Budget priorities for 2012: increase payments to the creditors, starve everyone else
A dissection of the 2012 budget proves Papandreou΄s preelection pledge had a point. Indeed “There is money”…. for the creditors. Prin
“There is money”* For the creditors
Leonidas Vatikiotis
Prin Oct 9th
The blueprint for next year’s budget, submitted to parliament by Finance Minister and vice Premier Venizelos on Monday, October 3rd, hid a couple of surprises.
There was nothing unexpected in the field of social spending. Funds for every conceivable public service, for civil servants’ salaries and transfer payments are slashed in a massacre unprecedented in peacetime. A few examples. Pensions in 2012 will be 5,8% lower than in 2011, salaries in the public sector in general 9,3% lower and in hospitals 8,4% lower. Funds for social security, health care and social protection will be 9% lower and subsidies to pension and health care funds 10% lower.
There were no surprises concerning government receipts either. The 2012 budget continues to spread the tax burden in the same uneven, class oriented way, rising taxes for real people by 27,5% and slashing taxes for legal entities by 22%. This is plain robbery, since higher taxes are imposed in a poorer society. The new steep rise in taxation does not follow a period of prosperity, but a dramatic shrinking of incomes, due to salary and pensions reductions, rising unemployment and a rise in indirect taxes, such as the VAT, that have already bitten hard into incomes. The Greek state has turned into a robber, using brute force to extract whatever it can. This is how the social contract has evolved in the era of IMF run totalitarian capitalism.
On the other hand, legal entities (corporations) contribute less and less taxes, not just because so many of them have closed shop, due to the recession, but also because of their institutionalized tax exemption, reinforced even further in next year’s budget.
The surprising thing in next year’s budget is our generosity towards the rentiers. Our creditors are the only ones who have reasons to rejoice, since there will be a 9,8% rise in funds allocated to interest payments. The 16,3 bn euros that will go towards interest payments in 2011 are projected to rise to 17,9 bn euros next year. Compare this to the 10,21 bn set aside for public sector salaries and the 6,57 bn set aside for pensions. Thus if there was a moratorium in interest payment, we could immediately double salaries and pensions. Social insurance, health care and social protection are projected to cost 15,9 bn, again, less than interest payments. If we withheld interest payments we could stop the decline of the public health care system.
Even more interesting conclusions could be drawn if we compare the 17,9 bn euros the rentiers will receive from otherwise bankrupt Greece in 2012 with the sums the state expects to collect through the most regressive tax, the Value Added Tax. The sum total of projected VAT income is 16,5 bn euros, which means we could scrap it altogether and still have some money left. This could be the beginning of radical change to the tax system, increasing taxes for corporations and multinational companies, lowering prices and supporting incomes.
By the way, the budget does not just benefit creditors, rising their share to 8,3% of GDP (up from 7,4% in 2011) but also arms dealers. Arms purchases are projected to cost 1,3 bn euros in 2012, up 18% from 2011. There is money for a military-industrial complex based more often than not in the USA, in Germany and in France, countries interested in “saving” Greece.
Meanwhile, the budget blueprint projects that public debt will rise from 127% of GDP in 2009 (298,5 bn euros) to 182% of GDP in 2012 (391,4 bn euros). In fact the rise is evev higher than 55% of GDP, because in 2009, Greek debt was 115% of GDP and was artificially inflated, with a little help of Eurostat, so as to facilitate surrender to the IMF/EU program. (The entire board of the greek statistics board, apart from the president who is an ex IMF man was recently sacked over this. More here http://greece.greekreporter.com/2011/09/21/statistician-says-greece-played-numbers-game-inflated-deficit/ )
Also, Venizelos settled for 182% in 2012, choosing to ignore the most recent IMF projection, made public two weeks ago, according to which Greek debt/GDP ratio in 2012 will shoot up to 189%. All efforts are made to cover up the size of the economic crime committed in this country the past two years, in the name of debt reduction, a crime resulting in a 74 percentage point debt increase. This is a wholly unprecedented explosion.
The previous unrealistic projections on GDP are beginning to harm the subservient Greek government. Up until now the government would sweep reality under the carpet, hoping to mask the social tragedy caused by austerity. They wrongfully claimed that renewed growth is on the way, and that the recession was much smaller. In June they claimed the economy was shrinking by 3,8% a number recently revised to 5,5%. If you add -0,2% in 2008, -3,2% in 2009 and -3,5% in 2012, the result is social destruction. Only in war is wealth destroyed in such a scale.
The fact that the recession is deeper than originally projected is not just a Greek phenomenon and it is by no means an accidental failure ( as shown by the fact that every country sickened by the IMF pest goes through similar experiences). The depth of the crisis accelerates the path towards a “controlled” Greek default, courtesy of Angela Merkel. Last Monday, Der Spiegel brushed aside Venizelos’ reassurances that there will be a primary surplus of 1,5% of GDP in 2012. “The June deal on a second bailout package for Greece, amounting to 109 bn euros, was based on the assumption of a 0,6% growth. With recession continuing for at least a year, the country will most probably need much bigger help.”
Thus the final details on the large haircut may be decided in the next Summit and were probably part of the discussions that German Finance Minister Roesler had at the Greek ministry of finance. Amidst all the uncertainty, one thing is certain. Bailout, “rescue” and default all entail new hardship for the people of Greece.
