Most of those who contest the general elections on 26-J may end up on paper, either because they are unfulfillable, or because the need to reach government pacts will prevent them from being carried out as they are written, since no formation You will be able to impose your program if you want to be in the future Executive.
We are, therefore, before more than one toast to the sun, since, apart from the promises of the parties, the next Government will have very little room for action in economic matters as long as the significant imbalances in the labor market and the forced containment persist. of public spending.
Despite this, almost all the parties maintain their spending commitments in the programs that they will present to the next elections. With what they have disclosed so far, and in the absence of definitive programs, only Ciudadanos has acknowledged that their commitment to lower VAT is no longer possible, due to the deficit data, although they do speak of lowering taxes at the end of the legislature.
Guaranteeing a minimum income for all families, increasing the amount of pensions, lowering taxes from January, repealing the labor reform or promising a self-determination referendum for Catalonia that the State will not allow are some of the commitments that, with the current situation and the breath of Europe in the neck, they seem unrealizable in the short term.
Two economic challenges
The truth is that, whoever the future tenant of La Moncloa is, will have two economic challenges that will mark the country’s political and economic agenda. On the one hand, the cut of 8,000 million demanded by the European Commission to meet the deficit, and that, for the moment, all the parties ignore on paper. On the other, the threat of a fine of up to 2,000 million by Brussels as punishment for non-compliance by Spain.
To these conditions we must add the electoral arithmetic, which suggests that the future government will be a sum of at least two political parties, which must negotiate and cede in their respective programs until reaching a consensus. The commitments must be adapted to the stability program and to the negotiations after 26-J.
1. Everyone proposes increases in public spending
The Unidos Podemos coalition proposes a social spending plan of 32,000 million euros, which would be paid for with a tax reform that would increase the tax burden by 30,000 million. Although this is a substantially lower figure than the 96,000 million raised in the previous campaign, the left-wing coalition’s programmatic agreement revolves around a notable increase in social spending.
According to Unidos Podemos, these spending chapters “would maintain the reduction provided for in the current Stability Program”, but the truth is that the proposal implies a cut of 6,000 euros with respect to what the acting government of Mariano Rajoy is proposing. In any case, the coalition promises to maintain in 2019 the ratio of spending to GDP at the level at which it closed 2015, at 43.3 percent, at least 32,000 million above the 40.1 percent provided for in the Stability Program.
Although the coalition is the only one that explicitly speaks of an increase in public spending, all the parties propose spending more: the PP, for example, wants to launch a maternity support plan of up to 2,000 euros per year and expand scholarships, while The PSOE wants to expand unemployment coverage and guarantee basic supplies to all families, as well as a minimum income for 720,000 households without income. Ciudadanos, for their part, in the absence of the final program, proposed in the previous campaign a salary supplement for the lowest incomes.
2. Guarantee a minimum income for families
Both PSOE and the Unidos Podemos coalition contemplate in their respective programs the creation of a minimum income for people without resources. In the case of the Socialists, it is called the Minimum Vital Income, as a non-contributory Social Security benefit, and it would be created within four months from the beginning of the legislature. It would go to 720,000 households that have no income. This benefit aims to become an indefinite extension of the unemployment benefit for families without resources and would materialize in an income of 426 euros per month plus family supplements, Sánchez specified yesterday. This, together with the extension of the unemployment subsidy, would have an approximate cost of 6,000 million euros, something hardly compatible with keeping the deficit at bay and which would involve modifying article 135 of the Constitution (see point 3).
It seems even more complicated to pay for the rent for all households with incomes below the monetary poverty line included in the programmatic agreement of Podemos and IU. This benefit would have an initial amount of 600 euros per month for households with only one member, and will increase progressively (an additional 35 percent for the second member, and 20 percent for each of the following) up to a maximum of 1,290 euros.
In C’s, it remains to be seen if Albert Rivera maintains his salary supplement proposal for the lowest incomes in his program.
3. Without consensus there will be no constitutional reform
Title X of the Spanish Constitution contemplates two ways for its modification. The simplest of them is described in article 167 of the Magna Carta and requires the approval of both Congress and the Senate by a majority of three fifths. In other words, it would require that 210 deputies and 156 senators vote in favor in both chambers (currently there are 350 deputies and 260 senators). Bearing in mind that the representatives chosen on 20-D were incapable of adding a simple majority of more yeses than noes to move forward with a government, an agreement to modify the Constitution seems more than remote, especially based on the absence of political consensus on the regard.
