ABSTRACT
This chapter will argue, first, that the overall macroeconomic framework of the Blair Government was contractionary – based on the twin-deficits proposition of standard neoclassical theory – and, second, that this constrained the key public investment elements of the Third Way program to such an extent that Blair, like Clinton, effectively abandoned them in favor of fiscal discipline. This will be shown through a detailed examination of public spending in the key areas of fiscal policy, investment policy, and education policy.
