Labour are drawing the wrong lessons from America

The global debate about how we live within our means is moving fast. I spent a week in Washington while Congress and the President hammered out their deal on this year’s budget. The deal was significant because all sides agreed on the need to cut spending now. After days of brinkmanship, they agreed to £38 billion in-year cuts. Significant, perhaps, because America has now started to tackle its huge deficit. But everyone agreed it is a small downpayment ahead of a much bigger debate to come.
 
What’s fascinating for us here is that President Obama’s proposals are to cut the deficit slightly faster than we are here. Congress would go faster still. The Coalition’s plan is to reduce the deficit by just over 8 per cent of GDP over five years, or around 1.6 per cent a year. Obama’s plan is to reduce it by just over 8 per cent of GDP over four years — around 2.1