The main parties and the media tell us that only massive cuts can save us. Eamonn Dwyer asks where the cuts agenda comes from.

"Our politicians think it's better to keep us in the dark," vents the BBC's Stephanie Flanders. "Experts have been talking about the need to cut borrowing drastically after the election... Which public services need to go? How much would defence - or road building, be squeezed? Which benefits would need to be cut or reined back? We don't know ... the three largest parties have still given us only a small hint of what they would do."

Political pundits are dragging the politicians over the coals, ridiculing them for being silent on the inevitable public sector purge. Andrew Neil has paraded party patsies onto his Daily Politics show to make them squirm about the spending squeeze. This is grand theatre for a media establishment that likes to see itself as hounding those in power for the truth.

With sceptics like these...

But the press pack is acting more like lapdogs than watchdogs of power. In questioning where massive cuts will come, but not whether they are necessary, the media is doing the groundwork for the next government to massively reduce the size of the state under the guise of fiscal necessity.

As if to emphasise the point, daily reports from Greece warn of anarchy. The Daily Mail’s election day headline was particularly clear in the moral readers should draw: Rioters kill three bank workers in Athens protests as EU warns Britain's debt crisis will be worse than Greece's. (Contrary to most reporting, Greece does have options beyond massive spending cuts).

The only-cuts-can-save-us campaign has clearly worked; there is virtually no discussion outside the frame that massive public spending cuts are necessary. Even Gillian Duffy, a relatively well-informed and lucid voter, asked “what are you going to cut, Gordon?”

Despite the almost complete lack of dissent in the media, questioning whether cuts are needed is not a radical position to take. In the context of stimulus packages and Keynesian economics, the rapid demand for cuts cannot be taken at face value; many economists are arguing that it’s downright dangerous to slash government spending during a weak recovery.

Your deficit or your life

The main parties would contend that maintaining Britain’s triple-A credit rating is vital for the economy, and that any downgrade could spark a run on the pound. After all, it was a downgrading of Greece’s credit rating that formed the background of the recent riots.

This is another way of saying Britain is being held to ransom by credit ratings agencies like Moody’s and Standard & Poor’s and the money markets. In a superb analysis, Robert Peston questioned how these ratings agencies have the power to topple governments when their track record in accurately rating debt risks is so terrible; they gave toxic bonds a clean bill of health before the crash.

Does Britain really face the prospect of defaulting on its debt, even if it maintained a high deficit for years? The question is academic, because it is the ratings agencies’ evaluation that matters to the markets and governments. Yet not a single political party in this election has outlined plans to limit the power of these ratings agencies.

Even if one accepts the parties’ claim that the ‘bulk’ of the deficit must be repaid in the next parliament, another question remains. Why do the majority of the deficit savings have to come from public spending cuts rather than tax rises?

When John Major’s right-wing Conservative government was faced with a massive deficit crisis in the early 90s, then Chancellor Kenneth Clarke cut borrowing through a balance of tax rises and spending cuts. According to the recent IFS report, all the mainstream parties plan to cut the deficit through spending cuts over tax raises by a ratio of at least two to one.

There is another way

The progressive alternative to cuts is to use the crisis as an opportunity to make the tax system fairer. As the Compass report In Place of Cuts notes, ‘Britain cannot have high level Nordic-style public services with low US levels of taxation’. It suggests a tax cut for the majority of the population, and a tax rise on the highest earners and a crackdown on tax avoidance to make tax paid as a percentage of income more even. They calculate around 25% of the deficit could be cut through such measures, and an additional 25% through ending the war in Afghanistan, and scrapping Trident and ID cards. The only party that supports the high tax agenda is the Greens.

The standard argument against tax rises this is that tough rules on pay will scare off talent and foreign investment. All the mainstream parties appear to have accepted this, although the Liberal Democrats have the most redistributive tax plans.

Another option is Britain could weaken the pound. While it would increase the cost of imports and increase inflation, it would boost Britain’s manufacturing base, tax revenue and the balance of payments. It would also reduce the cost of Britain’s repayments. While sterling is at a relative low, there is no reason it cannot be reduced further.

So why doesn’t Britain take this easy option? The luring psychology of the strong pound is a recurring motif for British politicians. In Philip Stevens’ book Politics and the Pound, he revealed a long line of premieres and chancellors, from Churchill through Wilson to Major, who found political shipwreck in the siren call of a strong sterling. One sector of the British economy that loves a strong pound is the City. Bankers especially like it because it makes it easier for them to get money on the international markets and lend to domestic customers at a profit. It’s yet another example of the money markets calling the shots.

Eat what you're given

All three parties have presented the public with a fait accompli – a massive reduction in the size of the state. Who stands to gain from a massive reduction in the size of the state? By definition, the business community. David Cameron’s ‘Big Society’ is at least a clearer articulation of what all the parties are essentially advocating; a society in which the government is dramatically reduced in size and people must look to the market for solutions to their problems.

As Robert Peston noted, one of the reasons the asset boom that led to the crash was not reported in the media may have been the massive boom in advertising revenue it received as a result. Perhaps there is another conflict of interest with their advertisers and proprietors in reporting the massive transfer of public funds to private hands. Only a small handful of journalists such as Seamus Milne have broken the media’s line that only cuts can save us.

Undoubtedly many politicians and commentators genuinely believe massive cuts are necessary. But the free market headbangers have used what should have been their nadir – the banking and deficit crisis – as a cover for a massive power grab.

We’ve seen this before. In the early 1970s, the anti-statist, libertarian right were viewed as cranks. But the ascendant ‘Chicago’ school of economics found in them a useful platform for their form of free-market, inflation-obsessed capitalism, and their radical agendas were adopted by Margaret Thatcher and Ronald Reagan. The monetarists were wrong and there influence has dwindled, but we see a similar marriage of convenience now, between deficit hawks and a right wing hungry to cut the government down to size.

An election without a mandate

Irrespective of the General Election result, given the parties’ silence on what cuts they want to make, there will be no popular mandate for such a radical change to British society. What the Tories’ sliding poll ratings have shown is there is no appetite for massive cuts to the public sector. On the contrary, parties have been falling over themselves to pledge funding to ‘frontline services’. Even if the Conservatives emerge with an overall majority, they have no popular support for the ‘Big Society’ they wish to create.

The burning streets of Athens offer a lesson for Britain’s politicians – and, perhaps, for its people.