Spain is executing the House GOP budget step by step.
Figures released by the Spanish government on Friday show that country with an unemployment rate of 24.4%, the highest in Europe, and a rate of over 50% among 16-24 year olds.
But despite the bad economic news, that country’s leadership appears determined to stick with the austerity program it has pursued for the last two years and has even recently announcing an increase in consumer taxes for next year.
According to the San Francisco Chronicle, “Prime Minister Mariano Rajoy passed a plan in February to make it cheaper for employers to let workers go while raising taxes and cutting spending including health care and education.”
As explained by The New York Times, the Spanish government’s hope has been that even if growth and jobs suffer from draconian budget cuts, the lower interest rates that result will keep bond investors happy. But instead, foreign capital has been fleeing the country.
Standard & Poor’s just downgraded Spanish bonds by two notches, confirming a sense among investors that “it will be nearly impossible for Spain to meet its current deficit-lowering target amid one of the most severe recessions in the euro zone.”
So no, austerity is causing investors to pull their money out because they know that if the government is cutting spending with 25% unemployment, Spain's economy will descend into a death spiral. Foreign investors know that with nobody in Spain able to buy their products any longer, there's no point in investing in the country when the economy is shrinking.
That should be the job of the spender of last resort, Spain's government. Instead they are cutting government jobs, spending on social program,education and healthcare, and axing business regulations, exactly what the Republicans here say we must do now.
It's failing miserably. But Republicans will do it here anyway if you vote for them. Period.
Your call, America.
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