Budget lessons from across the pond for America

In Washington, a budget shutdown is becoming an increasing possibility. The Republican controlled House of Representatives wants deeper cuts than the White House will accept.

This has led a growing bi-partisan group of Senators to try and revive the work of the blue-ribbon commission on Fiscal Reform and Responsibility that produced its report late last year. Interestingly, the commission’s proposals are very similar to George Osborne’s plan.

UK Treasury analysis shows that the Osborne plan calls for an average tightening of 1.6 percent a year from 2009-10 to 2015-16  while the commission suggests 1.4 percent a year from 2010 t0 2015. The composition is also similar, both work on roughly three quarters spending cuts and one quarter tax rises. Other similarities are a plan to steadily raise the retirement age and to lower the rate of corporation tax.

What this shows is that the Osborne plan is actually in the mainstream of the US fiscal debate.