Government In Chaos On Both Sides Of The Atlantic

Italian Government In Chaos As Neither Party Earns A Majority
The failure of Pier Luigi Bersani of the center-left Partito Democratico or  Silvio Berlusconi of , to garner a majority of the votes in Mondays election has left Italy in a state of limbo with a hung parliament. Both parties were greatly affected by the popularity of the Five Star Movement, a group started on the Internet in 2009 by Beppe Grillo, which won roughly one in four Italian voters.

According to BBC News, the stalemate could result in fresh elections or the “formation of a very broad and unlikely set of partners in a coalition government that would re-work Italy’s much-criticised election law.”

Global Markets Nervous As Italy Moves Forward
Global markets recoiled in response to the election results and with the process of sorting through the various options likely to take weeks, the already unstable European markets could weaken further.

Barclays Bank economist Fabio Fois told Reuters: “Political instability is likely to prevail in the near term and slow the implementation of much needed structural reforms unless a grand coalition among center-left, center-right and center is formed.”

Stalem

A similar stalemate is affecting business in Washington, but, unlike in Italy, the legislative logjam largely is chaos of the politicians making. After weeks of press conferences and public appeals for consensus, Republicans and Democrats have so far failed to reach an agreement that will avoid mandatory budget cuts related to sequestration.

Crisis Largely Politicians Fault, But Voters Share Partial Blame
A recent Pew Center poll found 73 percent of the people want to solve the deficit problem only or mostly with spending cuts, compared to 19 percent who favor only or mostly taxes. However, another Pew poll released the next day reported that when asked about which federal programs should have their funding increased or decreased, voters balked. Of the 19 categories of spending addressed, voters did not identify one category where there a majority in favor of cuts.

“While people mostly wanted spending to stay the same, in three categories – health care, education, and veterans’ benefits – people preferred increases to stability. Even among Republicans, in whose ranks budget-cutting fervor runs high, cuts draw majority support in only two categories – foreign aid and unemployment insurance,” William Galston of the Brookings Institution says.

Sequestration Masks Crises Just Around The Corner
All the talk about sequestration is distracting attention from larger crises just around the corner. In fact, it is coming at the end of March when the continuing budget resolution currently funding the government expires.

If Democrats and Republicans can’t agree on a stopgap funding measure by March 27, government spending could ground to a halt.

 

 

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