AltAusterity Digest #25 November 30-December 6, 2017

The Republican’s $1.5 tax cuts have been passed in the Senate. The tax bill, which will see the corporate tax rate fall from 35 to 20 percent, was passed in a 51-to-49 vote at 2 a.m. Saturday morning. However, only hours after the passage, Trump suggested that the rate may be finalized at 22 percent. Since the bills that were passed in the House and Senate differ on some key points, these details will need to be harmonized as the same bill needs to be passed in both houses before it can become law. The suggestion of raising the corporate tax rate is likely to cause divisions within the Republican Party.

The OECD’s 2017 Pensions at a Glance study has found that British workers have the worst state pensions of any developed country. British workers receive just 29% of their previous earnings from government pensions, compared to an average of 63% in other OECD countries. To offset these insufficient state pensions, British retirees have had to rely on private pensions to bolster their income replacement to 60% of former earnings. The value of private pensions in Britain is equivalent to roughly 95% of GDP. The size of private pension assets varies widely from over 100% of GDP in the US, Switzerland, the Netherlands and Denmark to less than 10% in France and Germany, where state pensions are much more comprehensive.

The Irish government has agreed in principle to raise the retirement age of public sector workers from 65 to 70. State employees hired after April 2004 will now have the option to work an additional five years. The changes exempt certain occupations such as gardaí, firefighters, defence force personnel and prison officers who will be required to retire earlier due to the nature of their work. Those who decided to stay on beyond 65 would have to continue to make pension contributions even if they were already entitled to a full pension, but will not receive further pension entitlements.

Eurozone finance ministers have elected Portugal’s Mario Centeno as the EU finance chairman. Centeno was appointed to Portugal’s finance ministry in 2015 by Socialist Prime Minister Antonio Costa, and has been influential in reversing certain austerity measures and leading his country to the highest growth in ten years. Despite these changes he has insisted that EU budget goals must be met, and has supported the “stability and growth pact,” which sets out EU fiscal rules. During his term as finance chairman, Centeno will attempt to establish a eurozone budget, transform the eurozone bailout fund into a European Monetary Fund, and oversee the third and final bailout program in Greece.

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