Huge budget cuts lead to protests in Spain
Spain released a budget on Sept. 27 comprising of new spending cuts and higher taxes amid violent and peaceful protests and fear of a bailout.
The new budget is accentuated by reductions in spending that will cause the various ministries of the Spanish government to be reduced by more than 10 percent. Some ministries, such as the agriculture and industry departments, will have their budgets cut by nearly 40 percent.
The budget will also increase taxes on greenhouse gas emissions and stock transactions. In addition, the budget calls for the salaries of all public workers to be frozen. The salaries, which have been at a fixed level for the last three years, will continue to be frozen into 2013.
Spanish Prime Minister Mariano Rajoy supported the budget cuts.
“We know what we have to do, and since we know it, we’re doing it,” Rajoy said in a Reuters report. “We also know this entails a lot of sacrifices distributed … evenly throughout the Spanish society.”
Vice President Soraya Saenz de Santamaria alluded to Spain’s economic woes in a statement to CNN. “This is a budget made in a time of crisis, but precisely to get out of a crisis,” she said.
The budget cuts come as Spain tries to prevent a potential bailout. With the fourth-largest economy in Europe, Spain would be the largest eurozone country to be bailed out.
The eurozone is the group of seventeen European Union (EU) countries that use the Euro as their form of currency.
If the Spanish economy were to fail, it would create a large ripple effect across Europe that could result in the devolution of the Euro. If bailed out, Spain would join Greece, Poland and Ireland as countries affected by the economic downturns that have encompassed the world.
The new budget also comes as Spain’s unemployment rate escalates to nearly 25 percent. The general lack of employment has led to calls for Rajoy’s resignation and street protests against austerity measures. Austerity measures are difficult economic conditions created by a government, in order to reduce budget deficits.
More than 1,900 protests against austerity measures have occurred in the Spanish capital of Madrid in 2012. The protests took a violent turn Tuesday when police and demonstrators clashed. The incident resulted in 28 people sustaining injuries and 22 arrests.
Despite Tuesday’s violence, the protests have been predominantly peaceful. Protesters like Adelaida Olivares only want their voices to be heard.
“The only way we can achieve anything is to be here every day,” Olivares told Reuters.
The response from the Calvin community has been varied.
William Morrison, a Senior Economics major and IDS minor, is uncertain of if the budget will succeed in helping the Spanish economy.
“One could argue that the Spanish government won’t collect as much in taxes because of the country’s high unemployment [rate],” he said. “The raised taxes could [also] stifle businesses and increase high unemployment.”
While uncertain on the tax hikes, Morrison is in favor of the cuts on spending.
“I think it’s good that Spain is cutting its government spending as they have a long history of wasteful government projects that produce little economic benefit,” he said.
Other students spoke about the situation with the protesters.
Sophomore Micah White is supportive of the protesters, but also sympathizes with the Spanish government. “I can see why they’re upset, but getting out of a huge deficit requires sacrifices on everyone’s part,” he said.
Sophomore Nate Zietse sides with the protesters, however.
“I sympathize with them because they’re desperate,” said Zietse. “If they can’t turn to the government then who can they turn to?”
If Morrison is right, then the government may be as uncertain of themselves as the protesters are.
“There really isn’t any sure answer for what should be done because we still don’t really know how a government should best respond to an economic crisis,” he said.
Despite that uncertainty, Morrison believes that Spain is moving in the right direction. “The only part I feel certain about is that it’s good that they’re cutting their budget,” he concluded.
This article draws information from Reuters and CNN.