It’s the economy, stupid!
Posted by Matt Walker on April 9, 2010
What is it that determines the outcome of elections? This is a difficult question to answer but undeniably a key determinant is public perception of a party’s economic competence. During the 1992 US presidential election campaign, Bill Clinton’s slogan summed this up perfectly: “It’s the economy stupid!” This was less the case in 2001 and 2005 when the UK economy was doing well. In 2010, it is as true as it ever was.
The first four days of the 2010 campaign have been taken up with taxation, public spending and the economy. Whether both parties planned to focus so much attention on Labour’s proposed national insurance increases, or whether circumstances have prevailed, it is hard to tell. But election campaigns are a bit like that. A particular issue catches fire, one party runs with it, and the rest have to follow, either rebutting their opponents’ claims, or going on the offensive.
Why has Labour’s proposed national insurance increase become such a key election issue? On the one hand, it comes down to trust. Who will the electorate believe? On the other hand, the parties want to use this issue to tell the public something important about themselves. For Labour, they can claim that Tory talk of cutting the budget deficit lacks credibility because they also want to cut taxes, or alternatively they will have to immediately cut public spending and will damage frontline services. For the Conservatives, they can argue that the government is wasting money, which should be used for cutting taxes, whilst simultaneously arguing that raising national insurance will damage the recovery. In fact, Labour and the Conservatives accuse each other of threatening the recovery.
The Lib Dems are playing their usual card of suggesting that both the main parties have got it wrong, though at the moment they are turning most of their firepower on the Tories, suggesting that the national insurance cut will be paid for by an increase in VAT, something David Cameron denies.
The effect of all of this is difficult to judge. However, none of the parties can afford to lose the argument on an issue which is probably the most important at this election. What do you think?