I think it’s good to have a  ‘cards on the table’ approach. On January 2nd, 2011, I wrote the following in LabourList:

Is government debt like a credit card debt?

David Cameron and Nick Clegg have consistently likened government debt to credit card debt (like paying for your weekly groceries). This is a plausible common-sense approach based on the electorate’s instinct for belt-tightening, and the hardships they will be experiencing in difficult times. The analogy is clearly weak, but analysis of that is way beyond the scope of this article. Given that the public appear to like this comparison, it might be useful to explain also what might go wrong in such terms. The biggest threat for the UK in 2011 is that unemployment goes up and therefore benefit payments go up, while tax receipts go down. This would be like credit card bills beginning to “flood in”, while you are unable to deposit any money into your bank account.

Interestingly, this is what was written about midday today in an article entitled “UK’s budget deficit doubled in February”:

The UK’s budget deficit almost doubled in February due to a drop in tax receipts and increased spending. According to the Office for National Statistics (ONS), public sector net borrowing, excluding public sector interventions, hit a record for the month of February. It jumped to 15.183 billion pounds last month from 8.875 billion pounds in February 2011. The pound fell immediately after this announcement early in the morning. The ONS said that the increased borrowing was driven by a 2.7 percent drop in tax receipts on the year, while government spending climbed 8 percent. Income tax alone dropped 12.4 percent on the year in February, while benefit payments rose by 11.2 percent. This announcement leaves Chancellor of the Exchequer George Osborne little room to meet his full-year goal as he prepares to announce the UK’s annual budget later today.

Indeed, what I even alluded to at the beginning of January 2011 emerged as a theme in an influential blog today in the Telegraph:

Then there was the vague promise to find another £10bn annually in welfare cuts by the end of the parliament. I couldn’t get my head around that one. Is this in the deficit reduction programme or not? The Chancellor will probably get away with it as far as the markets and the credit rating agencies are concerned, but the big picture is that Plan A no longer really exists. Much lower growth than expected and the political compromises of Coalition have blown it off course.

Well, I hate to tell you, as a Keynesian, but … I told you so! My other prediction is in the absence of a full Eurozone crisis I don’t expect this budget deficit to be paid off by 2015, and Labour is going to have ‘put its cards on the table’ as to whether it will maintain the cuts agenda, and how.