PORTLAND, Oregon — US President Joe Biden on Saturday called embattled British Prime Minister Liz Truss’ abandoned tax cut plan a mistake, and said he is worried that other countries’ fiscal policies may hurt the United States amid worldwide inflation.
Biden said it was predictable that the new prime minister on Friday was forced to walk back plans to aggressively cut taxes without identifying cost savings, after Truss’ proposal caused turmoil in global financial markets. It marked an unusual criticism by a US president of the domestic policy decisions of one of its closest allies.
“I wasn’t the only one that thought it was a mistake,” Biden said. “I disagree with the policy, but that’s up to Great Britain.”
Biden’s comments came after weeks of White House officials declining to criticize Truss’ plans, though they emphasized they were monitoring the economic fallout closely. Biden was speaking to reporters at an Oregon ice cream shop where he made an unannounced stop to promote the candidacy of Democratic gubernatorial candidate Tina Kotek, as Democrats across the country face a tough political environment amid GOP criticism of their handling of the economy.
Biden said he was not concerned about the strength of the dollar — it set a new record against the British pound in recent weeks — which benefits US imports, but makes the country’s exports more expensive to the rest of the world.
Britain’s new Treasury chief on Saturday acknowledged the mistakes made by his predecessor and suggested that he may reverse much of Truss’ tax cutting plans in order to bring stability to the country after weeks of economic and political turbulence.
Jeremy Hunt, who was brought in on Friday to replace Kwasi Kwarteng as Treasury chief and restore order in Truss’ administration, warned of “difficult decisions” to come. Taxes could rise and public spending budgets would likely be squeezed further in the coming months, he said.
Truss fired Kwarteng on Friday and ditched her pledge to scrap a planned increase in corporation tax as she sought to hang on to her job after just six weeks in office.
Truss, a free market libertarian, had previously insisted that her tax cutting plans were what Britain needs to boost economic growth. But a mini Budget that she and Kwarteng unveiled three weeks ago, which promised 45 billion pounds ($50 billion) in tax cuts without explaining how the government would pay for them, sent the markets and the British pound tumbling and left her credibility in tatters.
The policies, which included cutting income tax for those on the highest incomes, were widely criticized for being tone-deaf in the face of Britain’s cost of living crisis. Truss recognizes her mistakes and he is going to put them right, he said.
“It was wrong to cut the top rate of tax for the very highest earners at a time where we’re going to have to be asking for sacrifices from everyone to get through a very difficult period,” Hunt said.
“And it was wrong to fly blind and to announce those plans without reassuring people with the discipline of the Office for Budget Responsibility that we actually can afford to pay for them,” he added. “We have to show the world we have a plan that adds up financially.”