But that is precisely what several parties promise in their programs with some cases related to Catalonia. Pedro Sánchez insists on favoring a federal reform of the Constitution, in which a “political pact with Catalonia” is agreed that, without violating the principle of equality, improves self-government and recognizes “the singularity” of autonomy. An impossible promise to keep knowing that the PP, which has the key to said reform for an arithmetic matter, is not going to support the federal State.
A solution that, on the other hand, is rejected by the Catalan separatists, supporters of a self-determination referendum, a solution backed by Unidos Podemos and that is not feasible because it once again demands the support of a Chamber that is mostly opposed.
4. Lower taxes… despite Europe
While, with one hand, the acting government calms the fears of the European Commission and promises more adjustments after 26-J, with the other, the PP returns to the fray with a new plan to lower taxes starting next month from January. Specifically, they promise to reduce personal income tax rates to go from the current minimum of 19 to 17 percent and the maximum of 45 to 43 percent. In addition, they are willing to exempt young people who get their first job from this tax and to improve the exempt personal and family minimums and reward savings and investment.
The popular ones are not the only ones who flirt with the lowering of taxes. From Ciudadanos, although they admit that they are reviewing their economic program of 20-D, which proposed reducing personal income tax and VAT, since the commitment to budgetary stability does not allow lowering taxes in the short term, they do threaten to be able to do so at the end of the legislature in case of being able to govern after the next elections.
The truth is that, with the commitments made with Brussels, Spain is not in a position to lower taxes with a deficit above 5 percent and a public debt that, for the first time in a century, exceeds one hundred percent of GDP. The promise to alleviate the tax burden on taxpayers will remain a siren song unless spending is ostensibly disciplined and the Spanish economy grows at a rate that allows the state to collect more in other ways.
5. Repeal the labor reform that Europe praises
The repeal of the labor reform was the star proposal of the PSOE in the last electoral campaign on December 20. Later it was blurred in the post-electoral agreement with Ciudadanos and now it returns again to the speech of Pedro Sánchez, who speaks of de facto knocking down the labor law approved by the PP in 2012.
The Socialists’ proposal is to draw up a new Workers’ Statute, give priority to collective bargaining over business agreements, an immediate increase in the minimum wage by 4 percent, in addition to reducing the types of contract to three: permanent, temporary and permanent. training. In the absence of more specifics, what has been known so far about the PSOE’s plans seems complicated to carry out in an area where once again the screws are tightened on us from the European environment.
And it is that while the PSOE promises to repeal the labor reform of the PP and Unidos Podemos goes a step further and proposes to also tear down the regulations promoted by the socialist José Luis Rodríguez Zapatero in 2010, from Europe they demand that Spain -among other points- deepen labor market reforms in exchange for relaxing deficit targets, something all parties want. In fact, the European Commission assessed in a report on Spain last February that, in the area of the labor market, “the reforms adopted between 2012 and 2014 seem to have cushioned the fall in employment and accelerated its recovery.”
6. Drastic reduction in unemployment
The two parties that until now have alternated in power, PP and PSOE, promise a drastic reduction in unemployment in just four years. The general secretary of the Socialists, Pedro Sánchez, announced a few days ago that, if he governs after the general elections on 26J, he will reduce the unemployment rate by half in four years, acting to provide employment for more than a million long-term unemployed duration.
From the PP they maintain their promise to reduce half a million jobs a year, which would be equivalent to two million in the legislature. Taking into account that the last known unemployment data raises the number of unemployed by 3,891,403 people in May, as reported last Thursday by the Ministry of Employment and Social Security, the commitment of the popular is just as ambitious as that of the PSOE.
To put these promises in perspective, and bridging the gap, we find the example of what is known as the “second German economic miracle”, with which Germany managed to drastically reduce its unemployment, from 9.8 to 5.5 percent. Without going into assessing whether he did it in an exemplary manner or, as critics accuse, at the cost of precarious jobs and unsustainable mini-jobs in the long term, the feat cost the Teutonic country a decade, from 2002 to 2012.
Some precedents that, at least, question whether Spain, with an unemployment rate that doubles that of the beginning of the century in Germany, will be able to generate employment at the promised speed.
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