On Wednesday is a milestone, the halfway mark for this government, an inauspicious day for the chancellor's autumn statement. The passengers in the back are asking: are we nearly there yet? No, we are still travelling in the opposite direction, away from debt reduction, growth, jobs and hope. Will the drivers turn and set us on the right road? No, straight on and still applying the brakes.

If Keynes's paradox of thrift was once hard to explain, this government has offered the textbook case so all can understand. Cutting into a slump has killed demand, paralysed investment and choked off growth, with 200,000 more long-term unemployed this year and millions underemployed at further cost to the state. The national debt has risen by £150bn with nothing to show for it, money wasted on failure. Imagine the uproar if a Labour chancellor had planned to borrow another £150bn to invest in jobs, infrastructure, training, childcare and house-building. David Cameron's constant assertions that reckless Labour borrowing would imperil national finances sounds vacuous now.

Imagine the outrage if a Labour chancellor had reached into the Bank of England and raided £37bn from its quantitative-easing surplus to offset a failing Treasury balance sheet to massage figures for an autumn statement. That caused the FT's economics editor, Chris Giles, to have "an epiphany" well worth reading: "A Treasury press release entitled 'Changes to cash management operations' showed my faith in the credibility of the UK government's economic strategy to be misplaced. I no longer believe that this government is serious about economic or fiscal policy. Nor does it appear the institutional checks and balances work to protect the public." Giles was a supporter of Osborne's policy, but now calls this "ripping off future taxpayers, polluting statistics and undermining independent monetary policy". That's where we are.

Look back over the last two and a half years – the litany of policy disasters and affronts to basic fairness is longer than there is space for here. Many were taken by surprise at the Cameron team's intense ideology, despite the leader's chillaxed demeanour. That surface laissez-faire covers something far more driven, a belief as instinctive as breathing, imbibed as the groupthink of student Thatcher-worshippers. A second surprise is their incompetence, unexpectedly inept in almost every department, the reason why they look like a one-term regime. In the Economic and Social Research Council's annual report – Britain in 2013 – the work of Green and Jennings shows how the competence of a government trumps everything else in public opinion. The public's cumulative view spreads across all issues, one major failure dragging everything with it. The competence ratings of all governments decline over time, but this one squanders it at break-neck speed.

Its second half, starting on Wednesday, is set to become considerably worse. Debt will rise as austerity stretches further into the yonder with ever more cuts. At Ladbrokes the UK is odds on to have its AAA credit rating dropped – the empty prize that has caused such pain. How is investment going? Big business is piling up unused savings, while Osborne's cuts drain demand from customers. Small business is crippled, as the government's funding for lending has lent only £500m, poor compensation for a £3.3bn fall in bank business lending. Expect Michael Heseltine's energetic ideas for local regeneration to get a token nod tomorrow, but the brutal truth is told by Birmingham's council leader who says he will be forced to impose another 50% of cuts in the next five years, stripping out services. Middle- to low-earning households will see their income drop another 5% by 2020, according to the Resolution Foundation.

The NHS teeters on the edge: squeeze was inevitable, but why waste £3bn on an ideological reorganisation that squandered the time of 90,000 staff forced to move jobs? Expect bankruptcies and disruptions as the new system creaks into half-life in April. Outsourcing to the private sector in health, social care, welfare and the already failed Work Programme will reach £140bn by 2014. So says this week's report from Social Enterprise UK, the group that was supposed to benefit from the "big society", only to be cut out by a band of Serco and Capita giants. Polling by Opinium finds companies making profits out of health and care services is opposed by 66%, before it has begun in earnest. April will be the cruellest month in benefit cuts, too many to list, but let this one small disability cut stand for all the rest: 42,000 young school-age carers looking after a sick parent alone will lose £58 a week severe disability premium, 20% of their household income.

Keep that one in mind when Osborne cuts yet more benefits on Wednesday. No wonder opinion is starting to turn as the majority now think that benefits have been cut enough. Listen when Osborne declares that the rich will pay their "fair share" and wonder what that is. Nick Clegg boasts that he is only allowing cuts for the poor if the rich take a haircut too. When bailiffs knock on the poorest doors now that council tax benefit is cut; when no social fund is there to lend the price of a sandwich; when thousands are evicted for lack of housing benefit – why does Clegg think it helps them to know the top 10% are losing a bit more tax relief on their pensions?

Incidentally, Mark Hoban, the employment minister, has announced that the sick can be "mandated" on to "voluntary work placements" from this week. He didn't say that 11 times more win a benefits appeal than get a job. Looking ahead, how will HMRC, so weak at company tax collection, bring in the fiendishly complex universal credit without chaos?

If you save into a pension, the finance industry creams off half your pot: that's the kind of "wealth" the City "creates" in an economy as unbalanced as ever. What do they do with it? This week's edition of the FT's How to Spend It, suggests some Christmas foibles – £625 gloves, £705 Black Amber perfume, a £10,000 Boodles bangle. This is the world of Smythson of Bond Street, headed by Cameron's wife, where his echelons of opinion formers and policymakers may imagine they can glide on by, never looking down. "We are out of the danger zone," Cameron proclaimed two years ago. But in their second half Osborne will struggle to disguise how many more people he is deliberately sending deeper into all too real danger.

Dogma and Disarray – Cameron at Half Time, by Polly Toynbee and David Walker, is available from guardianbookshop at £5