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Ed Balls and Larry Summers to collaborate over plans for growth Ed Balls and Larry Summers to collaborate over plans for growth
(2 months later)
Ed Balls is to join forces with the former US treasury secretary, Larry Summers, to draw up transatlantic plans to target economic growth at lower and middle income families amid warnings in Labour ranks that the recovery is only benefiting higher income groups.Ed Balls is to join forces with the former US treasury secretary, Larry Summers, to draw up transatlantic plans to target economic growth at lower and middle income families amid warnings in Labour ranks that the recovery is only benefiting higher income groups.
As David Cameron suggested the Tories could cut taxes after a prolonged recovery, the shadow chancellor warned that "life is still getting harder" for ordinary families despite what he called the "welcome and hugely overdue" economic recovery.As David Cameron suggested the Tories could cut taxes after a prolonged recovery, the shadow chancellor warned that "life is still getting harder" for ordinary families despite what he called the "welcome and hugely overdue" economic recovery.
In a Guardian article the shadow chancellor announces he is to co-chair a commission with Summers, Bill Clinton's treasury secretary, to examine how to ensure the economic recovery benefits all income groups.In a Guardian article the shadow chancellor announces he is to co-chair a commission with Summers, Bill Clinton's treasury secretary, to examine how to ensure the economic recovery benefits all income groups.
Balls, who studied under Summers at Harvard more than 20 years ago, is to travel to Washington this week for meetings with Ben Bernanke, the chairman of the Federal Reserve, and Gene Sperling, the director of Barack Obama's national economic council who also served in the Clinton administration.Balls, who studied under Summers at Harvard more than 20 years ago, is to travel to Washington this week for meetings with Ben Bernanke, the chairman of the Federal Reserve, and Gene Sperling, the director of Barack Obama's national economic council who also served in the Clinton administration.
Balls retains a high profile among Democrat economists after his landmark Bloomberg speech in August 2010, during the Labour leadership contest, in which he warned that George Osborne's deficit reduction plan was "the equivalent of ripping out the foundations of the house just as the hurricane is about to hit".Balls retains a high profile among Democrat economists after his landmark Bloomberg speech in August 2010, during the Labour leadership contest, in which he warned that George Osborne's deficit reduction plan was "the equivalent of ripping out the foundations of the house just as the hurricane is about to hit".
In his Guardian article Balls says he is keen to learn lessons from the US, which has grown four times more quickly than the UK since the autumn of 2010 as a result of Obama's fiscal growth plan and monetary activism.In his Guardian article Balls says he is keen to learn lessons from the US, which has grown four times more quickly than the UK since the autumn of 2010 as a result of Obama's fiscal growth plan and monetary activism.
Balls writes: "Campervanning through New England three years ago, I was struck by the fear gripping America. Business leaders and commentators saw that another 'global economic hurricane' was brewing. They called loudly for government action to boost growth.Balls writes: "Campervanning through New England three years ago, I was struck by the fear gripping America. Business leaders and commentators saw that another 'global economic hurricane' was brewing. They called loudly for government action to boost growth.
"Most striking then was the contrast between US anxieties and the complacency of Britain's Conservative-led government. Events since have proved their hubris was woefully misplaced, causing lasting damage to the country. Very different policies have resulted in different outcomes for the UK and US economies.""Most striking then was the contrast between US anxieties and the complacency of Britain's Conservative-led government. Events since have proved their hubris was woefully misplaced, causing lasting damage to the country. Very different policies have resulted in different outcomes for the UK and US economies."
The shadow chancellor says the British economy, by contrast, flatlined and the deficit reduction has stalled after "George Osborne's accelerated tax rises and spending cuts".The shadow chancellor says the British economy, by contrast, flatlined and the deficit reduction has stalled after "George Osborne's accelerated tax rises and spending cuts".
He says Britain will see economic recovery this week, adding: "Any growth is both welcome and hugely overdue. To catch up the ground we have lost since 2010, we would actually need to see growth of 1.3% a quarter for the next two years.He says Britain will see economic recovery this week, adding: "Any growth is both welcome and hugely overdue. To catch up the ground we have lost since 2010, we would actually need to see growth of 1.3% a quarter for the next two years.
"Ministers will claim this modest return to growth is proof that Osborne's plan has worked. This is a little like Australia's cricket team scraping a draw in the next Test and proclaiming their tour a success.""Ministers will claim this modest return to growth is proof that Osborne's plan has worked. This is a little like Australia's cricket team scraping a draw in the next Test and proclaiming their tour a success."
