American Deficits to Top Trillion Dollars for All of Next Decade

View of the United States Capitol in Washington DC in the early morning, January 15, 2017
View of the United States Capitol in Washington DC in the early morning, January 15, 2017 (DoD/William Lockwood)

The Congressional Budget Office has run the numbers on America’s fiscal outlook and it’s not pretty. Read more

Italy Backs Down from Budget Fight with EU

Italian labor minister and Five Star Movement leader Luigi Di Maio eyes Prime Minister Giuseppe Conte during a news conference in Rome, July 3
Italian labor minister and Five Star Movement leader Luigi Di Maio eyes Prime Minister Giuseppe Conte during a news conference in Rome, July 3 (Governo Italiano)

The leaders of Italy’s ruling populist parties have backed down from a fight with the European Commission over their 2019 budget.

Luigi Di Maio, the labor minister and leader of the Five Star Movement, and Matteo Salvini, the interior minister and leader of the far-right League, said after a meeting on Sunday that they had given their blessing to Prime Minister Giuseppe Conte’s revised spending plan, which reduces next year’s shortfall from 2.4 to 2 percent of GDP. Read more

Eurozone Budget Could Take Years

French president Emmanuel Macron speaks with Dutch prime minister Mark Rutte during a European Council meeting in Brussels, June 24
French president Emmanuel Macron speaks with Dutch prime minister Mark Rutte during a European Council meeting in Brussels, June 24 (Elysée)

The Financial Times reports that Emmanuel Macron and Angela Merkel have made a “breakthrough” on eurozone reform: the French and German leaders agree the currency union should get its own budget.

The move is good news for the French president, who has long believed that giving the single currency area its own resources will make it more resilient to economic crises.

But it is unlikely to come into being any time soon. Read more

Italy’s Budget Standoff with the European Commission, Explained

Italian prime minister Giuseppe Conte and Five Star Movement leader Luigi Di Maio listen as Finance Minister Giovanni Tria answers a question from a reporter in Rome, October 3
Italian prime minister Giuseppe Conte and Five Star Movement leader Luigi Di Maio listen as Finance Minister Giovanni Tria answers a question from a reporter in Rome, October 3 (Governo Italiano)

The European Commission has told Italy to revise its budget for 2019, accusing it of “openly and consciously” reneging on the commitments it has made.

This has been reported as the commission “rejecting” Italy’s budget proposal, but that is too strong a term. It has no such power.

Here is what’s really going on — and what is likely to happen next. Read more

Boehner Did More for Fiscal Conservatism Than Ryan

House speaker John Boehner and President Barack Obama attend the annual Friends of Ireland Luncheon in Washington DC, March 17, 2011
House speaker John Boehner and President Barack Obama attend the annual Friends of Ireland Luncheon in Washington DC, March 17, 2011 (Speaker of the House)

What a disappointment Paul Ryan has turned out to be.

The Republican congressman from Wisconsin, who leaves the speakership of the House of Representatives — and politics — early next year, was hailed as the last best hope of fiscal conservatism in the United States, but in fact his much-reviled predecessor, John Boehner, did more to shrink the deficit. Read more

Spain’s Sánchez Seals Spending Deal with Far Left

Spanish party leaders Pedro Sánchez and Pablo Iglesias meet in Madrid, February 5, 2016
Spanish party leaders Pedro Sánchez and Pablo Iglesias meet in Madrid, February 5, 2016 (PSOE)

Spanish prime minister Pedro Sánchez has negotiated a spending deal with the far-left Podemos party that could keep him in power for another year.

Sánchez’ Socialist Workers’ Party does not have a majority of its own. In addition to Podemos, it leans on the support of regionalist parties in the Spanish Congress.

Some of them have mounted a challenge, though: the Catalans have proposed trading their support for a legal and binding referendum on Catalan independence. Sánchez has ruled that out.

He may just get his budget through if one of the Catalan parties abstains and parties from other regions vote with him. But it will be tight. Read more

Rome on Collision Course with European Allies, Financial Markets

Rome, Italy at dusk, October 17, 2008
Rome, Italy at dusk, October 17, 2008 (Andreas Caranti)

I cheered too soon. A few weeks ago, I reported that Italy’s populists were coming to terms with reality. Now they have introduced a spending plan that puts them on a collision course with the European Commission and financial markets.

Reneging on the commitment of the last government, the coalition of the anti-establishment Five Star Movement and far-right League, formed four months ago, proposes to run a deficit equal to 2.4 percent of GDP in 2019.

That is still below the EU’s 3-percent ceiling, but it is a reversal of the fiscal consolidation path followed so far and it means Italy’s public debt, already one of the highest in the world at 130 percent of GDP, will rise rather than fall. Read more