Spain’s socialist opposition leader Alfredo Perez Rubalcaba is trying to make the most of graft allegations against Prime Minister Mariano Rajoy.

His campaign to get Rajoy to quit brings back memories of when the Socialist Party was ejected from power in the 90s after their one-time nemesis Jose Maria Aznar kept up a drumbeat for then-premier Felipe Gonzalez throw in the towel amid his own corruption scandals.

Rubalcaba’s campaign to force Rajoy to “give up, leave it” echoes the refrain Aznar used to hammer Gonzalez in parliament, one of the best known in Spanish politics, “Vayase, Senor Gonzalez” — “Leave, Mr Gonzalez.”

Rajoy has denied El Pais reports that he accepted more than 250,000 euros ($333,000) in illegal cash payments over an 11-year period from former ruling PP party treasurer Luis Barcenas.

Yet Rubalcaba’s tactic carries risks for the opposition leader, who is facing mutterings of dissent from his party over his failure to lay a glove on a prime minister who’s seen 850,000 jobs destroyed during his first year in office.

While the corruption allegations cut support for Rajoy’s Partido Popular by 6 percentage points in a month, according to a Metroscopia poll published by El Pais on Feb. 3, Rubalcaba hasn’t benefited so far. The two parties were tied on 24 percent in a poll at the beginning of the month, where Rubalcaba has been languishing for the past year.

Rubalcaba has attacked Rajoy for cutting benefits for workers and accused him of undermining health care and education and protecting Barcenas instead of addressing the allegations against his party. “Give up, leave it. You can’t resolve the political crisis that Spain is facing,” he told Rajoy in Parliament on Feb. 13.

However, Rubalcaba’s campaign may not match the success of Aznar’s, which felled Gonzalez in 1996.

“The trouble with Rubalcaba is he’s associated with defeat,” said Nigel Townson, a history professor at Madrid’s Complutense University. Rubalcaba lost the 2011 election to Rajoy by 18 points. The Socialists “have to find someone younger, more dynamic and more credible.”

Original post is Calls for Spanish Premier to Quit Echo Attacks That Made Aznar by Euro Crisis.

Spain’s 32-month experiment with austerity-at-all-costs, as devised by Angela Merkel’s budget ultras, is drawing to a close.

Prime Minister Mariano Rajoy oversaw 62 billion euros of tax hikes and spending cuts, 851,000 job losses and three different deficit targets, all in his first year in office. Now European Union budget enforcer Olli Rehn is ready to ease up on the beleaguered premier.

“If there has been a serious deterioration in the economy, we can propose an extension of a country’s adjustment path,” said Rehn, the EU’s economic and monetary affairs commissioner, as he sat alongside Spanish Economy Minister Luis de Guindos on Jan. 28.

Thirty-eight hours later the National Statistics Institute duly confirmed that Spain was indeed suffering a serious deterioration in the economy. The pace of economic contraction more than doubled in the fourth quarter, when the tax hikes Rajoy had delayed to try and win power in the south region of Andalucia finally kicked in. Unemployment hit a record 26 percent.

The shift reflects a changing consensus among policy makers, which has seen the IMF join economists including Nobel laureate Paul Krugman in arguing that too much austerity is self-defeating. It damages economic activity, reduces tax revenues and tips economies into the vicious cycle of deeper spending cuts and falling output that the Greeks have been suffering since 2010.

Officials from the Washington-based fund pressed Rehn on the issue at the IMF’s October meeting in Tokyo, and in January Chief Economist Olivier Blanchard published a paper showing that European austerity programs damaged economic output more than twice as much as Rehn’s analysts had expected.

For Spain, though, what comes next is a trickier issue.

When the first-wave of the global financial crisis tipped Spain into its slump five years ago, then Prime Minister Jose Luis Rodriguez Zapatero applied his sometime adviser Krugman’s recipe of deficit spending for two years.

“We should learn the lesson of the Great Depression,” Zapatero told the New York Times in a July 2009 interview. “When an economy enters a deep recession, the only way we can come out of it is from a big push from the public sector.”

That approach, it turned out, was like revving the engine of your SUV as it careered off a cliff. In May 2010, with the deficit soaring beyond 11 percent, Zapatero was forced into the volte-face that ultimately cost him his job.

Today Spain is 180 billion euros of toxic banking assets closer to reaching a point of equilibrium, but its public finances have been shredded. Government debt reached about 85 percent of GDP at the end of last year from 36 percent in 2007, limiting the scope for any return to fiscal stimulus.

That is the circle the EU officials have to square when they update the Spanish program on Feb. 22.

Over to you Mr. Rehn.

Original post is Adios Austerity, But Debt Will Still Limit Spain’s Growth Measures by Euro Crisis.