Friday, March 14, 2014
Committee (Omni Shoreham)
In January 2010, upon realizing that Portugal would miss its budget deficit reduction targets and after having been downgraded by all 3 major rating agencies, the Socialist government put out a statement to reassure investors government that it was committed to deficit reduction through staff attrition, government wage freezes and spending reductions. Within five days, the chief opposition party confirmed that they would not oppose the government's 2010 budget, thereby assuring parliamentary approval. During the same time period, the governing Greek socialist party, faced with an even greater budget deficit, dragged its feet in terms of fiscal adjustment. Additionally, the Greek version of the Portuguese chief opposition party was passionate and loud in its opposition to the fiscal adjustment measures. While Portugal committed early, effectively and in a bipartisan fashion to a fiscal adjustment process, Greece attempted to avoid adjustment at all costs and demonstrated its increasingly limited political will by refusing to implement a whole slew of fiscal adjustment measures. By comparing these 2 countries, I show that the greater level of elite-level fractionalization combined with a greater level of dependence upon critical masses of supporters in terms of voter turnout in the Greek case led to slow and partial reform in Greece unlike Portugal.
