BBC has only one way to skin a cat

Ben Bernanke has been offering some support to proposed fiscal boost in the US during is Testimony to the US Representative. So far so Keynesian (and so now).

What is the most interesting about the story is how the BBC reported it. The headline is "Bernanke supports higher spending". The first paragraph was:

US Federal Reserve chief Ben Bernanke has said more government spending may be needed to combat economic weakness.

It was if Ben was channeling Gordon Brown, in his new found love for spend, spend (after all, it helped the Japanese no end).

The thing is that Bernanke made no such direct comment. He did offer qualified support for a fiscal package, saying:

... consideration of a fiscal package by the Congress at this juncture [of weak economic growth] seems appropriate.

But what the BBC seem to have forgot is that a fiscal package can be a tax cut as much as a spending increase (or as Bernanke says himself, "increased federal expenditure or lost revenue"). The first US fiscal stimulus was a tax cut after all. The BBC could not however entertain such as ridiculous idea.

I admit I'm being a pedant, but there are two serious points here:

1. Whatever the advisability of attempting to fiscally fine-tune the economy (the consensus has been don't for around 20 years now), why do most governments consider only spending increases, which typically become permanent structural spending?
2. Why is the level of economic knowledge so low in the BBC, they have bought the new Brown narrative that only spending increases are somehow a worthy response. I thought it was their job to give people information about the present downturn and policy solutions?
   

Technorati Tags: bbc, tax

Time to make allowances?

On 1 October last year, Alistair Darling, commenting of the Tories proposes to reduce inheritance tax by around £3bn, said:

"Yet again, this is an example of where the Tories are making promises on tax which they can't afford to pay for,

"[George Osborne] is making a promise he hasn't got the money to pay for.

"If you do that, you create the very instability which is the last thing the economy needs and people in this country would pay for that."

Just over six months later, Alistair Darling, commenting on his proposals to reduce the tax on basic tax payers by around £3bn through higher borrowing, said:

"...as I made clear at the time of the Budget it is right and sensible to allow borrowing to rise and investment to be maintained as the economy slows.

".... Our fiscal policy ... is designed to support stability in these uncertain economic times generated by the turbulence in world financial markets and global commodity price inflation."

That's clear then. Unfunded tax promises are only reckless and damaging to the country's economic stability when they're from the Tories; otherwise they support stability in uncertain times.

As an aside, Darling's tax policy has been to increase personal allowances while reducing the bottom of the top rate band. If this policy was extended to its logical conclusion, you would end up with a flat tax rate. Maybe Labour has been taking lessons from the Adam Smith Institute.