U.K. Austerity Plan: A Harbinger of America's Future?

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The British government announced Wednesday it would slash 81 billion pounds ($128 billion) in spending through 2015 in order to reduce the country's crippling deficit.
The harsh austerity measures serve as a reminder that America faces a similar tough decision in the near future.

Tightening the Belt

The United Kingdom's spending cuts are part of an effort to confront decades of debt and a financial future that many say is unsustainable at current spending levels.

"We are going to ensure, like every solvent household in the country, that what we buy we can afford.  That the bills we incur, we have the income to meet," British Treasury Minister George Osborne said.
Just who's to blame for Britain's financial problems is up for debate. Nevertheless, the reality is the nation has a spending deficit of 156 billion pounds or nearly $250 billion.
To fix it, Britain's parliament is slashing as many as 500,000 government jobs, drastically cutting welfare payments and putting the brakes on dozens of planned government programs.

"The benefit cuts ... on average will impact those in the bottom half of the income distribution more than the top half of the income distribution," said Carl Emmerson, the acting director of the Institute for Fiscal Studies, an economic think tank.
On top of that, Britain is imposing a permanent tax on banks which will raise approximately $4 billion a year.

Even the Royal Mint faces cutbacks.  It will use cheaper metals in British coins in an attempt to deliver savings.

A Necessary Evil?

"We are not doing this because we want to," British Prime Minister David Cameron said. "There is no ideological zeal in this. We are doing this because we have to." 

Britain's chancellor also defended the cuts. 

"I hope what people saw yesterday was a decisive 4-year plan, which will deal decisively with the problem," Osborne said. "I think that is the fair approach."

Still, many Britons are outraged and accuse their government of assassinating government jobs prematurely.

"People are very fearful about what is being announced today - fearful for their jobs and fearful for many of the services they rely on up and down the country," Labour Party head Ed Miliband said.

Meanwhile, in the U.S., Britain's deficit looks like a drop in the pond. This year's U.S. deficit is estimated to be $1.3 trillion. That means Uncle Sam is spending more than a trillion dollars it doesn't have.
It's one of the many issues waiting for the new Congress that will be elected on November 2.

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CBN News
Jennifer Wishon

Jennifer Wishon

CBN News White House Correspondent

Jennifer Wishon is the White House correspondent for CBN News based in the network’s Washington, D.C. Bureau.  Before taking over the White House beat, Jennifer covered Capitol Hill and other national news, from the economy to the 2010 oil spill in the Gulf of Mexico. Follow Jennifer on Twitter @JenniferWishon and "like" her at Facebook.com/JennWishon.