In a rare moment of fiscal sanity south of the border, Senate Republicans have slashed $1bn from President Trump’s lavish ballroom renovation project. The move, which echoes the kind of restraint we Brits take for granted, sends a clear signal that even in the land of deregulation and debt, there are limits.
For decades, I have watched from the City as American politicians played fast and loose with taxpayer money. They talk of ‘infrastructure’ and ‘defence’, but too often the only cement poured is at Mar-a-Lago. This latest cut is not just about a gilded dance floor. It is about the market’s patience with profligacy.
The yield on the 10-year gilt has been twitching nervously of late. Investors want discipline. They want to see that governments can say no. This Senate vote does precisely that. It says: ‘Your tax pounds will not be spent on chandeliers and champagne.’
Now, I am no fan of big government, but I am an even greater critic of inefficient spending. If you are going to borrow, borrow for something productive. A ballroom returns approximately zero to the public purse. It is vanity. It is the kind of capital flight that rattles confidence.
Some will argue that this is a symbolic gesture, a drop in the ocean of US fiscal stimulus. To them I say: look at history. Symbols matter. When a government curtails a high-profile boondoggle, it signals a change in culture. It signals that central bank policy may finally have an ally in the legislature.
The UK has long been the voice of fiscal discipline in Europe. Our chancellors, from Lawson to Osborne, have understood that credibility is earned through pain. This vote is America’s first tentative step in that direction. I only hope it is not reversed by a late-night amendment or a procedural trick.
Inflation remains the silent tax on savings. Every pound printed for a ballroom is a pound that devalues your pension. So yes, I cheer this cut. Not because I love the Senate, but because I love sound money.
Expect gilt yields to steady in the coming days. Expect the pound to find some support. And expect more battles ahead. The war against fiscal incontinence is never won, but this is a victory worth noting.
