When Deputy Prime Minister Soraya Sáenz de Santamaría announced the new Spanish government’s battery of cuts worth €8.9 million plus tax increases, there were plenty of questions in the air. Why such heavy cuts? How will the new tax increases work? Will there be more cuts?
The deputy prime minister’s answer to the first query was that the cuts are extreme because the 2011 deficit is 8 percent of GDP, rather than the 6 percent the outgoing Socialists had estimated. Public Administrations Minister Cristóbal Montoro offered detail about the tax rises. And the fact that the 2012 budget has yet to be presented means yes, there will be more austerity measures later in the year, although their details are unlikely to be revealed until after the Andalusia regional elections.
But another question hung in the air as Santamaría gave her press conference. Where was Mariano Rajoy, the man voted in on a landslide in November, apparently with a mandate to implement economic reform?
His absence was certainly in character for a politician who has shunned the limelight, even during the election campaign. But it was perhaps also tacit recognition that these aren’t the kind of measures that are going to extend his honeymoon period.
The package includes raising income tax, maintaining a freeze on civil service wages, capping the hiring of new civil servants, freezing the minimum wage and cutting funding for unions.
In fact these are exactly the kind of measures that Rajoy’s predecessor José Luis Rodríguez Zapatero employed during his last 18 months in power and which helped ensure the end of his frontline political career. At the time, Rajoy and his conservative Popular Party (PP) refused to back such measures. They were, he charged, Brussels-imposed recipes that wrested sovereignty from Spain.
“They came over here and set us homework and as a Spaniard I don’t like being told what to do,” Rajoy said last February.
Some of the language used in Friday’s presentation of the new measures was a euphemism-laden attempt to pretend they were something else, with the income tax increase described as “a complementary and solidarity-based temporary charge.”
“Groundhog Day”
But no one, least of all Rajoy, can pretend that his deficit-slashing second week in office was inspired by anything other than a desire to impress the European Union and distance Spain from the eurozone debt crisis. Raising taxes was anathema to the PP when in opposition and when campaigning to win the general election. But Santamaría has insisted such measures are now necessary, given the unwelcome, 8-percent deficit surprise.
“It’s Groundhog Day,” noted Público columnist Ana Cañil as she pointed to the new measures’ apparent focus on trying to create another real estate boom while further eroding Spain’s already thin research & development investment.
The new government justifies the package by accusing the Socialists of heinous overspending while in office and the latter attack the new measures as a neo-liberal overreaction. But the real villain could well turn out to be Spain’s regional financing structure, which allows massive debts to be built up, leaving the central government and the Spanish people to pick up the tab.
Since winning the November election, the new prime minister has already been highly successful in one area: keeping his plans to himself and his inner circle until the very last moment, whether they be ministerial appointments or austerity measures.
Having been so reluctant to show his hand while in opposition and when campaigning for his current job, Rajoy now has no choice but to rebel against his instinct and tell Spaniards clearly and deliberately what his intentions are, regardless of the u-turns that may imply or the harm it may do to his image.
That last paragraph, if suitably expanded on, should actually earn you big money from the new Spanish government; if just honour and accountability were a bit more respected here and even seen as ultimately an asset for re-election.
But I’m afraid that short-term partisan benefits and face-saving will again gain the upper hand. Why the heck else would they waste time on issues such as abortion laws and gay marriage!
So I see, they say that the deficit will actually be 8% not 6% due to overspending at a regional level then blame ZP. This of course conveniently forgets that all but three regional governments are in the hands of the PP and the worst offenders, junk bond level on their debt, are Valencia! PP for I don’t know how many years and corrupt “Hasta la médula”. Welcome to 2012!
Here’s an interesting alternative take on the regional spending issue from Edward Hugh: http://fistfulofeuros.net/afoe/the-rain-in-spain-falls-mainly-on-the-journalists-it-seems/
Let’s get things straight. The new PP government sees the 8% vs 6% difference due to spending on the central level, not the regional one, Graham. And maybe I don’t count correctly, but among the three exceptions you mention seems to be Catalonia, which is ruled by a quasi coalition of CiU and PP. Which does not want to take away your general point that they’ve all being doing a lot of shady business, no matter the party affiliation.
As to Ed Hugh’s article, he reduces it all to the fiscal deficit, which seems to be quite a meagre approach. I’m never sure, but economics seems to be about more than just public spending.
He won’t be in power long (personally, I couldn’t believe he was actually elected!!). Austerity doesn’t work. It hasn’t worked for any European country that keeps trying it but, hey, Rajoy jumped on the bandwagon and now he’s desperate to make it work.
I give him a year in office and the Spanish voters will be threatening an overthrow of the government as Spain’s economy collapses completely.