Book Reviews | Gordon Campbell | News Flashes | Scoop Features | Scoop Video | Strange & Bizarre | Search

 


Don Brash and the “Strategic Deficit”

Don Brash and the “Strategic Deficit”


By Alister Barry


*******

Acclaimed New Zealand documentary maker, Alister Barry, has been following Donald Brash's career for nearly two decades. Last year his documentary films 'Someone Else's Country' and 'In a land of Plenty' screened for the first time ever on national television.

*****************

“Strategic deficit” refers to a political technique used by President Ronald Reagan and his new right budget director, David Stockman to downsize the state. First, you give massive tax cuts which in succeeding years leads to huge budget deficits and borrowing.

The intent of the tax cuts isn’t to stimulate the economy as Reagan publicly claimed or even as payback for his political backers, as his critics accused.

The real intent of Reagan’s massive tax cuts was to create, in Stockman’s words, a "strategic deficit" that would give you an argument for cutting back the programs that weren't desired."

In Reagan’s case the huge deficit was used to cut back public housing, food stamps (vouchers used by the destitute in America to pay for food), and welfare benefits. The “strategic deficit” freed President Reagan from having to justify these cuts and their human cost. All he had to do was point to the deficit and explain that the programmes were simply unaffordable.

President George W. Bush has also made tax cuts the centre piece of his economic programme and for the same reason.

In New Zealand in the late 1980s we had our own version of the use of the “strategic deficit”.

In 1988 finance minister Roger Douglas gave massive tax cuts while at the same time selling off most of our state owned enterprises. The asset sales were, we were told, to pay back government borrowing. Years later Douglas mused that perhaps he should have been more honest and told the public that the real reason for the asset sales was his ideological conviction that privatisation is a good thing in itself.

In 1991 another deficit crisis was claimed by National Party finance minister, Ruth Richardson, as the reason for slashing government spending and huge cuts to social welfare benefits. Tens of thousands of beneficiaries were pushed below the official poverty line and into the queues at foodbanks. For Ruth Richardson all this constituted a rapid advance in the new right revolution in New Zealand. But after Ruth had gone there remained much unfinished business.

"Unfinished Business"

It is this unfinished business which Don Brash intends to address should be become Prime Minister after the election. And his principle technique for making relatively quick work of it will be his creation of a “strategic deficit”.

As we wait for the details of National’s tax cut package commentators and economists speculate over their affordability. Labour strategists take comfort in the figures which show that a politically significant cut of say $50 a week for middle income earners is fiscally impossible. Impossible for serious and responsible types like Michael Cullen perhaps, but not for revolutionaries like Roger Douglas, Ruth Richardson or Don Brash.

During his tenure as Governor of the Reserve Bank, Don Brash, shakes hands with National's Minister of Finance, Ruth Richardson. Still taken from Alister Barry's Documentary – 'In a Land Of Plenty'

I watched the studio debate on TVNZ on tax cuts, the one starring the terribly objective tax expert John Sherwin. I was struck by the vehemence of the supporters of tax cuts: the small and big businessmen, the business lobby group representatives, the occasional young ACT supporter. It struck me that they weren’t really interested in the arithmetic. They had a bigger idea in their eyes. Unconsciously perhaps, they understand and support the idea of a “strategic deficit”. They were thinking about the unfinished business, not the $50.

How big a tax cut is needed?

So what sort of cuts is Don Brash thinking of? In a word, massive. When Don Brash was National’s finance spokesperson in 2003 he explained to the party’s national conference that he believed government spending should be reduced as a percentage of GDP by about 5% over ten years. As Rod Oram explained in the Sunday Star Times (July 31st, p.D2), if Brash had been in charge and applying his formula over the last six years he would have spent $4 billion less this year than Michael Cullen.

Cutting spending by $4 billion could be achieved by halving the health budget, or halving the education budget, or cutting the entire law and order, defence and transport budgets. This is the order of magnitude of Don Brash’s intended assault on public services. This is what he dreams of doing once he is in charge.

Rod Oram asked Brash how he was going to a apply his thinking in his first term as Prime Minister. Brash replied that he “hadn’t really thought about that”. Like Roger Douglas and Ruth Richardson, he prefers to explain his intentions to voters after the election. His first priority is to persuade us to put him in power.

Don Brash can and will create his Orewa Three and he feels perfectly comfortable about the disruptive effects one, two and ten years out. It will be a $50 a week tax cut. This can and will be paid for, in the short term by borrowing and in the long term with asset sales, massive cuts to services and welfare payments. The details can be worked out later. First he creates the “strategic deficit.”

Roger Douglas had a ten point list of political pointers for new right revolutionaries. They included being bold, moving fast, keeping your critics guessing. Don Brash’s strange air of confidence is no act. He knows what has to be done and he will do it.

ENDS

© Scoop Media

 
 
 
 
 
Top Scoops Headlines

 

Werewolf: Living With Rio’s Olympic Ruins

Mariana Cavalcanti Critics of the Olympic project can point a discernible pattern in the delivery of Olympics-related urban interventions: the belated but rushed inaugurations of faulty and/or unfinished infrastructures... More>>

Live Blog On Now: Open Source//Open Society Conference

The second annual Open Source Open Society Conference is a 2 day event taking place on 22-23 August 2016 at Michael Fowler Centre in Wellington… Scoop is hosting a live blog summarising the key points of this exciting conference. More>>

ALSO:

Buildup:

Gordon Campbell: On The Politicising Of The War On Drugs In Sport

It hasn’t been much fun at all to see how “war on drugs in sport” has become a proxy version of the Cold War, fixated on Russia. This weekend’s banning of the Russian long jumper Darya Klishina took that fixation to fresh extremes. More>>

ALSO:

Binoy Kampmark: Kevin Rudd’s Failed UN Secretary General Bid

Few sights are sadder in international diplomacy than seeing an aging figure desperate for honours. In a desperate effort to net them, he scurries around, cultivating, prodding, wishing to be noted. Finally, such an honour is netted, in all likelihood just to shut that overly keen individual up. More>>

Open Source / Open Society: The Scoop Foundation - An Open Model For NZ Media

Access to accurate, relevant and timely information is a crucial aspect of an open and transparent society. However, in our digital society information is in a state of flux with every aspect of its creation, delivery and consumption undergoing profound redefinition... More>>

Keeping Out The Vote: Gordon Campbell On The US Elections

I’ll focus here on just two ways that dis-enfranchisement is currently occurring in the US: (a) by the rigging of the boundary lines for voter districts and (b) by demanding elaborate photo IDs before people are allowed to cast their vote. More>>

Ramzy Baroud: Being Black Palestinian - Solidarity As A Welcome Pathology

It should come as no surprise that the loudest international solidarity that accompanied the continued spate of the killing of Black Americans comes from Palestine; that books have already been written and published by Palestinians about the plight of their Black brethren. In fact, that solidarity is mutual. More>>

ALSO:


Get More From Scoop

 
 
 
 
 
 
 
Top Scoops
Search Scoop  
 
 
Powered by Vodafone
NZ independent news