In the press conference after the meeting of the Council of Ministers on March 12, Renzi listed some possibilities for financial coverage, declaring himself calm on the concreteness and solidity of the resources mentioned, indicated as even abundant. But, in reality, none of these, or almost, are immediately available.
We can discuss the choice of favoring private and public employees for tax relief, rather than companies on the side of labor cost burdens; or to favor only employees rather than all low-income taxpayers, including retirees. But Prime Minister Renzi must be recognized for his willingness and commitment to do something concrete and significant for the recovery of the economy and employment. Initiatives of this kind are essential to move the stagnant trend of consumption and investment, to try to reverse the economic cycle.
The problem, which Renzi had perhaps underestimated and which he is beginning to come to terms with, is that the margins for our country to move from the planning to the implementation of the tax relief measures are very limited, at least in the very short term. The conditions of our public finance, with the asphyxiating mountain of public debt to manage, after years, now decades, of maneuvers and manoeuvres, and with the constraints of the European and constitutional rules that stiffen it, allow negligible margins of movement for initiatives of economic policy based on the reduction of tax revenues. It doesn't depend on who puts their hands on it or what ideas they want to implement.
Revenue can no longer be increased. There's no need to dwell on this. The annual deficit cannot grow, indeed it must shrink. It is no longer enough for our country to respect the 3% ceiling in the deficit/GDP ratio, since the mountain of public debt must be eroded. The European Union is all over us on this point. Unless we question our membership of the euro, we need to move towards a balanced budget. The assets of the primary balance alone are no longer enough. The European Central Bank reminded us of this, perhaps not by chance, immediately after Renzi's announcement on the possible hedging of the fiscal wedge maneuver.
The reduction in the interest rates on the remuneration of government bonds can give us a big hand, but it can only be achieved and maintained with careful control of the public finances and with improving balances. We cannot finance deficit spending.
The only way out is the reduction of current expenditure, the only way to restore maneuverability to the state budget. But now there is nothing significant, after years of scraping the barrel, that can be accomplished overnight, with just a rule or a cut of scissors. Unless you want to proceed with methods like those adopted in Greece two years ago.
The only solution is to proceed decisively along the path of the so-called spending review, undertaken with uncertain steps for some years, but now being pursued with greater vigor by Commissioner Carlo Cottarelli. We need to trust the work carried out by Cottarelli and presented to the Senate, which, like everything, may be questionable in some respects, but which is the only one that can open up maneuvering passages in the tightness of the public budget. According to Cottarelli, it would be possible to realistically cut around three billion in expenses already this year, and then, continuing the actions outlined, aim for 18 billion next year and even 36 billion in 2016.
It seems like a dream for economic policy: being able to use these important resources to lighten the tax levy and launch a serious public investment plan. But it will remain so if the Government does not apply all its efforts and possible strength to implement Cottarelli's plan. It will encounter extraordinary resistance, some even reasonable, and will have to make painful choices; but pruning the garden thoroughly, cutting leaves and branches, is the only way to see it still alive and luxuriant in the following years.
Cutting State spending is the most difficult undertaking the Government can apply, but it is the real challenge to be overcome for the rebirth of the country, it is for Italy the only way to rebirth. Shortcuts no longer exist.
