Budget

Home Rachel Reeves, the Chancellor of the Exchequer, was expected to freeze tax thresholds in the Budget on 30 October, to swell government income as more working people were brought into higher tax bands. Before Labour formed a government, she had said that the Conservatives, by freezing tax thresholds, were ‘picking the pockets of working people’. Weeks of speculation on the Budget were encouraged by leaks and by constant questioning of ministers about how Labour would keep to its manifesto undertaking not to raise taxes on ‘working people’ by increasing income tax, national insurance or VAT. The International Monetary Fund raised its growth forecast for the United Kingdom to 1.1 per cent this year, compared with the 0.7 per cent it forecast three months ago.

After multiple rounds of negotiations to raise the debt ceiling with President Biden's team — not the president himself, of course, because he was busy eating his ice cream — the House Republican leadership announced an agreement in principle, subsequently putting up language up over Memorial Day Weekend for members to consider. There are hurdles to overcome, but based upon initial reactions, majorities of Republicans and Democrats are agreed on this deal, with opposition coming from fiscal conservatives and progressives: particularly environment-focused progressives angered by the inclusion of energy policy priorities for Republicans and for Senator Joe Manchin.

This week we heard a lot about AUKUS, a trilateral initiative between the United States, the United Kingdom and Australia that will revamp the Australian naval fleet with nuclear-powered submarines over the next two decades. President Biden, UK Prime Minister Rishi Sunak and Australian Prime Minister Anthony Albanese made a show of it in sunny San Diego on March 13, where they officially inaugurated the defense agreement and gave speeches about defending sea lanes and the rules-based international order in the Indo-Pacific. But there was another story here: the Pentagon released a torrent of charts and bureaucratic documents on what it would like to see in the coming year’s defense budget.

It’s almost spring, and you know what that means: buds popping on the trees, birds chirping as the days grow longer, and the president introducing a budget that will be quickly forgotten. And so it's happened. But there have been a few interesting twists that could make this budget season more interesting than most. President Biden wrote an op-ed for the Wednesday New York Times presenting his plan to “extend Medicare for another generation.” The piece was largely predictable: calls to raise taxes on the wealthy as a way “to increase the program’s solvency by twenty-five years.” While some fiscal conservatives welcomed the president’s willingness to raise the issue of Medicare solvency, his ideas are largely dead on arrival for Republicans.

Congressional Republicans are gearing up for their four millionth attempt to rein in government spending, and surely this time will be different. After years of posturing in favor of budget cuts that never seem to materialize, the national debt growing to 130 percent of GDP is finally a threshold they won't cross. A Fox News hit? By gum, there's no time! Republicans exclaim as they raise a quivering red pen to the latest defense authorization bill. This job is about policy, not going on TV, dammit! You'll forgive me if I sound a bit cynical. After all, Republicans controlled the elected government for two years under Donald Trump and the deficit only got bigger. Yet as another debt ceiling fight looms, this time the GOP sounds like they might be serious about shrinking the state.

Lame-duck sessions of Congress are rarely uneventful. Whether it’s cramming through spending at the last minute or cramming through even more spending at the last minute, our legislature can always be counted on to rubber-stamp bills that lacked political support before Mariah Carey returned to the airwaves. Leading the charge for the opposition this time around is the self-declared speaker of the House, Kevin McCarthy. A Bloomberg headline recently proclaimed that “McCarthy Draws Line on Spending,” and trumpets seemingly blared out from the heavens heralding that Republicans had — finally — rediscovered their fiscally conservative bona fides. But not so fast: this is a script we’ve seen before.