December 21, 2014
Action and reaction
One key question posed by Wednesday’s presidential announcements is whether they reflect a long-term strategy or the events of the day. The 40 increase in the universal child benefit (from 460 to 644 pesos per beneficiary) was certainly long overdue after a full year of heavy inflation but its timing looks very much like an admittedly successful bid to prevent opposition CGT chief Hugo Moyano’s Plaza de Mayo protest rally from dominating the front pages of yesterday’s newspapers. If so, it was overkill because overshadowing Moyano’s relatively feeble demonstration (filling perhaps a third of the square, according to the most generous estimates) did not warrant the outlay of some 14.6 billion pesos to up the benefits. At the same time a prompt awareness of Moyano’s failure might have encouraged President Cristina Fernández de Kirchner to stonewall raising the income tax floor (a favourite hobbyhorse of the teamster) — that and a determination not to give any ground to the opposition’s abortive Congress session that same day also pushing for income tax relief.
Thus far everything can be explained as a reaction to the day’s events but if we assume that their importance was secondary and the announcements essentially stemmed from long-term strategy, what conclusions should be drawn? Assuming that the rigid income tax floor is more than the desire not to be seen as yielding anything to Moyano and the political opposition on the same day with the intention of raising the floor at a later date, this indicates that the various drastic policy U-turns so far this year will not include any deceleration of public spending — Wednesday’s family benefit increase was accompanied by an extension of low-income housing programmes. There is also a definite redistributive thrust to policy if incomes over 15,000 pesos are denied tax relief while some 3.5 million children and almost eight million in total at the bottom of the social ladder see their family benefits increased. Those latter figures implicitly agree with the CTA’s poverty survey earlier this week but that is another debate.
Last and probably least, the midweek events raise the question of Moya-no’s future after his rally. A question perhaps not worth an answer because Moyano has cobbled together such a middle-class agenda and alliance — the anti-crime crusader Juan Carlos Blumberg, his garbage collection deals with City Mayor Mauricio Macri and the higher income tax floor — that he risks disqualifying himself as a voice of working-class anger. The family benefits were worth increasing in their own right but hardly to distract attention from Moyano.