Analysis FAES 2019 Budget |'Fake Politics'

15/01/2019

Miguel Marín is economist. Analyst in FAES Foundation


The draft General State Budget for 2019 approved by the Council of Ministers last Friday is the best demonstration of the stage of political fiction that our democracy is going through. Politics has ceased to be an instrument to improve the lives of citizens and has become an end in itself, with no other aspiration than to win and/or remain in power. A government wounded by democratic legitimacy walks oblivious to the daily reality of the Spanish people with the sole aspiration of leveraging one more day, one more month, the demoscopic inertia guaranteed by the screen quota. The fragmentation of the vote has generated a fever in all the parties, which devote practically all their time and resources to profiling their "ideology", elbowing each other in the political spectrum and trying to occupy the spaces that the polls recommend. The Spaniards and their problems do not appear on this page of the agenda.

With things like this and being these the motivations, it was unlikely that the General State Budgets proposed by this Government would respond to the country's needs and priorities. And so it has been. The draft budget is an exercise in marketing, tactics or political survival, but in no case in economic policy. We live in times of maximum uncertainty and global economic slowdown, and budgets are alien to this reality. After five years of intense economic growth, we have an unemployment rate of 15% and the highest public deficit in the euro zone, and yet the budgets do not incorporate a single measure to generate employment and are preceded by a manifest will to comply, materialized in income estimates that are not sustained and in the government's lamentation for not having been able to increase the deficit path.

But perhaps even more discouraging is the fact that the government tries to promote these budgets as something new ("to flee from black and white Spain", Celaa dixit), when they are based on outdated premises and should be discarded by the very budgetary evidence we accumulate.

The formula for increasing social spending at the expense of highly productive income has, so to speak, short legs. Short-termism, "bread for today and then we'll see...", has always had dire consequences for our economy. Especially if, as it is happening now, we have to prepare for a stage in which positive economic surprises are discarded.

In other words, the cosmetic operation of "I am more left-wing than anyone else, but without being Podemos", which the government has valued at 5 billion euros in a budget of 400 billion,

- is going to force a rise in taxes and company quotes at a time when some large companies are announcing large layoffs;

- is going to force a rise of the diesel tax on more than 14 million people, without clarifying the investment plans of a key sector of the economy;

- is going to force taxes to be raised on high incomes and to "stop" maximum contributions without there being a counterpart in the pension to be collected in the future;

- is going to force us to invent, and be pioneers in implementing, taxes on technology companies in the process of reviewing their investment decisions;

- is going to force an increase in the pressure on banking activity at a critical moment in the sector's profitability.

- Worst of all, all this effort is not going to be able to generate the necessary income to pay for the increase in expenditure, another of the premises of these budgets that the evidence has denied.

Faced with tax increases, revenue estimates are rarely met, but expenditure is undertaken to the full extent beforehand; therefore, in our case, we will certainly fatten the structural deficit and the vulnerability of the Spanish economy to a new crisis. And all this so that the Catalan separatists can put the seal of approval in the end. The truth is that this "Spain in color" is quite similar to the worst versions of Spain in the past.

Beyond the budgets which, of course, deserve an amendment to the whole, the issue is the end of this parliamentary term. We cannot continue to fall into the hands of interests that are not the general interests of the Spanish people. The Spanish economy has sufficient springs to improve its behavior and they can only be activated with orderly, stable political action supported by the citizens. Extending this legislature, and even more so with these budgets, is synonymous with postponing for a year, if not more, the necessary reform process that our economy urgently needs.

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