Liz Truss and Joe Biden Clash Over Economic Policy Ahead of US Meeting

By Staff, Agencies

Liz Truss clashed with Joe Biden over economic policy ahead of a meeting as the sidelines of the United Nations summit, as the US president lashed out at “trickle-down economics”.

Biden said on Tuesday that he was “sick and tired” of the theory that cutting taxes for businesses and the wealthy will see the benefits “trickle down” into the pockets of poorer workers.

It came as the prime minister appeared to suggest her government was willing to lift the cap on bankers’ bonuses, despite outrage among MPs, unions and economists at the proposal.

Truss also admitted her own tax-cutting plans will initially benefit the rich more than the rest of the country – insisting that economic growth “benefits everybody”.

She confirmed she will be reversing the national insurance hike and axing a planned rise in corporation tax. “We have to look at all tax rates … Corporation tax needs to be competitive with other countries so that we can attract that investment,” she said in New York.

Asked about the fairness of her tax plans, the PM told Sky News: “What we know is people on higher incomes generally pay more tax so when you reduce taxes there is often a disproportionate benefit because those people are paying more taxes in the first place.”

She added: “What is going to deliver that economy that benefits everybody in our country. What I don’t accept is the idea that tax cuts for business don’t help people in general.”

Asked by the BBC about allowing bankers bigger bonuses, and whether people were entitled to wonder “whose side” she was on, Truss said: “What I want to see is a growing economy, so everybody in our country has the high paid jobs that they deserve, the investment into their town or city or area.”

Truss said she is willing to make “unpopular” moves as PM to bring in measures she believes will grow the economy.

Truss and chancellor Kwasi Kwarteng are finalizing the details of a mini-budget on Friday, which seen could the end of a curb on bankers’ bonuses brought in across the EU in the wake of the 2008 financial crash.

The PM and Biden meet in New York on Wednesday, where they are both attending events as part of the UN general assembly.

In a message on Twitter ahead of the meeting, Biden said: “I am sick and tired of trickle-down economics. It has never worked. We’re building an economy from the bottom up and middle out.”

While the message was presumably intended for a domestic US audience, it underlines the economic and political divide between the White House and the free-market Tory in No 10.

Meanwhile, MPs on the Treasury select committee have demanded an Office for Budget Responsibility [OBR] forecast alongside Kwarteng’s mini-budget on Friday to “provide reassurance and confidence to international markets and investors”.

But No 10 indicated that there will be no OBR forecast for the fiscal statement. A spokesperson said: “Whilst we could have asked the OBR to do one for this event, given the need to move swiftly this would have involved compromises in the quality and the completeness of a forecast.”