On both sides of the Atlantic, conservatives are rolling out their latest budget plans. In the U.S., House Budget Committee Chairman Paul Ryan, R-Wis., unveiled this year's version of his "Path to Prosperity," which is scheduled for a vote on Thursday. In the U.K. today, finance minster George Osborne presented yet another budget on behalf of David Cameron's Tory government.
Both budgets include healthy doses of austerity. Ryan's calls for trillions of dollars in cuts to programs critical to economic growth. Osborne's plan, meanwhile, continues to cut deeply into public investment (with a minor boost to infrastructure spending), doubling down on his previous austerity efforts.
But for Ryan and Republicans in the U.S., the U.K. example should be instructive. Cameron and Osborne rode onto Downing Street promising that their plan to cut deeply into government spending would spur investment and turn the U.K. economy around. Instead, almost the opposite has happened. Joblessness has stayed high, economic growth has collapsed, and government debt has gone nowhere. In fact, were it not for the 2012 Olympics, Britain would have had no quarters of growth for more than a year.
Just today, new data from the International Labor Organisation showed that the number of unemployed workers in the U.K. creeped up again. Youth unemployment is also on the rise. The government has halved its estimate for economic output this year, predicting expansion by an anemic 0.6 percent. According to the National Institute of Economic and Social Research, Britain's economy, at this point in the recovery, is in worse shape than it was during the Depression.
Meanwhile, in the U.S., the 2009 stimulus package brought back growth, weak as it is. And Congress has the opportunity—however unlikely it is that lawmakers will seize it—to help America avoid Britain's fate.
For instance, the Progressive Caucus Budget, acknowledging that the biggest problem America faces now is the jobs and growth deficit, not the budget deficit, makes an up-front investment in new job creation programs that are paid for later. Both House and Senate Democrats have included smaller amounts of stimulus in their respective budget proposals. That approach is far preferable for dealing with today's problems than Ryan's slashing and burning.
Meanwhile, Osborne and Cameron are sticking to their game plan. "It is taking longer than anyone hoped, but we must hold to the right track," Osborne told Parliament. Cameron believes that turning away from austerity would send Britain "back into the abyss." Both seem to hope that the Bank of England will swoop in and save them from their own mistakes. (Three former members of the Bank of England's monetary policy committee, meanwhile, told the Huffington Post U.K. that Osborne's austerity push is "'premature,' 'self-defeating,' and 'completely at odds with economic theory'.")
The U.K. experience is by no means unique in Europe. Across the continent, 26 million workers can't find jobs. Several countries are experiencing Depression-level unemployment rates. Even supposedly mighty Germany has faltered. But the U.K. was in a position many other European nations were not: it controls its own currency, so it's wounds were much more self-inflicted.
If U.S. lawmakers want to avoid the same fate as Europe, they should listen more to people like Rep. Jerry Nadler, D-N.Y., who said, "trying to reduce the deficit right now is wrong, because this position is going to keep the economy in the doldrums and keep the depression going longer and it's self-defeating...If you grasp the economics of the economic recoveries from 2007 in Europe and the United States, they matched, until 2010, when they start to collapse. And then it diverges, and we keep going up, slowly." Ryan and the rest of the Republicans seem intent on syncing those paths again, to America's detriment.
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