The US budget deficit is coming down faster than the UK for two reasons. Yes, revenue is rising more quickly, thanks to economic recovery. But spending is also under much better control. The Federal government is now cutting defence spending, to assist the cuts made by the various states to a range of other programmes. In the latest figures Federal spending was only up by 0.5% in cash terms. The deficit is down to 6.6% of GDP and falling.
The President was an angry man in a hurry when he addressed the House and Senate with his state of the Union message recently. He wants to tighten gun control,seeks a strong anti global warming policy, and favours tax rises rather than spending cuts. He knows, however, that much of this agenda is not possible given Republican control of the House.
More interestingly, does he know that far from following an anti global warming policy, the USA is following a cheap energy policy – one of the reasons for her relative economic success. Presumably the President knows that the USA did not sign the Kyoto Treaty nor its successor recently on his watch, leaving the EU almost on its own with these expensive dear energy commitments. Presumably the President knows that his country is engaged in an amazing dash for gas, with much shale gas now beeing extracted despite the protests of environmentalists. Presumably he sees all around him people and companies who heat their homes and offices to a higher temperature in winter than they cool them to in summer. Presumably he sees the gas guzzling cars and the reluctance to use public transport. How can he say he is a strong anti global warming crusader with all this going on?
The US economy is in better shape than the Uk or Euroland. They sorted out their banks more quickly. They took a much bigger hit on property prices than the UK or Euro core, and now have them recovering. They are cutting overall public spending in real terms, and cutting defence spending and some state spending in cash terms and bringing the deficit down. It shows it does work.