Everything’s A Cut

In UK politics, at least, the language of “cuts” is common (most often preceded by the word “Tory”). There are to be cuts to this budget, and cuts to that service, and cuts to the other program. Cuts are almost universally seen as bad. But almost any change in any funding arrangement can be portrayed as a cut of some sort.

Let’s say the budget for activity X is £100,000 in 2015. In 2016, it’s £90,000. Is that a cut? Clearly. But what if it’s £100,000? Well, that’s a “real-terms cut” because of course inflation means that money this year is worth a bit less than money last year. OK, so let’s make it £102,000, to account for inflation. But the Retail Prices Index has gone up by more than that, so it’s still a “cut”. £105,000? Well, in fact, the costs of doing X have gone up significantly this year because of reasons, so that’s also an “effective cut”. More people using a service? An increase can be portrayed as a cut. More expensive and better treatment option becomes available? Even an increase can be portrayed as a “cut to that service”.

If you move resources from activity X to activity Y, then your opponents can focus on “cuts to activity X”. If you want to start doing a new activity Z, and don’t want to increase your budget, them something somewhere has to be “cut”. There’s always a cut somewhere you can find to complain about if you look hard enough.

If the previous administration was massively mis-spending their money and you have a big rearrangement of priorities, lots of things are going to be “cut”. If a particular client group such as the elderly has been doing extremely well for the past N years (triple lock, anyone?), and you change things to be more equitable, that’s a “cut”. And if that group is particularly photogenic or sympathy-worthy, no matter how much they were getting before, they can get the public on their side by objecting to the cruel “cuts”. Once a set of people has got access to a pot of government money, entitlement sets in extraordinarily quickly.

The difficulty for politicians, of course, is that it’s very difficult to say something like “well, pensioners have been coining it for the past 10 years, and it’s time we had a bit more equity”, because the press can always find a frail-looking pensioner who will be outraged on camera that they now apparently have to choose between food and heating.

The only way to avoid anything which seems like a cut is always to increase budgets for everything. And that normally means tax increases to pay for it (or, via borrowing, putting the bill on our children who can’t object, which is a sadly all-too-common move for politicians to avoid having to pay for what they are doing). But there are limits to how much you can increase tax, because taxation changes behaviour. It’s generally accepted when talking about carbon emissions, or cigarette smoking, or sugar consumption, that taxing something means you get less of it. But people shy away from applying this logic when it’s applied to incomes, or sales, or company profits (which are, absent a monopoly or criminal activity, the reward for hard work and entrepreneurship). Taxing those things means you get less of them too – less economic activity, smaller economy, poorer people.

So when someone tries to engender outrage by simply saying “something is being cut!”, remind them that pretty much everything’s a cut, and point them at this article. Just because something qualifies as a cut, and the group or activity receiving less money is deemed worthy of support, doesn’t make the change necessarily wrong.