Opportunities missed once more

The debate of the 2012 budget in Congress shows how the government of the Popular Party (PP), despite its parliamentary majority, has been left in a delicate position due to a series of mistakes. The new budget has been almost unanimously rejected by all the other political parties, which, while not constituting a majority, do hold several regional governments. One factor that might help restore general confidence in Spain’s capability to service its debt would be the opposition parties’ support for the budget. But this necessary support now seems unlikely. The unilateral policy of cutbacks has earned the government widespread hostility.

Whatever the government’s economic team may say, this rejection is not due to the irresponsibility of the opposition, the obstruction of the Socialists (PSOE) or any other kind of conspiracy theory. The reasons lie in the government’s political ineptitude, and in the aforementioned series of errors, which have made the budget unviable as an austerity plan, and unacceptable as an economic policy. Ineptitude is the word for it, when Finance Minister Cristóbal Montoro blames all the ills of the deficit on the regional governments, even as he seeks the support of Catalan nationalist grouping CiU. The responsibility of the regional governments in the proliferation of debt and deficit is true enough; so is that of the PP’s leadership in the financial disasters of the regional governments in Valencia and Murcia.

Ineptitude, too, is the word when the only arguments advanced in support of the cutbacks are “the inheritance received” and the stark obligation to meet the deficit objective. The minister ought to know that there are several options for reducing the deficit, not all of which require devastating cuts in investment, education and health. Nor is it artful to present accounts so damaging to growth and employment, without explaining the rationale of a single one of the adjustments. The cutbacks have been decreed on an indiscriminate, scattergun principle, regardless of effects or desirability.

In the form of low credibility at home and abroad, the government is now reaping what it has sown with errors such as postponing the budget until after the Andalusian elections. This initial mistake has conditioned decisions in the regional governments, paralyzed ministerial activities, and diminished the possible beneficial effects of the cutbacks. A serious government cannot bring forward a budget good only for eight months (or even less, because new cutbacks will probably be required for October), lacking any kind of parliamentary consensus.

The government has missed several opportunities. It was a good time to show that the state could be rebuilt with a more efficient structure of public expenditure, but the deficit obsession has swept that option away. It was also a good time to reach a basic pact on the deficit, with the acquiescence of the opposition and the regional governments. Montoro’s “tact” and irritating insistence on the “inheritance” received from Zapatero has made that impossible. This is not the way to win the sought-after confidence of the markets.