Cutting Taxes and Spending? Huh.
A wonder from Down Under:
A new left-wing government in Australia has begun with a decidedly unliberal approach to economic policy—proposing a budget based on deep cuts in spending and taxes.
More, care of the Washington Times:
The Australian plan, announced Jan. 21 by Labor Prime Minister Kevin Rudd, was based on the assumption that a 3.8 percent inflation rate—rather than slow growth—was the greatest threat to the nation's economy. It calls for spending cuts sufficient to produce a surplus equaling 1.5 percent of gross domestic product—even as the government goes ahead with promised tax cuts totaling $27 billion over four years.
The fiscal belt-tightening goes far beyond anything envisaged by the previous right-wing government of defeated Prime Minister John Howard—a staunch U.S. ally for more than a decade—or for that matter by U.S. governments since the 1990s.
"We are embarking on a hard-line approach to fiscal discipline," Mr. Rudd said in announcing the plan last week. "It won't be easy."
In addition to $8.8 billion in savings the party identified during the campaign, the prime minister said the new government will turn to its "razor gang" to find more spending cuts.
He said his Labor Party government will also look for ways to encourage private savings and tackle a chronic shortage of skilled labor.