Tuesday, 4 May 2010

Trying to get my head around fiscal policy

Fiscal policy is boring as hell, and it ignites my math-phobia in a flash. However, every time I'm in a political discussion with someone who isn't going to vote the same way as I am, I fall on my arse as soon as they mention the national debt and the need to cut spending. I'm often being told that the Lib Dems' policy on public spending and closing the deficit is ill thought out and unrealistic, and all I can impotently splutter in reply is that Nick Clegg seems to use actual numbers and make reference to detailed budget plans that account for every pound that must be spent and saved, while the other two don't like to use numbers when they could use class stereotypes instead. It usually turns out that neither I nor anybody else I've spoken to has actually done any research on fiscal policy, and we're all as ignorant as each other on the matter. However, I know that I'm exactly the sort of person who can get easily bamboozled by a man in a suit saying that the maths has already been done by other men in suits, so I don't need to worry my pretty little head about it. I think I ought to at least try to understand the numbers behind the policies to some extent so that I can make an informed decision about how I use my vote.

The Institute for Fiscal Studies,an independent research institute, has carried out a lot of research into the various parties' proposals regarding fiscal policy. Luckily for me, this is presented in an uncomplicated, easy-to-understand format. Take this example of a graphics-rich presentation regarding national debt, the budget deficit, tax rises and public spending cuts. It seems to be a good way of becoming better informed about the policies behind the rhetoric, without having to retrain as an economist.

Nevertheless, I don't think the results of this study would change anybody's mind about how they're going to vote - the Conservatives will keep tax low and close the deficit early, but they won't be able to keep it as low as they've promised; Labour will cut the least spending, but they will have to find another £7 billion by 2016 in order to do so; the Lib Dems are going to raise taxes a lot, but they are at least very open about this and seem to have given the most detail on fiscal policy and actually accounted for every pound. This seems to follow exactly what I would expect from each party, so there's no real surprises here. But at least I feel a teeny-weeny bit better informed in my voting decision.

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