*G.Papandreou’s infamous pre-election statement
Leonidas Vatikiotis
Prin Oct 9th
The blueprint for next year’s budget, submitted to parliament by Finance Minister and vice Premier Venizelos on Monday, October 3rd, hid a couple of surprises.
There was nothing unexpected in the field of social spending. Funds for every conceivable public service, for civil servants’ salaries and transfer payments are slashed in a massacre unprecedented in peacetime. A few examples. Pensions in 2012 will be 5,8% lower than in 2011, salaries in the public sector in general 9,3% lower and in hospitals 8,4% lower. Funds for social security, health care and social protection will be 9% lower and subsidies to pension and health care funds 10% lower.
There were no surprises concerning government receipts either. The 2012 budget continues to spread the tax burden in the same uneven, class oriented way, rising taxes for real people by 27,5% and slashing taxes for legal entities by 22%. This is plain robbery, since higher taxes are imposed in a poorer society. The new steep rise in taxation does not follow a period of prosperity, but a dramatic shrinking of incomes, due to salary and pensions reductions, rising unemployment and a rise in indirect taxes, such as the VAT, that have already bitten hard into incomes. The Greek state has turned into a robber, using brute force to extract whatever it can. This is how the social contract has evolved in the era of IMF run totalitarian capitalism.
On the other hand, legal entities (corporations) contribute less and less taxes, not just because so many of them have closed shop, due to the recession, but also because of their institutionalized tax exemption, reinforced even further in next year’s budget.
The surprising thing in next year’s budget is our generosity towards the rentiers. Our creditors are the only ones who have reasons to rejoice, since there will be a 9,8% rise in funds allocated to interest payments. The 16,3 bn euros that will go towards interest payments in 2011 are projected to rise to 17,9 bn euros next year. Compare this to the 10,21 bn set aside for public sector salaries and the 6,57 bn set aside for pensions. Thus if there was a moratorium in interest payment, we could immediately double salaries and pensions. Social insurance, health care and social protection are projected to cost 15,9 bn, again, less than interest payments. If we withheld interest payments we could stop the decline of the public health care system.
Even more interesting conclusions could be drawn if we compare the 17,9 bn euros the rentiers will receive from otherwise bankrupt Greece in 2012 with the sums the state expects to collect through the most regressive tax, the Value Added Tax. The sum total of projected VAT income is 16,5 bn euros, which means we could scrap it altogether and still have some money left. This could be the beginning of radical change to the tax system, increasing taxes for corporations and multinational companies, lowering prices and supporting incomes.
By the way, the budget does not just benefit creditors, rising their share to 8,3% of GDP (up from 7,4% in 2011) but also arms dealers. Arms purchases are projected to cost 1,3 bn euros in 2012, up 18% from 2011. There is money for a military-industrial complex based more often than not in the USA, in Germany and in France, countries interested in “saving” Greece.
Meanwhile, the budget blueprint projects that public debt will rise from 127% of GDP in 2009 (298,5 bn euros) to 182% of GDP in 2012 (391,4 bn euros). In fact the rise is evev higher than 55% of GDP, because in 2009, Greek debt was 115% of GDP and was artificially inflated, with a little help of Eurostat, so as to facilitate surrender to the IMF/EU program. (The entire board of the greek statistics board, apart from the president who is an ex IMF man was recently sacked over this. More here http://greece.greekreporter.com/2011/09/21/statistician-says-greece-played-numbers-game-inflated-deficit/ )
Also, Venizelos settled for 182% in 2012, choosing to ignore the most recent IMF projection, made public two weeks ago, according to which Greek debt/GDP ratio in 2012 will shoot up to 189%. All efforts are made to cover up the size of the economic crime committed in this country the past two years, in the name of debt reduction, a crime resulting in a 74 percentage point debt increase. This is a wholly unprecedented explosion.
The previous unrealistic projections on GDP are beginning to harm the subservient Greek government. Up until now the government would sweep reality under the carpet, hoping to mask the social tragedy caused by austerity. They wrongfully claimed that renewed growth is on the way, and that the recession was much smaller. In June they claimed the economy was shrinking by 3,8% a number recently revised to 5,5%. If you add -0,2% in 2008, -3,2% in 2009 and -3,5% in 2012, the result is social destruction. Only in war is wealth destroyed in such a scale.
The fact that the recession is deeper than originally projected is not just a Greek phenomenon and it is by no means an accidental failure ( as shown by the fact that every country sickened by the IMF pest goes through similar experiences). The depth of the crisis accelerates the path towards a “controlled” Greek default, courtesy of Angela Merkel. Last Monday, Der Spiegel brushed aside Venizelos’ reassurances that there will be a primary surplus of 1,5% of GDP in 2012. “The June deal on a second bailout package for Greece, amounting to 109 bn euros, was based on the assumption of a 0,6% growth. With recession continuing for at least a year, the country will most probably need much bigger help.”
Thus the final details on the large haircut may be decided in the next Summit and were probably part of the discussions that German Finance Minister Roesler had at the Greek ministry of finance. Amidst all the uncertainty, one thing is certain. Bailout, “rescue” and default all entail new hardship for the people of Greece.
*G.Papandreou’s infamous pre-election statement