Monday, August 22, 2005



Creating the strategic deficit

Just Left has a pair of good posts up in response to National's tax cuts. The first costs those cuts at $11.5 billion - about $2 billion more than they said on Friday. The second points out that that $11.5 billion would eat the projected surplus entirely, meaning that there would either have to be a massive increase in borrowing (and I mean massive; currently we're scheduled to borrow a mere $1 billion over the next three years), or savage cuts in spending on core public services. Given that Brash is a dedicated Revolutionary in the same spirit as Douglas and Richardson, I'm picking the latter. The massive tax-cuts will be used to create a "strategic deficit", which will then be used to justify a further attack on the public services needed by the poor. And meanwhile, Brash and his rich friends will laugh all the way to the bank...

5 comments:

Hey, just a bit of a correction. My figures are for the three full years of the package, once implemented - National's numbers are lower because they are doing a transition into the package.

Also, the cuts do not eat the whole budget surplus. They eat less than half of it ($11.5bn of $29bn) but because the budget surpluses already don't quite cover capital spending, that difference all goes straight on to debt.

It's an outrageous way to treat the public accounts. Muldoon will be spinning in his grave!

Posted by Jordan : 8/22/2005 04:31:00 PM

just as well they cremated him then isn't it ;-)

(actually i have no idea how the Piggy's corpse was dealt to, but it seemed like a good chance for a chuckle)

Posted by span : 8/22/2005 05:53:00 PM

Relax guys, I doubt that this would be enough to get National into power -- if people voted for tax cuts, ACT wouldnt be floundering at 2% in the polls...

However I still think we are going to pay for these cuts the hard way - less schools, hospitals, cops, firemen, etc..

Those farmers wont be whining about high taxes when an underfunded MAF is impotent in the fact of a major foot and mouth epidemic...

Posted by millsy : 8/22/2005 06:07:00 PM

Relax guys, I doubt that this would be enough to get National into power -- if people voted for tax cuts, ACT wouldnt be floundering at 2% in the polls...

However I still think we are going to pay for these cuts the hard way - less schools, hospitals, cops, firemen, etc..

Those farmers wont be whining about high taxes when an underfunded MAF is impotent in the face of a major foot and mouth epidemic...

Posted by millsy : 8/22/2005 06:07:00 PM

I read an interview today with Michael Cullen (the link to which I have totally forgotten) - he was not of the opinion that it was Brash's goal to create a strategic deficit, but that his failing was that Brash thinks that 'trimming the fat' from government is as simple as waving a pen.

It was a good article - I'll have to find the link...

Posted by CutFoldGlue : 8/22/2005 11:27:00 PM