The secretary of the Democratic Party, Enrico Letta, has proposed the convening of a summit of the heads of the parties who support the government, but perhaps also extended to those of the opposition, to secure the budget law and then think in peace of mind about the election of the new President of the Republic. Put like this, the move appears to be a way to weaken the government as it would devalue the patient mediation work carried out by Mario Draghi and would mark the irrelevance of the ministers who approved the budget law after lengthy discussions.
It would be different if Letta had justified her request with the need to change the choices made on the allocation of budget funds due to the rapid change in the economic situation and also the worsening of the spread of Covid infections. In short the situation changes with such rapidity that decisions taken even just a few weeks ago appear today to be inadequate, if not harmful.
In fact, it is increasingly evident that the robust recovery of the economy is going to collide bottlenecks in the supply of both goods and personnel qualified, bottlenecks that are putting pressure on prices, which are recording increases worldwide that have not been seen for at least a couple of decades. If this is the case, then responsible and far-sighted political and social forces should ask themselves whether an “expansive” budget law is still needed, ie capable of supporting domestic demand, when instead the problem is all on the supply side. In short, it would be urgent to address the bottlenecks that risk blocking the recovery.
Il budget prepared by Draghi and by Minister Daniele Franco, it was rightly described by former Economy Minister Giovanni Tria as "wise" in the sense that it was built pleasing all parties to some extent and therefore avoiding political tussles that could have embarrassed the government and hinder the pursuit of objectives considered much more important such as the approval of reforms and the implementation of the Pnrr. the basic income has been refinanced with some changes that are more superficial than in substance, an initial compromise has been found on pensions by removing the 100 quota, but leaving the future structure undetermined, a tax cut of 8 billion has been promised, leaving the parties the choice of how to use them. On the other hand, little or nothing has been done to adapt the labor market to new needs, the issues that continue to hinder private investment have not been tackled, substantial progress has not been made in creating a legal environment more favorable to investors both Italians and foreigners.
It is not a question of returning to austerity, but of directing the thrust of public finances towards those expenditures which could quickly eliminate at least some of the most serious bottlenecks on which the recovery risks getting stuck. Let's start with tax reduction. The allocated figures, if divided between IRAP for businesses and Irpef or tax wedge for citizens, would not help competitiveness much nor would they be visible in the incomes of every single citizen. Wouldn't it be better to use that money to encourage the work of many young people and women who don't find it convenient to train or move from their residence? Couldn't we go back to providing fiscal incentives for corporate bargaining, the only one that allows new wages to be negotiated against increases in productivity? Even the basic income could be profoundly revised thanks to a more active and better supported labor market.
The same goes for the house bonus that being too generous is causing a sharp increase in the prices of all raw materials for construction. It would therefore be necessary to reduce the amount and extend the time of use. And instead parties and trade unions have launched a noble (sic !) race to see who manages to grab the largest slice of public money.
The unions focus on elimination of the Fornero law to effectively restore old-age pensions, the ones that have sunk our social security system, and drained resources that otherwise would have gone to investments and young people. The parties want tax cuts for one category or the other. The leader of the 5 Stars Giuseppe Conte defends nonsense made by its two governments.
Someone might try to break this game to slaughter of the Italian economy. Could be the entrepreneurs who, putting general medium-term interests before particular short-term ones, should declare that at this moment they do not consider a tax relief appropriate (especially since two or three billion of IRAP reduction would be invisible in their balance sheets) to devote all the resources to job market.
Today in Italy 40% of companies declare that they have difficulty in finding manpower and this also applies to public works which should start in large quantities thanks to funding from Brussels. Tito Boeri and Roberto Perotti explained in an article in Repubblica the various measures that should be taken to increase the availability of manpower. This is today's real priority. The tax relief, which is also indispensable, can be implemented next year with the implementation of the enabling law that Parliament is expected to approve in these days.
It is not the government's fault that the economic situation changes extremely rapidly. And even Covid will likely require additional resources to avoid catastrophic business closures. The available resources must be concentrated on the reforms and on the implementation of those made. It is necessary reduce direct support to demand to focus on those deriving from investments that have the advantage of raising our growth potential and therefore also reassuring the markets that always watch us carefully because they have certainly not forgotten the stratospheric level of our public debt.
