Who ran up the US deficit? Clue: it's not Obama

Republicans are demanding deficit reduction through spending cuts alone - but the Bush-era tax cuts

As the political deadlock over the US debt ceiling continues, it is worth taking a moment to remind ourselves the source of America's current economic woes. The New York Times published the following chart last weekend:

Obama deficit chart

George Bush inherited a surplus. This chart shows that the main causes for the swing from surplus to deficit were his tax cuts, and the billions spent on war. This was compounded by unexpected recessions in 2001 and 2008/9. Obama's policies do add to deficits, but by a comparatively negligible amount.

If those tax cuts -- which have had a hugely detrimental effect, as the chart shows -- ended as planned in 2012, future deficits would instantly be cut by half. These are the same tax cuts which Obama agreed to extend back in December 2010, in one of the first bruising battles with Republicans since their mid-term gains in November.

This makes frustrating reading -- as we speak, Republicans are steadfastly refusing to accept any tax increases. Conversely, Democrats do not want to add further cuts already limited social programmes for the poor and the elderly, and a public pension scheme. However, the basic figures are on the side of the Democrats, as the chart shows that these cuts would not be sufficient to fill the shortfalls created by these tax cuts are too large to be filled with spending cuts alone.

Obama has called for a combination of spending cuts and tax rises for the rich. While it is clear that the Republicans are motivated by politicking -- delaying any rise in the debt ceiling to the run-up to the presidential race -- nor is Obama making his case clearly enough. The clock is ticking, but as all too often in American politics, the loudest voices are those of small-state, pro-elite conservatives.

Hat-tip: Marbury

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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After Article 50 is triggered, what happens next?

Theresa May says Article 50 will be triggered on 29 March. The UK must prepare for years, if not decades, of negotiating. 

Back in June, when Europe woke to the news of Brexit, the response was muted. “When I first emerged from my haze to go to the European Parliament there was a big sign saying ‘We will miss you’, which was sweet,” Labour MEP Seb Dance remembered at a European Parliament event in London. “The German car industry said we don’t want any disruption of trade.”

But according to Dance – best known for holding up a “He’s Lying” sign behind Nigel Farage’s head – the mood has hardened with the passing months.

The UK is seen as demanding. The Prime Minister’s repeated refusal to guarantee EU citizens’ rights is viewed as toxic. The German car manufacturers now say the EU is more important than British trade. “I am afraid that bonhomie has evaporated,” Dance said. 

On Wednesday 29 March the UK will trigger Article 50. Doing so will end our period of national soul-searching and begin the formal process of divorce. So what next?

The European Parliament will have its say

In the EU, just as in the UK, the European Parliament will not be the lead negotiator. But it is nevertheless very powerful, because MEPs can vote on the final Brexit deal, and wield, in effect, a veto.

The Parliament’s chief negotiator is Guy Verhofstadt, a committed European who has previously given Remoaners hope with a plan to offer them EU passports. Expect them to tune in en masse to watch when this idea is revived in April (it’s unlikely to succeed, but MEPs want to discuss the principle). 

After Article 50 is triggered, Dance expects MEPs to draw up a resolution setting out its red lines in the Brexit negotiations, and present this to the European Commission.

The European Commission will spearhead negotiations

Although the Parliament may provide the most drama, it is the European Commission, which manages the day-to-day business of the EU, which will lead negotiations. The EU’s chief negotiator is Michel Barnier. 

Barnier is a member of the pan-EU European People’s Party, like Jean-Claude Juncker and German Chancellor Angela Merkel. He has said of the negotiations: “We are ready. Keep calm and negotiate.”

This will be a “deal” of two halves

The Brexit divorce is expected to take 16 to 18 months from March (although this is simply guesswork), which could mean Britain officially Brexits at the start of 2019.

But here’s the thing. The divorce is likely to focus on settling up bills and – hopefully – agreeing a transitional arrangement. This is because the real deal that will shape Britain’s future outside the EU is the trade deal. And there’s no deadline on that. 

As Dance put it: “The duration of that trade agreement will exceed the life of the current Parliament, and might exceed the life of the next as well.”

The trade agreement may look a bit like Ceta

The European Parliament has just approved the Comprehensive Economic and Trade Agreement (Ceta) with Canada, a mammoth trade deal which has taken eight years to negotiate. 

One of the main stumbling points in trade deals is agreeing on similar regulatory standards. The UK currently shares regulations with the rest of the UK, so this should speed up the process.

But another obstacle is that national or regional parliaments can vote against a trade deal. In October, the rebellious Belgian region of Wallonia nearly destroyed Ceta. An EU-UK deal would be far more politically sensitive. 

The only way is forward

Lawyers working for the campaign group The People’s Challenge have argued that it will legally be possible for the UK Parliament to revoke Article 50 if the choice is between a terrible deal and no deal at all. 

But other constitutional experts think this is highly unlikely to work – unless a penitent Britain can persuade the rest of the EU to agree to turn back the clock. 

Davor Jancic, who lectures on EU law at Queen Mary University of London, believes Article 50 is irrevocable. 

Jeff King, a professor of law at University College London, is also doubtful, but has this kernel of hope for all the Remainers out there:

“No EU law scholar has suggested that with the agreement of the other 27 member states you cannot allow a member state to withdraw its notice.”

Good luck chanting that at a march. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.