When the deficit's "under control", will the Conservatives be able to resist deficit-funded tax cuts?

There's no reason why they should even try.

Matt Yglesias asks what could be an existential question for conservatives on both sides of the Atlantic:

This is the question for John Boehner and Paul Ryan whenever they do unveil their balanced-budget plan: Why not make taxes lower instead of balancing the budget? The budget will, presumably, cut spending down to a level that conservatives think is appropriate. Say that sums up to 18 percent of GDP. Well if you're spending 18 percent of GDP and 18 percent of GDP is the right amount to spend, then why is it better to raise 18 percent of GDP in taxes rather than raise 16 percent and borrow the rest?

For the time being, in Britain and America, rhetoric about "getting the deficit under control" and about "shrinking the size of the state" are pointing in the same direction. Both are reasons for the massive spending cuts which the Conservatives and Republicans have attempted to enact.

Most of the attacks on the false connection between those two arguments have been focused on the "shrinking the state" part of the equation. That is, questions like "if we're trying to reduce the deficit, why aren't we raising taxes on the rich/on bankers/on financial transactions" are appropriate for exposing the drive for deficit reduction as a sham, driven largely by ideology.

But what if, instead, we accept — hypothetically — that the size of the state had to be shrunk. Eventually, spending would be "under control", whatever that means for them, and the choice would become whether taxes ought to be at the same level. Why, all things considered, would it be bad if they weren't? Yglesias asks:

Is it because a 2 percent of GDP budget deficit would be inflationary? Is it because an inflation-targeting central bank faced with a 2 percent of GDP budget deficit would be forced to peg short-term interest rates at a high level? What's the problem, exactly, that the budget balancing solves once we've stipulated that spending has been cut to an appropriate level?

Of course, in the political world, we would be unlikely to get such a clear answer to that question. Rhetoric about a "maxed-out credit card", "paying off the country's mortgage" or "unsustainable budget deficits" — where "sustainable" is never defined — dodges the fact that the macroeconomics of small persistent budget deficits in a country which controls its own currency are relatively settled: it's fine. And chances are that if the Conservatives do manage to get the deficit down, and cling on to power through 2015, then they will do the obvious thing, and enact deficit-funded tax cuts.

But getting a straight answer to that question from the economically minded people who call for swingeing spending cuts now would be interesting indeed.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Article 50: Theresa May tries to charm the EU but danger lies ahead

As the Prime Minister adopts a more conciliatory stance, she risks becoming caught between party and country. 

She may have been a "reluctant" one but a Remainer Theresa May was. The Prime Minister's first mission was to reassure her viscerally anti-EU party that Brexit meant Brexit. Today, by invoking Article 50, she has proved true to her word.

In this new arena, it is not Britain that has "taken back control" but the EU. When Brussels drew up the divorce proceedings it did so with the intention of maximising its influence. The withdrawal deal that Britain reaches must be approved by at least 72 per cent of member states, representing 65 per cent of the EU’s population. The two-year deadline for leaving can only be extended by unanimous agreement. Even the much-maligned European Parliament has a vote.

While keeping her famously regicidal party on side, May must also charm her 27 EU counterparts. In her Commons statement on Article 50, she unmistakably sought to do so. The PM spoke repeatedly of a new "deep and special partnership" between Britain and the EU, consciously eschewing the language of divorce. In contrast to Donald Trump, who pines for the EU's collapse, May declared that "perhaps now more than ever, the world needs the liberal, democratic values of Europe" (prompting guffaws and jeers from Tim Farron's party and the opposition benches). Indeed, at times, her statement echoed her pro-Remain campaign speech. 

Having previously argued that "no deal is better than a bad deal", the Prime Minister entirely ignored the possibility of failure (though in her letter to the EU she warned that security cooperation "would be weakened" without an agreement). And, as she has done too rarely, May acknowledged "the 48 per cent" who voted Remain. "I know that this is a day of celebration for some and disappointment for others," she said. "The referendum last June was divisive at times. Not everyone shared the same point of view, or voted in the same way. The arguments on both side were passionate." 

Having repeatedly intoned that "we're going to make a success" of Brexit, May showed flashes of scepticism about the path ahead. She warned of negative "consequences" for the UK: "We know that we will lose influence over the rules that affect the European economy. We know that UK companies that trade with the EU will have to align with rules agreed by institutions of which we are no longer a part, just as we do in other overseas markets. We accept that." May also acknowledged that any deal would have to be followed by a "phased process of implementation" (otherwise known as transitional agreement) to prevent the UK falling over what the PM once called the "cliff-edge". 

In Brussels, such realism will be welcomed. Many diplomats have been stunned by the Brexiteers' Panglossian pronouncements, by their casual insults (think Boris Johnson's reckless war references). As the UK seeks to limit the negative "consequences" of a hard Brexit, it will need to foster far greater goodwill. Today, May embarked on that mission. But as the negotiations unfold, with the EU determined for the UK to settle a hefty divorce bill (circa £50bn) at the outset, the Prime Minister will find herself torn between party and country. Having delighted the Brexit-ultras to date, will she now risk alienating the Mail et al? The National Insurance debacle, which saw the government blink in the face of a small rebellion, was regarded by Remainers as an ominous precedent. May turned on the charm today but it will take far longer to erase the animosity and suspicion of the last nine months. 

George Eaton is political editor of the New Statesman.