Quico says: Chávez’s message today, in a nutshell, was that he plans to raise Value Added Tax and cut overall central government spending from BsF.197 billion in 2008 to BsF.156 billion this year. So his bright idea is to fight the looming recession with a tax hike and a 21% cut in public spending. But remember, inflation is running at 30% so, in real terms, that’s more like a 39% budget cut, year-on-year.
And this bit of Hooverian economics is dressed up in socialist rhetoric and trumpeted as a masterstroke of counter-cyclical fiscal mangement. Ooooooookay….
Never fear, we’re told: everyday hard working Venezuelans will hardly notice the difference because the entirety of the cut will come from capping high-ranking public servants’ salaries and cutting the fat from the budget: official advertising, cocktail parties (agazajos), official cars, office redecorations, that sort of thing.
…ummmm, even if you take this claim at its own, insane, face value, doesn’t that amount to a roundabout way of admitting that 39% of last year’s budget was wasted on exorbitant salaries, needless ad campaigns, extravagant hors d’oeuvres, fancy cars and Thainesque office makeovers?!?
There is no such thing as a pain-free retrenchment on this scale. It’s clear to me that the real cuts won’t be announced. They’ll just be made.