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article imageOp-Ed: Spain has an economic plan, it looks vaguely familiar

By Gar Swaffar     Apr 27, 2013 in World
Madrid - Spain is moving in a different direction now, although the Spanish economy is still faltering, they do have a plan. It looks nothing like the American plan for recovery.
It is being reported by the BBC that Spain has a plan to correct the problems created by so many years of profligate spending, and government indebtedness. The plan has a familiar look to it, one which nearly any American over the age of forty-five or fifty would recognize.
The report indicates the unemployment rate overall in Spain has breached the 27% level, and for those under 25 years-old, more than half of the demographic is out of work and suffers from a 57% unemployment rate.
The Spanish economy was projected to contract by 0.5%, while Soraya Saenz de Santamaria, the Deputy Prime Minister is now suggesting the actual rate of contraction for 2013 will reach nearly three times that much at 1.3%.
A faltering economy, stagnant growth, high unemployment, they all have a familiar sound for those of us who lived through the Jimmy Carter presidency years. In 1977 when Carter took office, the unemployment rate was on a downward slide, moving from an 8.5% range in 1975 toward 5.8% in 1979. And that was when the Carter policies really kicked in, along with an oil embargo to push the unemployment rate back up to 9.7% under Ronald Reagan.
With the tax cuts of 1981, the economy was ready to move forward, but then a recession struck. There are those who argue the legacy of Carter policies were still operating, and some who conclude the tax cuts (Daily Beast) were the culprit. Neither side can offer conclusive proof for their argument, since the American economy is simply too large and too complex to offer up easy answers to difficult questions.
One fact does remain in the process though, Reagan, far from being the penultimate tax reduction proponent he is touted as being, oversaw the largest peace time tax increase in American history up to that date. Yes he slashed capital gains and income taxes. However, he got the largest Social Security tax hike ever proposed!
In 1986, the one bright moment for Lower Taxes and Smaller Government conservatives came when Reagan and Congress cut the top marginal income tax rate from 505 to 28%.
It was at that point that unemployment began to drop. From 7% in 1986 to 5.3% in 1989, more people were finding work. (Bureau of Labor Statistics)
The Spanish government appears poised to try doing Economic Reform the right way, by reducing taxes in 2015 according to Deputy Prime Minister Soraya Saenz de Santamaria. And also reducing the deficit spending which placed the Spanish economy in such dire straits to 6.3% this year, 5.5% next year and an impressive 2.7% in 2016.
The Spanish government seems poised to follow through on that which Ronald Reagan spoke of but failed to carry out. Unfortunately it also appears the current American administration is going to try the opposite approach. The current administration with a willing Congress seems intent on increasing the government confiscation of wealth with Obamacare costs, and allowing the Federal Reserve to continue printing a minimum of $85 billion US dollars every month until the dollar is completely worthless.
It is perhaps a measure of the enormity of Spain's concerns, that further austerity measures are a possibility. The €150 billion already saved may or may not be enough, but Madrid seems to have charted a course toward fiscal health and, at least so far, will not be deterred.
The people of Spain are still not on board with the full range of austerity measures however, it is reported at RT, citizens on Thursday, April 25, in Spain and Portugal were arrested after clashes with police. In Madrid, alleged anarchists were arrested for plotting to set a bank alight.11 others were arrested for provoking riots when found carrying chains and clubs.
RT reports tens of thousands of citizens engulfed streets protesting measures of austerity which are designed to reduce indebtedness and deficit spending. Perhaps the Portuguese demonstrators have forgotten the need for the government in Lisbon to be saved from bankruptcy to the tune of €78 billion, by people who may never have visited Portugal?
The dire straits of the Portuguese and the Spanish people shouldn't be minimized however, many are in serious fiscal trouble along with the government. Some older citizens may find themselves left out of the job market by the glut of younger and more capable out of work citizens.
The Telegraph reports on one Spaniard who took the extreme course of chopping his own hand off, in an attempt to collect insurance payments totaling €2.1 million. The man had reported the hand lost in an auto crash to 11 separate firms. Fraud investigators in the course of their investigation found the claim to be bogus, with the severed hand being so cleanly cut that it hadn't damaged the bone.
The desperation of an individual who is convinced of the need to engage in self mutilation can only be described as an illness. That desperation begs the question of whether or not, the decades of all inclusive government cradle to grave care, and overblown apparently out of control public benefits fostered an unhealthy dependence on government.
In the meantime, Spain's leaders appear to have taken a different course for now. Austerity measures and decreases in levels of taxation, given enough time, may actually do for Spain what it was supposed to have done for the United States in the 80's under President Ronald Reagan. The real challenge being to engage the people in the actions which are meant to return to a nation of prosperous citizens, dependent on themselves for all that which makes life worth living. Prosperity is the goal, but the path to that goal remains murky.
For the United States, the question is whether or not we will have to reach an unemployment rate of over 27% to finally change the course the current administration and Congress seem so intent on traveling?
Is it in relation to the possibility of unrest by the citizens of the United States when the trillions of dollars of deficit spending must be paid back, that the Department of Homeland Security is making mass purchases (US News) of hollow point ammunition? Is that the reason DHS now has a two year supply of ammo and is still buying more? With Fox News reporting US House of Rep. Jason Chaffetz noting that DHS used 1,000 rounds more per agent in 2012, than did the US Army per soldier.
Austerity measures in Europe have prompted mass demonstrations in each country involved. The demonstrations by a fully armed citizenry could take a decidedly ugly turn, with an outcome closer to that of Syria, or Egypt rather than Greece, Spain or Portugal.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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