Prime Minister David Cameron’s visit last week to the United States underscored the important relationship between the U.S. and Britain, both politically and economically.
Britain’s new coalition government faces tremendous challenges, many of which are similar to the United States’ problems. Britain’s public debt was 68 percent of GDP at the end of 2009; the comparable figure for the U.S. was 53 percent.
Cameron’s coalition aims to slash government spending over the next five years. The eventual goal is to cut Britain’s annual budget deficits in half over five years, which will mean some ministries will face funding reductions of up to 40 percent. Even the popular National Health Service (NHS) will be ordered to make personnel cuts, although overall it will face much lighter cuts than other ministries. About 75 percent of deficit reduction will be achieved with budget cuts while the other quarter presumably will come from raising revenues.
The proposed cuts in Britain stand in stark contrast to the three-year freeze on domestic discretionary spending President Obama has proposed. Although broad generalizations cannot—and, indeed, should not—be drawn from these figures, it is clear that both the U.S...