Mitt Romney’s choice of running mate has galvanised Republican support for their candidate, and has ensured there will be a big debate in the USA over how to tackle the deficit and promote faster growth. Paul Ryan believes in cutting spending and cutting tax rates. He will give Democrats under Obama, and the so called “liberal” intelligentsia in the UK, a new hate figure.
Some in the UK have sought to contrast the USA, growing a bit under current policies, with the UK, not growing at all. They have suggested this is because Obama has carried on spending whilst the UK has “cut too far too fast”. The arrival of Mr Ryan on the scene provides a useful opportunity to remember the published figures.
Since 2010 UK total public spending has risen by 6.1%, with fast growth in current spending of 11.4% more than offsetting the cuts in capital spending which the Coalition have continued from Labour’s plans. Meanwhile, in the USA Obama’s 9.8% increase in federal spending has been partially offset by a 2.5% cash cut in State and local spending, meaning that US total public spending has risen a shade less quickly than the UK’s.
The big difference between US and UK policy has been on the tax side. The US has continued with lower tax rates. As a result it has an economy which has grown faster, and done better at increasing tax collection. The US has also been quicker at fixing its main banks, which has helped.