Cameron and Obama could soon be drowning in debt
The voters will not be placated for ever by governments that fail to deliver on their word
8:26PM BST 30 Aug 2012
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For all his love of American politics, Ed Miliband has not flown to Florida to watch the Republican convention. Only one member of Labour’s high command has been sent out to keep an eye on the rogues, but the rest view the gathering with humorous contempt. There is a tendency to picture the event as a political freak show where the high priests of sado-austerity are cheered on by Tea Party fruitcakes. Mr Miliband may sometimes struggle to articulate what he is for in politics, but he certainly knows what he’s against – and most of it can be embodied by the people on stage in Tampa.
But this time, Labour and the Republicans have more in common than either party would like to admit. Both have chosen relatively dull leaders, but are hoping to fight an election based on the failure of their rivals. And their opponents, David Cameron and Barack Obama, are using similar tactics: massively increasing the debt while promising (and failing) to halve the deficit within one term. They use cheery phrases (“we’re all in this together”) but govern an angry nation. For Cameron and Obama, a simple rule applies. If their next election is fought on personality, they win. If it’s fought on economics, they lose.
The fiery speeches coming from the Republican platform could have been custom-made for a 2015 Ed Miliband campaign. “They’ve run out of ideas. Their moment came and went. They were elected in the middle of a crisis, as they constantly remind us, but they’re making it worse.They have added £11,000 of debt for every man, woman and child in the country. Thousands have graduated from university, ready to use their gifts and get moving in life. Half of them can’t find the work they studied for, or any work at all. Without a change in leadership, why would the next five years be any different from the last five years?”
All of the above was adapted from Wednesday’s speech by Paul Ryan, Romney’s running mate. His is a devastating argument, neither exaggerated nor nerdy. He does not talk about “structural deficits” or GDP but about dashed hope, stymied life chances and paths to prosperity. As a line of attack, it is very transportable. It could have been deployed against Nicolas Sarkozy five months ago; it could be used against Mario Monti when Italy goes to the polls next year, or Cameron in 2015. It has allowed Romney, for all his drawbacks, to pull ahead of Obama in the opinion polls. And it could well usher in a new era of one-term governments, and minority politics.
Not so long ago, politicians in both Britain and America were preparing for a political realignment. Labour was readying itself not just for defeat but annihilation, and the biggest surprise on election night was how many of its MPs were left still standing. Obama’s 2008 victory was accompanied by hubristic talk of a new Democrat era – but Republicans were back to take control of the House of Representatives two years later. The global debt crisis has created problems too big for any government, Left or Right, to solve easily. As a result, incumbents everywhere are vulnerable – and politics is becoming thrillingly unpredictable.
Voters in most European countries have booted out their governments over the past two years, but new brooms aren’t proving much more popular than the old ones. Take François Hollande, who was taken to the Elysée on the slogan “austerity isn’t inevitable”. It took just a few weeks for him to start preaching austerity, and he is now looking for 30 billion euros of cuts in France’s government budget. The French pollsters explain his vanishing approval rating simply: Hollande claimed he’d do things differently, and hasn’t. In fact, he’s doing pretty much what Sarkozy had planned.
Cameron faces the same problem. He says he is “dealing with the debt” when he is actually increasing the national debt by as much as Labour proposed: an almighty £600 billion. But he has not yet been rumbled. An unpublished YouGov poll by Policy Exchange, taken after last year’s Budget, found that just 14 per cent of voters realised the national debt is rising. Another poll, released this week, found that only 10 per cent see what’s going on. Now, just as under Labour, ministers play word games and talk about “cutting the deficit”, knowing that most voters will hear “cutting the debt”. Astonishingly, almost half of British voters think that debt is falling.
A government can only play this game for so long. Sooner or later, voters will work out that they have been saddled by more debt under one term of Cameron than they were under three terms of Labour. There are good reasons for this, all linked to a diabolical inheritance, but the PM is taking a major gamble by letting voters think he’s making more progress than he is. Cameron, like Hollande, has found himself unable to seriously change the trajectory that he inherited. As for Obama, he is almost parsimonious compared to George W Bush, the biggest spender of all.
The quickening of the political pendulum means that a moderate Labour Party would have little difficulty winning the next election. But herein lies Ed Miliband’s problem. His shadow chancellor, Ed Balls, wants to copy the strategy that is backfiring so badly for Hollande – attack the Government’s austerity and hint that there is an alternative. This strategy may work on a day-to-day basis, allowing Balls to deplore “harsh, deep” cuts scarcely bigger than those he too proposed. But poll after poll shows that it robs Labour of credibility.
The younger Labour MPs are beginning to worry. There is a nascent “In-The-Black Labour” movement, which is keen to accept that the scale of the Brown-era overspending will mean cuts for several years to come.
Stella Creasy, perhaps the most promising member of Labour’s new intake, is making the point that there is nothing “progressive” about saddling the next generation with debt, requiring tax rises that will hurt the poor. The former Trades Union Congress economist, Adam Lent, says the biggest threat to the party is its failure to take the deficit seriously.
But to the relief of the Tories, these arguments are being made from the fringes, because so many of the moderates quit after the last election, fearing a decade or more in the wilderness. Their absence has solidified the unions’ grip. James Purnell, once seen as a possible leader, tells friends that he could not return to Westminster if he wanted to because the unions would make sure he was never selected for a seat. Moves are afoot to expel Progress, the Blairite wing of the party, in the Labour conference, in the way that Neil Kinnock once expelled Militant. “The ideological purge is as bad as any time in the 1980s,” says an ally of David Miliband.
There are eight Tories at the Republican conference, studying the new kind of political attack lines that can be aimed at governments, anywhere, which cannot control their debt. “It’s the ghost of Christmas future for us,” one Tory MP tells me. Things are tough for Cameron, but he still remains very lucky in his enemies: the Labour leadership seems oblivious to the opportunity that is opening before it. For as long as Ed Balls is shadow chancellor, the weapon of fiscal sanity is the one weapon that Labour cannot bring itself to use.
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