Italy: An Innovative Government?

When it comes to political dysfunction, Italy is an innovator. In the 73 years since the fascist regime of Benito Mussolini collapsed, the country has had 64 governments (soon to be 65).

Yet as my pal @gflipton explains, an unlikely pact between Italy’s left-wing 5-Star Movement and far-right Lega, which should be finalized this week, would represent an even more novel accomplishment: a marriage of evenly-matched populist parties from opposite ends of the political spectrum that even the most creative anti-establishment leaders have struggled to emulate elsewhere.

But beyond a shared disdain of the status quo and establishment politicians, there are few areas of agreement between Five-Star and the League, meaning that this marriage could be a rocky one.

Perhaps the thorniest issue is fiscal policy, where both parties want to put more money in Italians’ pockets, but disagree on how to do that: 5-Star wants to implement a universal basic income scheme for all citizens, while the League favors a 15 percent flat tax. Either of those options would severely test Italy’s already-shaky adherence to EU fiscal rules — current estimates suggest they would cost an additional $100 billion to $120 billion a year, a potentially dangerous economic burden for Europe’s second-most indebted country (after Greece).

Can both parties get what they’ve promised their voters without coming to blows with each other or provoking a crisis with Brussels? The 5-Star/Lega tie-up is a political high-wire act with almost no safety net below.