Ted Bromund: Why Cameron needs that something special to get Britain back on its feet

Not that the United States has anything to brag about: our outlook is only a bit better than that of Britain. As the OECD politely puts it, "further fiscal consolidation" is "essential".

That is a sad epitaph for New Labour. Their prudence turned into profligacy. Their promise that they could deliver better services for less money turned into a mountain of debt that will mean fewer services and higher taxes.

Let's be honest: conservatives are sceptical about the social welfare state. We think it destroys individual initiative, perverts personal responsibility, and wastes money. We think it's profoundly illiberal, because, by creating wards of the state, it turns citizens back into subjects. And we think when the government starts passing out money, it will always be tempted to try to play Lady Bountiful to everyone.

But a social welfare system that is modest and financially sustainable is far more attractive to conservatives than one that is neither of those things. Indeed, conservatives want a sensible system precisely because they understand that the social welfare system is a series of promises the state has made to individuals.

Some of those promises should never have been made, and will now have to be broken. That is part of the value of conservative scepticism about welfare: it prevents us from making promises we can't afford to keep.

And that is the worst thing you can say about Tony Blair. The Left's post-1945 world view has centred on its creation of the welfare state. Blair had one, last chance to fix Britain's social welfare system without unnecessary pain, when times were good. When he failed to take it, he betrayed both the system and his forbears. All the hatred of the Left for the Iraq War should be as nothing compared to this.

The chance that Blair had will never come again: Britain's pension obligations are mounting, and its economy is burdened with debt. Now the promises will have to be unmade. The costs may fall on the old in the form of reduced pensions and delayed retirements, or on the young in the form of higher taxes and diminished expectations, but one way or another, the costs will have to be paid.

Cameron's challenge is not to balance the budget. It is to balance it in ways that do not reduce growth and capabilities going forward. The debt mountain will be all the more insurmountable if Britain tries to climb it by taxing its way back to prosperity. Austerity for the Government: yes. But not for the people, if austerity for them is simply a code word for higher taxes. High taxes are not the cure.

For a nation that needs growth, they are the disease. Naturally, the British public is focusing on what balancing the budget means at home. And that is sensible, because home is where the money is.

But foreign policy matters too. Britain doesn't spend money on its Armed Forces or its diplomats because it is a nice, altruistic nation, though those are, indeed, the instincts of its citizens. It spends money on foreign policy because it has worldwide interests to defend.

There is no reason to be embarrassed about the fact that those interests are partly economic. Britain has these interests because it has, to the advantage of all, been a liberal, democratic, capitalist state for so long.

And that is one reason why its interests and those of the US overlap so closely. Our shared political heritage is vital, of course, but the special relationship is also based on the shared interests defined by that heritage.

Gordon Brown will go down in history as one of Britain's worst post-war Prime Ministers. He was unlucky, not terribly good at his job, and not likeable. Yet the way he was treated by President Obama was shameful nonetheless. It is pleasant that Obama and Cameron have got off on the right foot, but this only emphasises just how badly Obama handled the Anglo-American relationship when Brown was in office.

A YouGov poll in early May found that 74 per cent of the British people think that their relationship with the US has stayed the same or even worsened since Obama's election.

Of course, personalities matter: it helped tremendously that Reagan and Thatcher liked each other personally. But if Obama's shabby treatment of Brown was based on simple personal dislike, or even on contempt for his political prospects, it was worse than foolish.

It should be an embarrassment to all concerned that only 32 per cent of Britons identified the US as the nation that would come to its aid

first if it was attacked.

If Cameron and Obama want to put the recent unpleasantness behind them, they should prove it by taking action to reinforce the relationship.

There is a lot to be done on both sides, from closer co-operation on defence trade to resisting supranational financial regulation.

But they might begin by doing something that will build awareness of our shared interests for the long run. Labour's belated revision of Britain's immigration laws has made it all but impossible for young Americans to volunteer in Britain. The failing, needless to say, is mutual.

This needs to end. The roots of the special relationship, after all,

lie in the Anglo-American reconciliation created by the rise of transatlantic civil society in the late 19th century.

In an era when both nations need to tighten their belts, they cannot afford to go it alone, yet that is what they are trying to do.

It was Labour's refusal to think ahead that put Britain in this hole. Cameron will have to build for the future to get Britain out of it.

Ted Bromund is a Senior Research Fellow at The Margaret Thatcher Center for Freedom at The Heritage Foundation, Washington.