fortune and every penny counts. Suddenly, if you have 2 kids and 1 earner, the posh gits pinch £1500 (Tax Free) away from you a year and you are left with quite a big hole to find. No chance you're going to get a £3000 pay rise to cover the short fall.

Posh gits? Rather a loose generalistion there Biddy. Instead of 'posh gits' I think it would be more accurate to describe them as the kids who actually listened and acted on their teachers advice when the teachers said 'stop messing about, roll up your sleeves, get your head down, do your homework on time, pass your exams and you'll get a good well paid job'

After consideration you might now prefer to call them 'swots' but I think 'grafters' is far more accurate.

[Amo]

Posh gits? Rather a loose generalistion there Biddy. Instead of 'posh gits' I think it would be more accurate to describe them as the kids who actually listened and acted on their teachers advice when the teachers said 'stop messing about, roll up your sleeves, get your head down, do your homework on time, pass your exams and you'll get a good well paid job'

After consideration you might now prefer to call them 'swots' but I think 'grafters' is far more accurate.

Yeah, I bet they're all self-made men 'Drog. No silver spoons dangling from their mouths...

[92er]

Quite right too. Anything else would be biting the hand that feeds them and betraying the faith of their staunchest supporters. Those poor people hardly constitute Tory heartland support do they?

Now Jim I'd like you to take a step back, a big breath and consider the following.

I'm absolutely certain that the Tories would not want to take unpopular measures at all if the economic state of the country did not require it. Such measures are always going to be unpopular and no government in a minority position dares trifle with unpopularity. There is everything to lose and nothing to gain.

You obviously disagree Jim, so can you explain why and what the Tories have to gain by having to make such swingeing cuts and alienating so many future voters?

There is an argument, which I find interesting, along the lines that the economic crisis has given the tories the chance to do something they have wanted to do for decades-demolish the welfare state.

On this basis, they won't limit themselves to doing the minimum to solve the problem, rather they will do the maximum possible to try and gain favour with certain elements within the tory party.