Not up to the job
Labour's latest story goes like this: once the recovery is established, fiscal discipline will be imposed and there will be tougher spending cuts than even Thatcher managed.
Fine. In Labourworld, the recovery will be very well established by next year. In 2011-12, GDP growth hits 3%, before accelerating to 3.25% pa over the following three years. So just how big are those tougher-than-Thatcher cuts?
Here's the budget projection of public spending in real terms. And just for fun, we'll add in the history of public spending since Labour came to power in 1997 (figures are Total Managed Expenditure -TME -deflated to 2009-10 prices using the GDP deflator).
Now, I wonder if anyone can spot those tougher-than-Thatcher cuts. Yes, we can spot the monstrous 60% ramping up of spending over the last 13 years - we can spot that only too well. But can anyone spot the cuts?
Well, that's because you need a high powered microscope to find them. The truth is that on top of their reckless splurge since 1997, Labour is actually planning to increase spending further over the next 5 years. In real terms, spending in 2014-15 will actually be higher than this year.
It's scarcely believable, even for this bankrupt crew. They intend to increase spending by 2% next year, and then - despite all the huffing and puffing - leave it pretty well at the same level thereafter.
Of course, as the IFS has again been been pointing out, a static spending total (or "envelope" as the Treasury calls it), might still imply some pretty swingeing cuts for specific areas. Indeed, according to the IFS calculations, once you strip out rising debt interest, welfare benefits, and areas where budgets are protected (eg health), the budget's implied cuts in unprotected departmental budgets range between 5.3% and 7.1% per annum for the years after 2010-11.
But does anyone seriously believe that? Does anyone really believe Labour would cut transport, universities, housing, and defence by 25% over a parliament?
No, of course not. They'll faff around talking tough but hoping the problem might go away. Finally, after God knows what market crisis, the IMF would have to come in, taxes racked up even further, and across-the-board blind spending cuts imposed.
The budget is a mind-boggling exercise in unreality.
It's no way to run Belize, let alone once Great Britain.
PS Today sees the official publication of the TPA's new book - How to cut public spending (and still win an election). It's a rattling good read (including the Bloke's contribution on how decentralisation can help tackle our fiscal deficit). May I urge you to invest in a copy.