Why I Think Brexit Will Win

Polls are not providing much insight into whether voters will opt for a Brexit tomorrow. The Leave campaign's surge was upended last week with the slaughter of Labour MP Jo Cox by a deranged constituent outside a Leeds library.

If an edge exists, the Leave camp still has it, but it is modest. And if you are one of those who like to "follow the money," then you might want to pay attention to the jump in exchange transactions. Britons are unloading pounds out of fear that the currency will take a significant hit when Brexit triumphs.

My own non-rigorous interpretation gives great weight to the big win for the Five Star Movement in Italy's mayoral election Sunday. Thirty-seven-year-old beauty Virginia Raggi is the first woman and the first member of the Five Star Movement (M5S) to be Mayor of Rome. A super-historic achievement (she won over two-thirds of the vote!) and a huge blow to politics as usual as personified by Italian prime minister Matteo Renzi.

Think of Renzi as a Paul Ryan of the center-left. Someone that party leaders believe breathes new life into their corpse-like organization. It is hard to think of a Democrat -- young, confident, telegenic -- in the United States who is a peer to Renzi. Julian Castro? Not even close. For a while Renzi seemed to have a little pep in his step. He was able to achieve a rollback of Italian labor law (of the type Hollande's Socialists are presently attempting with the El Khomri law). But because of the success of Raggi in Rome and another M5S upset in Turin, Renzi appears to be a politician well past his sell-by date.

Granted, Italy is not the UK. But if voters in Rome overwhelming support a non-traditional leader --and M5S advocates an Itexit -- I think it means something, and it augurs ill for the status quo.

Also, I don't think Juncker lecturing Britons that "out is out" is going to win any votes for the Remain campaign. And there is the hope that the UK will lead the way with the right choice as Parliament did when it voted against bombing Syria in the summer of 2013.

Tsipras' Syriza Should Not Survive

Read "Comparing Greece’s New Proposal With the Creditors’ Previous Offer" by Liz Alderman and ask yourself how Tsipras, coming so soon after the 61% "Oxi" vote, can muscle his austerity capitulation through Parliament:

Prime Minister Alexis Tsipras of Greece largely capitulated late Thursday to austerity demands by his country’s creditors.

The move came only four days after Greek voters heeded his call to repudiate an earlier European bailout blueprint known as the Juncker plan, which had been put forth by Jean-Claude Juncker, the European Commission president.

With the Tsipras proposal, which the Greek government submitted under a tight deadline before a weekend of meetings that could determine whether Greece could remain in the euro currency union, the country is seeking a three-year bailout loan of 53.5 billion euros, or about $59 billion.

The proposal includes terms that are virtually identical to the Juncker plan.

Here is a look at some of the main provisions:

STIMULUS AND DEBT

Greece, whose total debt exceeds €300 billion, proposed running a small primary surplus — the amount of money in its coffers before expenses and interest payments — as a way to free up more money for the moribund economy rather than diverting it to paying off debts.

Greece would agree to the levels in the Juncker plan: 1 percent of gross domestic product this year, 2 percent next year and 3 percent the year after.

Greece also asked for a restructuring of debts due after 2022, although it did not specify the changes it would seek.

TAXES

Mr. Tsipras’s proposal includes a series of new taxes and structural adjustments throughout the Greek economy that are identical to the Juncker plan.

They include a 23 percent value-added tax — a consumption tax — for most goods, including restaurants and processed foods; a rate of 13 percent for basic food, energy, hotels and water; and a 6 percent value-added tax on pharmaceuticals, books and theaters.

In a move that may spur a social backlash, Mr. Tsipras also reversed course and bowed to creditor demands to eliminate the 30 percent discount on the consumption tax for the Greek islands, starting with the most lucrative tourist destinations.

The plan would also eliminate preferential tax treatment for farmers. But there is a difference in the timing: Greece would do this by 2017, not by the 2016 date proposed by creditors.

Greece pledged changes in the country’s notoriously lax tax system to make collection more thorough and efficient. The proposal uses language identical to Mr. Juncker’s, including the promise to create an autonomous revenue agency and produce “a comprehensive plan with technical assistance for combating tax evasion.”

Other provisions would include closing loopholes for income tax avoidance, adopting outstanding overhauls to the income tax code, and introducing a new criminal law for tax evasion and fraud.

There is one difference between the plans that indicates Mr. Tsipras means to have businesses share the pain: He proposes raising the corporate tax rate to 29 percent. The Juncker plan called for a corporate rate of 26 percent to 28 percent.

PENSIONS AND HEALTH CARE

Dropping its earlier opposition, Athens acceded to creditors’ demands for further cutbacks in the Greek pension system. Mr. Tsipras has adopted nearly the same terms as in the Juncker plan, including a pledge to gradually raise the retirement age to 67 by 2022 – or allowing retirement at age 62 if a person has made 40 years of contributions to the pension system.

The Greek plan agreed to create “strong disincentives to early retirement, including the adjustment of early retirement penalties.”

The government would phase out a supplementary allowance for Greece’s lowest-income retirees by 2019. But unlike the Juncker plan, that phaseout would begin next spring, rather than this year.

Health insurance contributions paid by pensioners would rise to 6 percent of the cost, from 4 percent today. Those contributions would also be required for the first time on supplementary pensions.

In all, the pension measures are meant to save the government up to 1 percent of gross domestic product through next year — in line with creditors’ demands.

LABOR OVERHAULS AND PRIVATIZATION 

Greece agreed with the Juncker plan’s proposal to not roll back previously agreed-to overhauls to the labor market. And it said it would begin to review existing labor market arrangements, including collective wage bargaining, in the fall. 

The new Greek plan backs off previous opposition to the privatization of lucrative state assets, agreeing to creditor demands to sell the state-owned electricity transmission company.

GOVERNMENT SPENDING 

One of the few differences between the Tsipras and Juncker plans involves military spending. The government pledged to cut military expenditure by €100 million this year and €200 million next year. The creditors had asked for an immediate cut of €400 million. 

But the government for the first time agreed to take additional steps, if necessary, to cover revenue shortfalls, including increases to income and corporate taxes.

All in all total, abject surrender. There is nothing else to call it. Unless Sunday's 61% "Oxi" was a mirage, Tsipras' government cannot survive. Tsipras' government should not survive.