The Insitute for Fiscal Studies (IFS), a well-respected British thinktank, reports that despite Chancellor George Osborne’s claim in June that his budget would be progressive the austerity budget will hit the poor the hardest.
I can’t say I’m surprised by the IFS’ findings. I don’t see how you reduce public expenditure without hurting the poor.
I was a skeptic from the moment Osborne made mention of people getting 100,000 GBP a year on benefits, followed by The prime minister framing fairness in terms of people who wake up at 5am to earn minimum wage versus people on benefits who keep their curtains closed all day. I interpreted it as nothing more than priming the people for pain by appealing to our lesser natures: “I don’t mind taking a hit as long as we really stick it to those scroungers”.
Perhaps the most striking thing about the government response to the Institute for Fiscal Studies (IFS) report is that they are so keen to bat down suggestions that the poor will face the biggest initial hit from austerity. It is a mathematical consequence of cuts to benefits, a landmark coalition policy. They could, and perhaps should, openly admit that the budget was regressive on almost every fair measure, and then defend it politically as the consequence of dealing with a bloated benefits bill.
I doubt they’ll attempt to defend it politically considering the fact that, as Mr. Islam pointed out, that the Lib Dem leadership would lose face, if they did so. As far as I remember a fair and “progressive” budget was something Nick Clegg claimed he would deliver.
I’m reminded of this article in the Atlantic Magazine as I observe events in both the US -and to a lesser extent- in the UK.
Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.