Italy's politicians aren't well-known for sober realism, but the campaigns ahead of Italy's elections on March 4 are something new. The political parties are outbidding each other with the most lavish pledges -- ranging from Silvio Berlusconi's flat tax to the Five Star Movement's "citizens' income" -- while offering no credible explanations of how to pay for them.
This kind of fiscal daydreaming is especially reckless in Italy, where sovereign debt has topped 130 percent of national income. The country's leaders should be arguing about how to bring this debt under control, not promising to make it bigger still.
Two factors help to account for the surge in irresponsibility. One is the country's economic recovery, which has helped to reduce the government's budget deficit to 2.3 percent of gross domestic product. The next government could use the upswing to cut borrowing further, making space to raise spending when the next recession hits. Instead, the better outlook is prompting calls for fiscal relaxation. Matteo Renzi, leader of the center-left Democratic Party, would like to raise borrowing to 2.9 percent of GDP for the next five years.
The second reason is Italy's new electoral law -- a mixture of first-past-the-post and proportional representation. The new rules will make it impossible for any party to govern alone. As a result, leaders know they won't have to keep their word. They'll be able to blame their broken promises on the need to do business with coalition partners.
A precious opportunity to discuss Italy's towering public debt is therefore going to waste. The subject could hardly be more urgent. The European Central Bank has begun to scale back purchases of bonds, and the program is set to end in September. As the ECB's extraordinary stimulus comes to an end, Italy's borrowing costs are likely to rise.
Rome also needs to show more fiscal responsibility if it's to have any influence in the upcoming debate on the future of the euro zone. The Italian government has long argued for greater risk-sharing between member states -- making the case for a joint unemployment insurance scheme, for instance. Germany is unlikely to agree to such measures unless Rome proves its fiscal rectitude.
Italy's politicians seem intent on proving the opposite. The longer their fiscal daydreaming goes on, the more certain it is to end with a rude awakening.