At a time of budgetary debate, and when balancing the accounts became an uncontested objective, it is worth remembering that at the beginning of the century the PS and the entire Portuguese left considered the Stability and Growth Pact and the 2% deficit limit to be stupid, defending its review as an absolute necessity.
The PEC was to blame for the decline in GDP, the economic crisis, unemployment, evils that only an increase in public spending could overcome.
In the same vein, there were some governments in southern Europe that did not tolerate limits on their electoral policies and in 2005 the European Commission even had the PEC review on its agenda.
It was the time when the governor of B. Portugal, V. Constâncio, stated that with the euro “we will not have balance of payments problems again…no one analyzes the macro dimension of the external balance of Mississippi or any region of a large monetary union…”.
Times have changed and it is also interesting to remember the turnaround of the Socialist Party which, leaving the country with an excessive deficit procedure, with Guterres, and in bankruptcy, with Sócrates, became the champion of budgetary balance and even a surplus. Change worthy of praise, although late.
It could therefore be thought that the PS converged with the PSD’s thinking on the topic, but this is not quite the case: they converge on budget balance, but differ on the way to achieve it.
Since the deficit is just a result of two quantities, revenue and expenditure, while the PSD seeks balance by reducing expenditure compared to GDP and cutting taxes, the PS saw and still sees the tax burden as the lever for increasing expenditure.
The point is that the effects on the economy are very different, particularly when it is known that part of investment and public consumption lacks rationality. There are no correct accounts when the expenditure serves obsolete systems, demanding sectors or electoral objectives. In the SNS alone, the reduction to 35 hours resulted in a brutal increase in costs, a reduction in medical procedures and a degradation of the service.
With such a high level of public expenditure, the economy does not grow, as it requires a disproportionate tax contribution from citizens and companies, with a perverse effect on investment and consumption, affecting the creation and even distribution of wealth.
Economist