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Commentary: Austerity ahead?

This article first appeared in the St. Louis Beacon, Nov. 16, 2010 - In October, the new coalition government in Britain announced its budget cuts. The result was an austerity budget the likes of which the country has never seen.

After the Nov. 2 election, which brought conservative Republicans back into legislative power, could a similar fate be in store for America? The GOP's Pledge to America, while being very clear on the need to cut taxes is, however, more vague on the question of where to cut spending.

The Republicans' reluctance to say what they would cut was simply good politics. It is smart before an election to avoid talking about cutting programs. By openly discussing cuts, you always run the risk of angering supporters. In the midterm elections, for example, the Republican Party attracted a large number of seniors. It is unlikely that it would have received much senior support if GOP leaders said they would cut Social Security and Medicare. But now that they are back in power in the House, Republicans can no longer avoid mentioning specific cuts.

During the campaign, Republicans targeted earmarks and government waste as two areas where they hoped to reduce the deficit. Taken together, earmarks and inefficiencies, however, make up a smaller proportion of the budget than defense spending.

Add to this the issue of entitlements, Social Security and Medicare, and even if you were able to eliminate all earmarks and find every last bit of government waste, it would still barely make a dent in the deficit. To really make a difference, Congress would have to enact the measures recently outlined by the bipartisan commission on debt reduction. These measures, which have yet to be approved by the whole commission, would require a painful mix of tax increases and spending cuts, including significant cuts in defense spending and entitlements.

Neither the Republicans or the Democrats in Congress show the slightest inclination to seriously consider such a drastic course of action.

Thus, in spite of the Republican wave that swept over Capitol Hill, do not expect to see from the White House and Congress the same type of massive spending cuts that in Britain have sparked civil unrest on a scale not seen in years.

It is also unlikely for two other reasons. First, America's economic and political situation is different. In Britain, 13 years of Labor Party rule and the financial meltdown brought about a deficit that is a bigger proportion of the GDP than in the United States. Second, in the UK's more centralized political system, the prime minister can act with fewer constraints than can President Obama. The prime minister is in fact the leader of Parliament, or at least, the majority party. Any initiative that the majority party supports can be pushed through Parliament with relative ease. His American counterpart can only dream of this, even when the president's party controls Congress as Obama learned.

In contrast, we can look forward to at least two years of divided rule, with the Democrats in control of the White House and barely in control of the Senate, and the Republicans with a big majority in the House. The president's agenda will be blocked by the GOP-controlled House while at the same time, any attempt to enact Republican measures will be stymied by Democrats in the Senate and the presidential veto power. Furthermore, given the current political realities, it is unlikely that the two biggest items on the budget -- defense and Social Security -- will be cut.

It is much more likely that the election will produce austerity budgets at the state level. Just as in the House, the Republicans made strong gains in the states, capturing a majority of governorships for the first time since before the 2006 elections. A majority of state legislatures are also now in Republican hands.

This means that with conservative Republicans in control of more state governments, state budgets are likely to be slashed further. This merely continues and exacerbates a trend that has been apparent since the 2009 fiscal year, however. In other words, given the revenue drop-off resulting from the economic downturn, there would be cuts at the state level no matter which party gained control.

The only difference is where and how deep.

With the Republicans in charge, there will be steeper cuts in social services and Medicaid. They are also more likely to try to cut taxes.

Thus, even if Obama were to offer another stimulus package and Congress to pass it, the severity of the states' spending cuts would, in all likelihood, more than offset it. From an economic perspective, this is bad news because, if the way out of this recession is to spur demand, the options at the national level appear to be limited.

Robert A. Cropf chairs the Department of Public Policy Studies at Saint Louis University. 

Cropf is a professor of political science Saint Louis University.