UK: Runaway borrowing to trigger tax rises (coming to US soon)

FT ^ | 11/20/08

[TigerLikesRooster]

Runaway borrowing to trigger tax rises

By Chris Giles and George Parker

Published: November 20 2008 23:45 | Last updated: November 20 2008 23:45

Annual public borrowing is set to rocket towards £120bn over the next two years – far higher than City forecasts – forcing Alistair Darling to announce plans for deferred tax rises and public spending curbs when he presents his pre-Budget report next week.

Treasury officials say the “mammoth shock” to the economy will cause tax revenues to fall far below previous government forecasts, even before the chancellor announces what is promised to be a “decisive” temporary fiscal stimulus.

The consensus forecast is for borrowing to hit 6 per cent of national income, or £90bn, next financial year, but the Treasury expects the rate of deterioration to continue apace, suggesting the budget deficit will hit 8-9 per cent of gross domestic product over the next two years, close to £120bn – three times the European Union’s deficit limit.

[TigerLikesRooster]

I guess this would be the battle line between conservatives and libs in U.S.

Dropping tax revenue forces the government and people to choose: drastically cut spending or raise taxes?

This one will be one fierce fight.

[TigerLikesRooster]

Ping!

[pointsal]

oh...give me a break...

[sickoflibs]

China is going to dump dollars and Japan wants to be paid back in yen , but Obamas plan is (like Clinton and MD gov OMalley) to give out the candy first to supporters like UAW to SAVE economy, then call an emergency to raise taxes to be responsible. But my question is what the heck is republicans strategy? I dont see any. I see democrats plan as clearly I saw it 2005-2008, but once again we seem directionless, and no Ayers and Wright wont stop it,

[ari-freedom]

cut spending and taxes

[mlocher]

Spending restraint alone seems unlikely to meet that target, [borrowing reduced to 2% of GDP] leaving Mr Darling with little choice but to announce deferred tax rises – which would kick in when the economy recovers.

Again, the stage is set to make it seem reducing gov't spending is impossible....only recourse is to raise taxes. And by the way, once an economy begins to recover, raising taxes will send it back from whence it came.....

[TigerLikesRooster]

As long as we have many who follow RNC directives like robots, we won't go anywhere.

I guess lots of Republicans in D.C. also feel that they will do fine by just "playing court politics" in D.C..

They will shove us anoter list of unimpressive candidates to choose, unless something is done. They shoved us Bush, then McCain. Who would be next? Romney?

[Boiling Pots]

Gee it never occurs to them to cut spending, like normal people do in rough times.

[ari-freedom]

they truly believe that govt spending helps the economy

[Shermy]

“I guess this would be the battle line between conservatives and libs in U.S.

Dropping tax revenue forces the government and people to choose: drastically cut spending or raise taxes?”

Are you kidding me? The last seven years have been both cut revenues and raise spending.

The only recent president to balance the budget was Bill Clinton.

[TigerLikesRooster]

It is just that we can no longer pretend that everything is fine. We could try to pretend more, but the reality bites you back the next day.

When all local governments and the federal government are simultaneously teetering on the brink, it is a different ball game. It will make them focus in the end, despite government's bait and switch or stalling.

Of course, government will fight it tooth-and-nail like N. Korean regime does for its survival. With no room for slack on either side, it won't be business as usual.

[Shermy]

Oh, humor!

I agree.

[ken21]

comrade obamao wants things to get badder (sic)

so that he can “rescue” the economy a la fdr.

si.