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The limits of Change

Sanchez stumbles on pensions and regional funding

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The limits of Change

The Government of Pedro Sánchez has just given up on two of most thorny problems he can face during two years that remain in legislature. An agreement has not been possible in Toledo pact to establish a system for revaluation of pensions for future, beyond budget content agreed between PP and PNV. Although re is a general agreement on updating of benefits, PP and citizens are aimed at realism: in event of recession, higher pensions should be discriminated against; PSOE and we can claim rises for all according to IPC. The agreement, which could have cleared one of fronts of government's social policy, is frozen pending new negotiations.

In addition, Government has had to recognize that a reform of regional funding must be postponed until next legislature. It is not a surprise: little of what must contain a reform of that caliber, be future of autonomous funds, degree of autonomic fiscal responsibility, allocation of resources to cover minimum services or transfer of taxes, today has Support for serious calculations supported by parties. The autonomic reform dossier also needs a solution for Catalonia. These problems cannot be solved in two scarce years; But in that period it is necessary to predispose all parties to an agreement, to establish solid calculations to say what is wanted and what can be done and perhaps to reach a reasonable agreement to resolve autonomic deficits.

Previous Editorials

Anti-Crisis Plan (10/03/2018)

Reformist Paralysis (03/02/2018)

Blocked reforms (09/10/2017)

The brake on pensions and regional funding can be interpreted as a reflection of government's political weakness; But re is a deeper flaw that exceeds political juncture. The governments of Rajoy jumped to bullfighting deadlines to negotiate both reforms. The policy of "letting time pass" places Spanish public funding, wher in terms of autonomy State, wher in Social security, in face of sad reality of a lost legislature.

What threatens pensions, to extent that in medium term should be considered as likely a cut in benefits, is ageing of population, an inevitable consequence of increase in period between beginning of retirement and end of it. This demographic pressure, led by improvement of public health, makes it advisable to make drastic political decisions with a broad political agreement: among ors, to transfer non-contributory pension costs to budgets; Eliminating Social security bonuses to job creation (an expense that has not produced expected effects); To stop maximum price, to raise system's revenues and to allow retirees to maintain paid employment.

Pedro Sánchez and his government have clashed with limits of what y can and cannot do. But, although in both cases y cannot aspire to reforms, y can make partial decisions that will prepare way for next legislature. Anor four years of autonomous tensions and a irredeemable deficit of 18 billion in social security would endanger political and social stability.

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