Monday, November 21, 2011

The Political Price of Inaction in Spain and the United States

Voters in Spain gave the Popular Party a ruling majority in yesterday’s elections. The Popular Party might be a deeply corrupt pro-business conservative party whose policies did much to create the economic problems Spain now faces, but voters are in no mood to accept failure, and the Socialist Party, in seven years, has not been able to do much to revive the country’s tepid economy.

It is just the latest in a series of anti-incumbency votes that have been sweeping across Europe, replacing some governments more than once in the last three years. It is not really much of a victory for the Popular Party in Spain, whose pro-business theories and tendency toward corruption are not likely to do much to reduce unemployment or make voters feel better about the state of the economy. The way things are going in Europe, they could be out again as soon as next year if the problems in Spain get worse. A sharp slide in stock markets today suggests that the ownership class that supposedly would benefit from the Popular Party’s programs does not have high hopes.

All this bodes poorly for Republicans and Democrats in the United States, whose two-party special budget committee, facing a Wednesday deadline, is expected to announce failure today. The committee was designed to deadlock, as any recommendation it made would next face a vote from a House that is adamantly opposed to any cuts in the largest categories of spending. But that doesn’t mean voters, or investors for that matter, will understand the lack of action.