New York Times Editorial Board
“Greek society and the economy cannot afford any more measures,” Prime Minister Antonis Samaras said on Nov. 4. There is no room or need for any more across-the-board wage and pension cuts, he declared.
The representatives of the European Commission, the European Central Bank and the International Monetary Fund, however, are deaf to his warnings. They are demanding additional belt-tightening measures, including more layoffs. Otherwise, they threaten to hold up 1 billion euros in already overdue bailout money that Greece needs without further delay.
Between pay cuts, public spending cuts and tax increases, Greeks have seen their disposable income slashed by roughly 40 percent since 2008, and most of them were not well-off to begin with. Cuts already in place have reduced Greece’s budget deficit, exclusive of interest payments, from 15 percent in 2008 to near zero this year.
These austerity measures have resulted in a 25 percent cut in national output, 28 percent unemployment, slashes in health care and other public services, and rising poverty.
And with the economy shrinking, Greece’s debt burden, as a percentage of annual output, is more than 20 percent higher today than it was in 2010 when the European Union bailout program began.
Meanwhile, the country is veering close to political breakdown. Millions of voters have abandoned the centrist parties of Mr. Samaras’s coalition, which now holds only a tenuous five-vote majority in Parliament.
Street clashes attributed to, and now directed at, the neo-Nazi Golden Dawn party are straining the social fabric. Strikes and anti-austerity demonstrations occur almost daily.
Mr. Samaras could be doing more to ease those social tensions. His attempts to shut down and replace the state broadcasting network have perplexed and angered many Greeks. A police raid on the network’s former headquarters building on Nov. 7 may force an early Parliamentary vote of confidence in the Samaras government.
Worse, the government has done little to reform a grossly unfair tax system that overburdens the already painfully squeezed middle and working classes and fails to pursue the rich and well connected.
A more progressive tax code and a more consistent collection and enforcement system are areas in which consistent outside pressure might do some good. But Europe’s continued fixation on spending cuts, layoffs and tax increases is helping no one, while it is pushing Greece toward the brink of collapse.