By Iain Anderson, Director of Cicero Consulting – from New York.
Spending the last week in Washington DC and New York, I have been constantly ‘catching up’ with London on my emails.
But it’s not just the time difference where being in the US means catch up.
In my various conversations with policymakers and policy watchers here in the US in recent days, there is no doubt that a big component in the November mid terms will be whether or not the deficit ‘hawks’ win out against those who want to continue a State stimulus.
Today’s New York Times editorial calls for continued State spending. It says: “Republicans and several Democrats have made the argument that cutting the deficit is more important than spurring the economy. The argument is wrong..”
The decision of the NY Times to come out in favour of continued stimulus comes in a week when we discovered the US shed another 125,000 jobs this month – and there is no doubt New York as a City is hurting. I can see from the cab drivers, restaurants and shops that the US consumer is watching the pennies.
I have spent the week explaining to US policymakers, among other things, about the outcome of the UK election and I had expected to see from Democratic strategists a more powerful defence of continued spending in response. But surprisingly it is just not there.
Much of the debate on fiscal contraction vs continued stimulus post the recent G20 meeting has been characterised by European commentators as the US pitched against the UK and Germany. But in Washington and New York the debate continues to rage.
I now have a sense that Obama will tack to the right following the mid terms – just as Clinton did in 1994. I see all the signs of this in the Democratic rhetoric.
And if that does happen – David Cameron and George Osborne may suddenly have a powerful ally in the White House on deficit reduction plans. The answers lies with the American people.
Happy 4th July!
