So after a little bit of suspense and some presidentially-friendly rearranging of cabinet chairs, Italy has a new government. At least, it will officially sometime this week, when it passes a vote of confidence in Parliament. And then? Well, probably not much else.
While this first vote is likely to go smoothly as the parties have already agreed on the list of ministers and government program, some analysts predict difficult times ahead in future parliamentary ballots as the two parties spar over which of their expensive electoral promises to keep first….
On Sunday, Five Star leader Luigi Di Maio said a universal basic income for poorer Italians will be among the first measures he plans to put before the parliament. League’s leader Matteo Salvini, who has promised voters hefty tax cuts, said over the weekend that he plans to cut 5 billion euros ($5.8 billion) worth of assistance to asylum seekers in order to recover funds to keep his electoral pledges.
Ah, yes, tax cuts: The perfect way to pay for UBI. And the €100 billion worth of other stuff the two parties plan, or however many gazillion lire that adds up to.
Italian politics have always been unstable, reflecting the plethora of parties and deep divisions between the prosperous north and poorer south. Voters like “simple solutions to complex problems,” says Roberto Perli, an Italian-born economist and policy analyst at Cornerstone Macro in Washington….
Last week, blowback from the markets and opposition by the Italian president forced the coalition to replace Mr. Savona with a pro-euro finance minister. Voters, who generally want to stay in the euro, were probably more attracted to the coalition’s promises of a crackdown on immigration, universal basic income and a flat tax. But those proposals would bust the budget and thus be blocked by the EU, says Mr. Perli. The government could tap resulting anti-Europe sentiment to legitimize leaving the euro, he says. Thus, the debate over euro exit may “only be postponed rather than abandoned.”