Obama rejects Osbornomics: "we can't simply cut our way to prosperity"

The US president's statement on the fiscal cliff deal demonstrates how he has rejected the coalition's approach.

One fact that the many Conservatives who supported Barack Obama's re-election conveniently ignored is that the US president has long rejected the coalition's approach to the economy. Unlike George Osborne, who pushed the UK off its own fiscal cliff in 2010, when he slashed infrastructure spending and raised VAT to 20 per cent, Obama recognises that austerity must not come at the expense of growth. After Congress approved the fiscal agreement reached on New Year's Eve, he commented last night:

We can't simply cut our way to prosperity. Cutting spending has to go hand-in-hand with further reforms to our tax code so that the wealthiest corporations and individuals can't take advantage of loopholes and deductions that aren't available to most Americans. And we can't keep cutting things like basic research and new technology and still expect to succeed in a 21st century economy. So we're going to have to continue to move forward in deficit reduction, but we have to do it in a balanced way, making sure that we are growing even as we get a handle on our spending.

For Obama, economic growth is a precondition of deficit reduction, not a hoped-for outcome (remember Osborne's "expansionary fiscal contraction"?) Having maintained stimulus after 2008, the US is now in a stronger position to withstand austerity. While the UK suffered a double-dip recession (and is at risk of a triple-dip), the US economy has grown for 13 consecutive quarters and is now 2.2 per cent above its pre-recession peak. The UK, by contrast, remains 3.1 per cent below.

The deal reached between Obama and the Republicans postponed, rather than averted, the $109bn of spending cuts that were due to take effect from 1 January. The stage is now set for a showdown on 1 March when the Republicans will once again use a vote on raising the US debt ceiling (hitherto a formality under Republican and Democrat presidents alike) to extort large cuts to social security and Medicare. But while Obama has signalled that he is "very open to compromise" - there will be significant cuts - it is clear that the US president will veto any measures that pose a significant threat to growth. For the UK, however, the wrangling in Washington is an unhappy reminder that its fate was settled long ago.

Barack Obama greets George Osborne during an official arrival ceremony on the South Lawn of the White House on 14 March, 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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“Trembling, shaking / Oh, my heart is aching”: the EU out campaign song will give you chills

But not in a good way.

You know the story. Some old guys with vague dreams of empire want Britain to leave the European Union. They’ve been kicking up such a big fuss over the past few years that the government is letting the public decide.

And what is it that sways a largely politically indifferent electorate? Strikes hope in their hearts for a mildly less bureaucratic yet dangerously human rights-free future? An anthem, of course!

Originally by Carly You’re so Vain Simon, this is the song the Leave.EU campaign (Nigel Farage’s chosen group) has chosen. It is performed by the singer Antonia Suñer, for whom freedom from the technofederalists couldn’t come any suñer.

Here are the lyrics, of which your mole has done a close reading. But essentially it’s just nature imagery with fascist undertones and some heartburn.

"Let the river run

"Let all the dreamers

"Wake the nation.

"Come, the new Jerusalem."

Don’t use a river metaphor in anything political, unless you actively want to evoke Enoch Powell. Also, Jerusalem? That’s a bit... strong, isn’t it? Heavy connotations of being a little bit too Englandy.

"Silver cities rise,

"The morning lights,

"The streets that meet them,

"And sirens call them on

"With a song."

Sirens and streets. Doesn’t sound like a wholly un-authoritarian view of the UK’s EU-free future to me.

"It’s asking for the taking,

"Trembling, shaking,

"Oh, my heart is aching."

A reference to the elderly nature of many of the UK’s eurosceptics, perhaps?

"We’re coming to the edge,

"Running on the water,

"Coming through the fog,

"Your sons and daughters."

I feel like this is something to do with the hosepipe ban.

"We the great and small,

"Stand on a star,

"And blaze a trail of desire,

"Through the dark’ning dawn."

Everyone will have to speak this kind of English in the new Jerusalem, m'lady, oft with shorten’d words which will leave you feeling cringéd.

"It’s asking for the taking.

"Come run with me now,

"The sky is the colour of blue,

"You’ve never even seen,

"In the eyes of your lover."

I think this means: no one has ever loved anyone with the same colour eyes as the EU flag.

I'm a mole, innit.