Conservative And Labour Politicians In UK Invoke Obama On Economy

The Road Forward: UK Politicians Try To Claim Obama As Their Own

LONDON -- In March 2012, British Prime Minister David Cameron and Chancellor George Osborne jetted off to the United States for a series of meetings at the White House.

“They should use the trip to ask President Obama for some economic advice,” Ed Balls, the Labour Party’s shadow chancellor, said at the time. “While Britain’s economy has stalled and unemployment has reached a 17-year high, the U.S. economy is strengthening and the jobless rate has come down to a three-year low.“

Since the formation of the Conservative-led coalition in May 2010, Tory and Labour politicians have tried to claim Obama, and his economic approach, as their own -- for political reasons (the U.S. president is very popular with the British public) as well as economic ones (the U.S. economy has been growing much faster than the UK’s). To be economically credible in Westminster, it seems, is to be aligned with Barack Obama.

But for how much longer?

In speeches, interviews and press releases, Balls has repeatedly invoked Obama, and the latter’s fiscal stimulus and delayed austerity, in order to loudly denounce Cameron and Osborne’s fiscal strategy.

Meanwhile, the Tory claim on Obama is growing increasingly difficult to sustain, says David Blanchflower, professor of economics at Dartmouth College and a former member of the Bank of England’s Monetary Policy Committee. “Obama's view [on austerity] is ‘later is better than sooner,’ while Osborne thinks ‘sooner is better than later,’” he told The Huffington Post UK. “The evidence suggests Osborne is wrong.”

Blanchflower says “the proof is in the pudding”: Since the coalition’s cuts-laden Spending Review in October 2010, the UK economy has grown by an anaemic 0.6 percent, compared to a much healthier 3.4 percent in the U.S. Despite the looming row over the debt ceiling, the IMF forecasts 2.1 percent growth for the U.S. in 2013 and just 1.1 percent for the UK.

In response, the Conservatives have stressed the president’s stance on the importance of reducing the deficit and balancing the budget by 2018. During Obama’s state visit to the UK in May 2011, Tory spin doctors even briefed the press that the leader of the free world would offer an implicit endorsement of the coalition’s deficit reduction plan.

They were left disappointed. Answering a question on the UK’s deficit reduction efforts at a joint press conference with Cameron, the U.S. president stressed that "every country is different" and highlighted the way that "concerted action" by the UK and the U.S. had "yanked the world economy out of recession" -- a pretty clear nod to the previous Labour government's fiscal stimulus.

However, the Obama administration has a record of mixed messages on the UK’s austerity measures. On a visit to London in February 2011, for example, U.S. Treasury Secretary Timothy Geithner said that he was "very impressed” with George Osborne’s fiscal plan, and said his British counterpart had been handed "problems not created by this government." His Tory hosts were delighted.

So will Obama’s reelection help or hinder Osborne and Co., between now and the next election in 2015? The chancellor’s biographer, Janan Ganesh, has argued that the election of GOP presidential candidate Mitt Romney and his running mate Paul Ryan would have shifted “the international debate rightward, leaving the UK looking less like an austere outlier.”

“The U.S. is taking a more Keynesian approach to things,” admitted Tory MP Brooks Newmark, who sits on the Commons Treasury Select Committee. “So it’s not surprising that Balls admires it … [but] the shape of the U.S. economy is structurally very different to the UK economy.”

Newmark, one of the few Conservative politicians to have publicly backed Romney, views America’s national debt as “unsustainable” and -- contradicting those Tories who argue that the coalition is on the same page, fiscally, as the Obama administration -- thinks the president isn’t “cutting hard enough or deep enough.” This despite recent reports suggesting the U.S. is on pace to experience more austerity than most of Europe in 2013.

Senior Labour figures, who had been petrified by the prospect of a victory for the Romney-Ryan austerity ticket, breathed a sigh of relief on the morning of Nov. 7 -- and then promptly set about spinning the president’s reelection as an endorsement for their own fiscal strategy.

"Obama's win proved that voters will back a balanced and pro-jobs and growth economic policy,” a source close to the shadow chancellor told HuffPost UK. “A victory for Romney would have been a victory for the austerity-and-tax-cuts-for-the-rich approach that David Cameron and George Osborne have been cheerleaders for.”

But senior Tories haven’t given up on Obama -- yet. In a column for the Times of London, published the week after Obama’s victory, Osborne praised the president’s “hard fought campaign." He noted how “the incumbent government was re-elected despite a historically weak economic recovery” and claimed Obama had “made up lost ground once he stopped talking about stimulus and instead said ‘our debt has grown so large that we could do real damage to the economy if we don't begin a process now to get our fiscal house in order.’” He added: “Here in Britain, the [Labour] Opposition are a million miles from understanding this crucial truth.”

Not all of Osborne’s Conservative colleagues agree with his approach. “I don’t think the British public sees the U.S. economy as a success story,” a senior Tory minister told HuffPost UK. Thus, Obama’s fiscal decisions, adds the minister, “don’t matter a jot to our message on the economy."

Yet if the U.S. economy continues to motor ahead of the UK’s, expect to hear more from Balls about how the coalition’s cuts have failed and how Obama’s much slower, more moderate approach to deficit reduction should be the model for Britain.

"If we're completely honest, there's not a huge amount of distance between the U.S. and UK economies,” said Will Straw, associate director at the left-leaning Institute for Public Policy Research. “Despite what we’re led to believe, all major parties [Labour, Conservative, Democrat, Republican] favour some form of austerity to reduce deficits. The debate is about the pace and the balance between spending cuts and tax rises.” On this, Straw said, “there’s little doubt that Obama is closer to Labour.”

The Labour leadership wants Obama to firmly resist the push from congressional Republicans to cut spending ahead of the looming debt ceiling deadline, and to continue to advocate a Labour-style 2:1 ratio of (delayed) spending cuts to tax increases. Cameron and Osborne, on the other hand, are keen for Obama to focus his rhetoric, if not his policies, on deficit reduction, balancing the books and cutting the debt.

Both sides will continue to scour the president's statements, and his budget proposals, over the next four years for ammunition to use against their opponents here at home.

Yet, as Blanchflower notes, “the [U.S.] evidence suggests that if you delay austerity … then outcomes are better.”

This article is part of a series produced by The Huffington Post that closely examines the most pressing challenges facing President Obama in his second term. To read other posts in the series, click here.


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