Boris, Biden and the era of big government

Bill Clinton’s declaration that ‘the era of big government is over’ summed up the late 1990s political zeitgeist. Centre-left political parties could win if they accepted the small state model bequeathed by the Thatcher-Reagan consensus.

Now things feel very different, as I say in the Times today. The stimulus Joe Biden signed into law is huge, $1.9 trillion (£1.4 trillion): three times larger than the financial hole created by Covid. Here there has been nothing as dramatic. But it is still telling that Boris Johnson is insistent that the public finances won’t be brought back into order by ‘austerity cuts’. Big government appears to be back.

This isn’t just about Covid ether. Public weariness with spending cuts combined with the new Tory electoral coalition and the demands of an ageing population all point in the direction of higher spending. One Thatcherite former cabinet minister concedes: 

‘We’re going to have to get used to spending more money and if you’re going to be halfway fiscally responsible then that is going to have to mean more tax.