By Monica Showalter
The tottery, weak government of Liz Truss in the U.K. has come to a mercifully short end.
It was unfortunate — there were high hopes that Truss could be another Margaret Thatcher, which is what the U.K. needs, and Truss had barely started the job, having lasted all of 44 days.
The fiasco was triggered by her disastrous “mini-budget,” an expensive subsidy program to counter high energy prices, combined with tax cuts, which the press repeatedly shouted were “not paid for.”
Old Joe Biden piled on with that one four days ago from Portland, literally between gobbles of ice cream, horning in on another country’s internal affairs, while also yawping that our economy was “strong as hell.”
According to the Guardian:
Joe Biden has called Liz Truss’s abandoned economic plan that sent financial markets into chaos and caused a sharp drop in the value of the pound a “mistake” as criticism of her approach continued.
The US president hinted that other world leaders felt the same way about her disastrous mini-budget, saying he “wasn’t the only one” who had concerns over the lack of “sound policy” in other countries.
Biden said it was “predictable” that the new British prime minister was forced on Friday to backtrack on plans to aggressively cut taxes without saying how they would be paid for, after Truss’s proposal caused turmoil in global financial markets.
His comments on Sunday to reporters at an ice-cream parlour in Oregon marked a highly unusual intervention by a US president into the domestic policy decisions of one of its closest allies.
That was trash. Joe Biden doesn’t have any idea how to run an economy. Inflation is out of control on his watch with a big recession on the horizon. He would have been wise to sit that one out.
Truss was nevertheless forced to resign because Britain has some very big problems — all derived from socialist activities of both her Tory predecessor, Boris Johnson, and the leaders of the Labour governments which came before him.
To wit, that includes the bad effects of the COVID shutdowns which put a lot of businesses out of business and people out of work — and took out Truss’s predecessor, Boris Johnson, who partied like a Democrat during that period, leaving the public bitter about the junk-science lockdowns. See the New York Times’s man-on-the-street interviews here.
Inflation was another problem — clocking in at more than 10% at last reading, which points to too much government spending because inflation is always and everywhere a monetary phenomenon, to put it the way Milton Friedman did. The Bank of England rate hikes that inevitably followed drove interest-rates sky high, and mortgage rates sky high with them. They also increased government borrowing costs, meaning, the government would be carrying a big debt load with a big interest load. Unfortunately, central bank rate hikes are pretty much the only practical way of getting rid of inflation, so they had to happen. For the U.K., as with many countries, things were made even worse by Joe Biden’s overspending, which triggered Federal Reserve hike rates here, but had the knock-on effect of forcing other central banks like the U.K.’s Bank of England, to hike with them, or else they would see the value of their currencies drop.
A fallen currency might have been an O.K. thing if inflation weren’t so bad — if there were sufficient trade opportunities to sell cheap British goods. There wasn’t. Brexit had cut off one market to free trade, which might have been helpful. On the other side of the pond, Joe Biden put Britain at the back of the line for a compensatory free trade agreement with the world’s richest market, the U.S. President Trump had the U.K. at the “front of the line” for that, but the deal didn’t get done, and while Joe Biden continues to seek that disgusting Iran trade deal with the mullahs, he’s utterly failed to get a British trade deal in some kind of working order, because he hates free trade except for political cronies. That had to have put Britain in a bad position on its economy, with many Brits saying they wished they still had Brexit and its officious and bossy eurochickens.
A third problem was energy costs. Truss’s plan was to subsidize them instead of free Britain’s domestic energy industry, which, like America’s, was hampered by greenie-oriented shutdowns and bans. Green energy was all over in the U.K. and the result had the smell of what happened to Sri Lanka.
A fourth problem was taxes. The Brits are overtaxed, and while Liz Truss tried to cut them for those with higher incomes (where the rates were really outrageous) she got labeled a bad guy for it and backtracked, which was a big mistake. She fired her chancellor, who was a good friend of hers. Then the nightmare happened: She somehow got forced to put a Tory version of a RINO in place, a TINO named Jeremy Hunt, who erased every proposal for tax cuts she tried in order to keep the energy subsidies going. What a horrible picture.
At Spectator Australia, Fraser Nelson put his finger on the problem:
A new Prime Minister sacks a Chancellor for doing exactly what she told him to, then declares she will implement every single one of the corporation tax rises that she had promised to stop. It now emerges that Liz Truss stood for leader on a false prospectus, promising an agenda she has proved unable to deliver.
She ran for office promising £30bn of unfunded tax cuts – in a government that spends £900bn, this was doable. But at a push. She’d have to prove that the £30bn would be stimulatory and (most of all) transitionary. Like an entrepreneur asking for a massive loan, the investors would need to be persuaded that it was well thought-through and would work.
She’d have had her work cut out to pull off her £30bn package. But in her mini-budget she upped it to an undoable £110bn – via a staggering, unnecessarily expensive £10bn-a-month energy plan. A big-state spending splurge, that was being carried out with language of supply-side tax reform.
The markets reacted negatively to her mini-budget, not because it hates tax cuts the way Joe Biden and his Democrats do, but because of the proposed gpvernment spendfest.
The Spectator’s Patrick Flynn writes:
They judged that Truss was planning to borrow recklessly to further increase an already very large national debt. That she envisaged using even a small portion of these borrowings to facilitate a tax cut for those earning more than £150,000 a year told financiers – and voters alike – that they were dealing with a dogmatist and not a realist.
The lack of any prior political ‘pitch-rolling’ for the contents of such a bombshell mini-Budget told Tory MPs that this rookie combination of PM and chancellor was disastrous. Downing Street sources initially reacted to pressure for U-turns by suggesting that a majority of 70 meant now was the time to force through radical measures.
The whole thing was badly managed, and ended up failing to adhere to a Thatcherite free market agenda, because there was no rootedness in it. While most of us are sorry for Truss, who was so inept, and so easily caved in to pressure, even as she had good intentions, there’s no excuse for not having the requisite Thatcherly toughness and political chops that such times as these require. Britain should be all over Joe Biden’s keister over the failure to support its trade needs, and use the diplomatic muscle it has to make the old fool pay attention. It should make tax cuts available to all Britons, not just the higher paid ones. It should cut government spending and above all, free Britain’s domestic energy production so there will be no crises to subsidize. It should also rake in a guy like Nigel Farage and make him an honorary Tory, to get him to get some kind of tough immigration program in place that will restore confidence to the Brits and strike fear into cartel human smuggling rackets.
The Brits made it clear at the last election time that they wanted a conservative government. The problem here is that they didn’t get it, they just got a lot of talk about it and a lot of backtracking. Now they may get a leftist government — which will give them leftwingery good and hard. That’s if the next prime minister can’t get this series of problem resolved right.