From Volume 37, Issue 43 of EIR Online, Published Nov. 5, 2010

U.S. Economic/Financial News

Calls for Importing British Budget Axe to U.S.

Oct. 24 (EIRNS)—In the week following the British government's announcement of massive budget cuts in public employment, pensions, health care, and other services, the predictable cry for the U.S. government to follow suit has arisen in both "right-wing" and "mainstream" press outlets. As in the case of the Thatcher government's "model," the London-based financial establishment is keen to use a dramatic turn in British policy, to try to impose it on the United States.

An example is David Broder's column in the Oct. 24 Washington Post, entitled "Omens of Austerity." Broder hails the "boldness" of the Cameron government for taking this action, which includes a substantial increase in the value added tax as well. He concludes:

"If Republicans emerge next month with sufficient leverage in the House and Senate to approach Obama with a proposition, they could insist that he 'do a Cameron' when it comes to federal spending: a radical rollback now in the welfare state in return for a two-year truce on such policy questions as repeal of the health-care law.

"The vehicle could well be Obama's strong endorsement of the Dec. 1 report from his fiscal responsibility commission, which is expected to emphasize spending discipline over raising revenue. This would offer major gains to both parties, and set the stage for another experiment in the British model."

The lead editorial in the Washington Post, oh-so-cleverly entitled "The English Patient," likewise argues that U.S. policymakers should learn from the UK model, declaring that the British plan "offers a useful and, in many ways, impressive example of what a serious approach to deficit-cutting entails—and will eventually require from U.S. policymakers."

The British model is what is killing the U.S.—including through actions of that British puppet Obama himself.

Just Because You Have a Budget, Don't Think You've Solved Anything

Oct. 27 (EIRNS)—Cities and towns all across the country are going through horrible gyrations to try to get a balanced budget in place, often making deep cuts across the whole range of city services. After completing the process, some budget officials breathe a sigh of relief and think their worries are over until they begin the difficult process over again for the next fiscal year. Think again, buddy! At least two cities in our survey have discovered that's not the case at all. The city manager of Santa Clara, Calif. reported, in an interoffice memo acquired by the Santa Clara Weekly, that, less than half-way through its budget year, the city and its emergency reserves "are nearing depletion," and proposed three alternatives to deal with the budget situation: a 5.15% across-the-board salary reduction for all employees effective Jan. 2011; unpaid furloughs; or layoffs. The city is to begin negotiating with its unions in November to try to gain some concessions; otherwise, there will be layoffs.

In Sugar Land, Texas, where the budget took effect on Oct. 1, the budget writers there have discovered that the revenues they projected are already obsolete because of greater than expected declines in sales tax receipts. So, the city council approved a budget amendment on Oct. 19 to eliminate 11 full-time positions, on top of the 20 positions already eliminated, to save $676,450.

Newark Takes Another Step Towards Oblivion

Oct. 29 (EIRNS)—On Oct. 28, the Newark, N.J. City Council approved a budget that raises taxes 16% and lays off 866 city employees, effective Nov. 12—about one-quarter of the city's workforce—in an effort to close an $83 million budget deficit. The layoffs include 167 police officers, 96 firefighters, and 251 sanitation workers, among others. The police layoffs wipe out the last three classes of police recruits, virtually all of the new police officers who have been hired since Mayor Cory Booker took office in 2006. The budget also demotes 112 police officers to lower ranks.

On Oct. 27, three public safety unions sued the city to try to stop the police and firefighter layoffs. According to the Newark Star-Ledger, the suit argues that the Mayor did not have the authority to proceed with the layoffs; but that argument appears to have been undercut by the City Council's 6-3 vote in favor of the plan. The suit also claims the layoffs will put police officers in danger, and will have a "real and imminent impact" on residents' safety. Given what has happened in other cities that have substantially cut back on police and fire services, that seems likely.

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