The Inclusive Prosperity Commission, which Balls and Summers will launch this week, will draw up what is being described as "robust" policy proposals to ensure that future economic recovery benefits all income groups.The Inclusive Prosperity Commission, which Balls and Summers will launch this week, will draw up what is being described as "robust" policy proposals to ensure that future economic recovery benefits all income groups.
In a significant move, the former Labour science minister Lord Sainsbury has agreed to serve on the commission. Sainsbury, now chancellor of Cambridge University, had distanced himself from Ed Miliband.In a significant move, the former Labour science minister Lord Sainsbury has agreed to serve on the commission. Sainsbury, now chancellor of Cambridge University, had distanced himself from Ed Miliband.
Balls writes: "This week former US Treasury secretary Larry Summers and I will launch a transatlantic commission on inclusive prosperity to investigate what reforms our countries need to generate more high-wage jobs for the future. Instead of complacent claims that everything is going to plan, Osborne should this week recognise that for ordinary families life is still getting harder. And with risks and uncertainties in the global economy ahead, he should finally act to secure the recovery he squandered three years ago and ensure it benefits the whole country."Balls writes: "This week former US Treasury secretary Larry Summers and I will launch a transatlantic commission on inclusive prosperity to investigate what reforms our countries need to generate more high-wage jobs for the future. Instead of complacent claims that everything is going to plan, Osborne should this week recognise that for ordinary families life is still getting harder. And with risks and uncertainties in the global economy ahead, he should finally act to secure the recovery he squandered three years ago and ensure it benefits the whole country."
The commission is to be launched as the prime minister hinted that he might use the recovery to cut taxes.The commission is to be launched as the prime minister hinted that he might use the recovery to cut taxes.
Cameron told the Andrew Marr Show on BBC1: "I'm a Conservative. I'm a low tax Conservative. I think as we start to see the economy healing – and it is healing; as we start to see the economy grow stronger – and it is growing stronger; as we start to see the country improve, actually I want to give people back some of their hard-earned money and try to reduce their taxes.Cameron told the Andrew Marr Show on BBC1: "I'm a Conservative. I'm a low tax Conservative. I think as we start to see the economy healing – and it is healing; as we start to see the economy grow stronger – and it is growing stronger; as we start to see the country improve, actually I want to give people back some of their hard-earned money and try to reduce their taxes.
"That is what drives me as a Conservative. I think your economy does better if you say to people: you've worked hard, you've done the right thing, here is some of your own money back in a tax reduction.""That is what drives me as a Conservative. I think your economy does better if you say to people: you've worked hard, you've done the right thing, here is some of your own money back in a tax reduction."
Labour said the prime minister was at odds with Osborne after the chancellor said last month it would be "very silly" to rule out tax rises. The chancellor later told the Commons Treasury select committee that the government could eliminate the structural budget deficit after the next election without raising taxes.Labour said the prime minister was at odds with Osborne after the chancellor said last month it would be "very silly" to rule out tax rises. The chancellor later told the Commons Treasury select committee that the government could eliminate the structural budget deficit after the next election without raising taxes.
Catherine McKinnell MP, the shadow treasury minister, said: "David Cameron and George Osborne are at total odds with each other on tax policy, but after broken promises not to raise VAT or cut child benefit nobody will believe what either of them say. The Tories have given millionaires a huge tax cut, but their decisions have made people on middle and low incomes worse off. Labour would help families right now by introducing a 10p starting rate of tax, paid for by a mansion tax on the wealthiest. And instead of cutting taxes for millionaires this year the government should have protected tax credits for working families instead.Catherine McKinnell MP, the shadow treasury minister, said: "David Cameron and George Osborne are at total odds with each other on tax policy, but after broken promises not to raise VAT or cut child benefit nobody will believe what either of them say. The Tories have given millionaires a huge tax cut, but their decisions have made people on middle and low incomes worse off. Labour would help families right now by introducing a 10p starting rate of tax, paid for by a mansion tax on the wealthiest. And instead of cutting taxes for millionaires this year the government should have protected tax credits for working families instead.
"The reason why there's still going to be a big deficit after the next election is this government's economic failure. That's why the government should be acting now to secure the recovery and help families struggling with the cost of living crisis.""The reason why there's still going to be a big deficit after the next election is this government's economic failure. That's why the government should be acting now to secure the recovery and help families struggling with the cost of living crisis."
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