Italy refuses to budge on EU's budget demands: 'There isn't any B plan'

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TODAY:

• The European Union and Italy's new populist government are going to war over budgets.
• In the U.S.some politicians pick their voters rather than the other way around, but there's a growing backlash against gerrymandering.
• MichaelAvenatti,the porn-star-representing-lawyerturned possible contender for the 2020 Democratic Party presidential nomination, seems to be facing some big financial challenges.
• Missed The National last night? Watch it here.

Budget battle

The European Union and Italy's new populist government are going to war over a couple of percentage points.

This morning, the European Commission the EU's executive body rejected Italy's draft 2019 budget because it would increase the country's deficit from the previous government's target of 0.8 per cent of GDP to 2.4 per cent.

Italy is already the bloc's second-most-indebted member, behind Greece. Its national debt stands at 131 per cent of GDP more than twice the EU's notional 60 per cent "limit."

It's the first time that the EU has exercised its power to spike a member state's annual fiscal plan.

Italy has been given three weeks to submit a revised budget to Brussels, although its government is suggesting that there will be no compromise.

"There isn't any B plan," Prime Minister Giuseppe Conte told Bloomberg News.

His firebrand deputy Matteo Salvini, leader of the far-right and anti-EU League party, expressed outright defiance.

"We won't subtract one single euro from the budget," Salvini told reporters during a visit to Bucharest. "I personally am available to go even tomorrow to meet the President of the European Commission to explain how Italy's economy will grow thanks to this maneuver. But no-one will take one euro from this budget."

The plan, tabled late last month, increases spending to meet a number of key campaign promises from the League and its left-ish coalition partner the Five Star movement. They include tax cuts, a basic income for the unemployed, and rolling back the retirement age.

The populists' theory is that the extra funds will help jumpstart an economy that really hasn't grown in 15 years.

But the EU maintains that the country's debt-servicing costs $98.5 billion in 2017 are already far too high, outstripping what the government spends on education, and that government austerity must continue.

If a new budget can't be agreed upon, the European Commission will open an excessive deficit procedure investigation, a disciplinary process that could eventually lead to sanctions or expulsion from the EU. Although levying such punishments against the bloc's third-largest economy might be self-defeating.

What seems more likely is that the markets will be used to try and bring the populists to heel. Italian bonds have already been falling for the better part of a week, and the government's borrowing costs will further increase if the European Central Bank stops or slows its interventions.

Some sort of face-saving agreement seems like the most likely outcome. After all, France is being permitted to run an even larger deficit in 2019, equal to 2.6 per cent of GDP.

The wildcard remains Salvini, who owes much of his popularity to his anti-EU stance and has more to gain by for an all-out conflict than compromise.

"The blood-and-tears manoeuvres which butchered Italians, sent via fax by Brussels, don't work with us," he proclaimed today. "We are not going to backtrack by half a centimetre."

Gerrymandering backlash

In the U.S., some politicians pick their voters rather than the other way around, writes David Common.

Some races in the American midterms just aren't up for grabs. It's already clear who will win, and it's because one political party dominates life in a particular district.

The politicians have designed it that way.

Gerrymandering is all about drawing maps. In many states, the power to draw those maps lies with the legislatures. So, the party in power can draw weirdly shaped maps using available data about where their supporters live and vote.

Sometimes they'll even pack virtually all the opposing parties' supporters into certain voting districts, while ensuring more than 50 per cent of their own supporters dominate in the rest.

It may sound like cheating the system, but it's perfectly legal.

Some people want to change that.

I travelled to Michigan, where a new organization has made gerrymandering a midterm election issue.

Despite the polarized U.S. political climate, "Voters, Not Politicians" is a cross between a Bernie Sanders-like grassroots uprising and a Trump-style "Drain the Swamp" drive. The group's members are going door to door trying to persuade voters to take the power of drawing electoral maps away from politicians and hand it to a more independent citizen's panel that must achieve some consensus.

But explaining gerrymandering to people is just half the battle.

Then there's the question of money. The other side has lots and has been using it to fight in public and in the courts.

In fact, one of Michigan's Supreme Court judges voted against an effort by the Michigan Chamber of Commerce to kill the ballot proposal on gerrymandering. That judge was backed by Republicans, and they pulled their financial support from her campaign for re-election to the bench after her ruling.

Republicans appear to be the greatest beneficiaries of the currently gerrymandered maps, but Democrats most certainly have been as well. In fact, if they have big wins in November, it may become the Dems who redraw the maps in their own favour.

If Michigan's anti-gerrymandering effort works, expect other states to follow.

-- David Common

• WATCH: David Common's feature on gerrymandering tonight on The National on CBC Television and streamed online

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Legal costs

Michael Avenatti, the porn-star-representing-lawyer turned possible contender for the 2020 Democratic Party presidential nomination, likes to style himself as a fighter.

"If you want to fight for this republic, if you want to take this nation back, you're going to have to engage in a brutal campaign," he proclaimed this past weekend during an appearance at a politics fan-fest in Los Angeles. "Part of the problem is that we don't have enough Democrats that will actually stand toe-to-toe with this bully Donald Trump and fight for the rights and values of this republic."

But two California court judgments delivered yesterday suggest he might be more of a runner.

First, a Superior Court in Los Angeles slapped him with a personal judgment for $4.85 million US over an unpaid debt to a former law partner.

Then, less than an hour later, a court in nearby Santa Ana awarded a local landlord an order evicting Avenatti's firm from its swanky Newport Beach offices over four months of unpaid rent totalling $213,254 US.

The root of both cases is a long-running dispute between Avenatti and his former employee Jason Frank.

The firm that Frank worked for, Eagan Avenatti, sought bankruptcy protection in 2017. It had agreed to pay him and other creditors, including the U.S. government, millions when it emerged from the process this past spring.

But Frank's money, personally guaranteed by Avenatti, has not been forthcoming.

Avenatti says that he no longer owns that firm and is not responsible for the debts or the rent payments. Although his new firm, Avenatti & Associates, continued to occupy the same offices until yesterday.

Avenatti has characterized Frank's lawsuit as "frivolous and baseless,"and yesterday he told the LA Times that his former colleague owes him $12 million. The paper notes that he has not provided evidence to back up the claim, nor filed any legal action.

It also appears that this not the only financial dispute Avenatti is engaged in.

Over the weekend, the Daily Beast website published a lengthy exploration of Avenatti's fiscal situation, revealing the existence of $1.2 million in liens over unpaid federal taxes, as well as millions more in liens, warrants, judgments and penalties against his former company Global Baristas, once the majority owner of the Seattle-based Tully's coffee chain.

And then there is his acrimonious divorce from Lisa Storie-Avenatti, his second wife and mother of his young son. It has featured claims of lavish spending on mansions, vacation villas, personal jets, chauffeurs, and his passion for participating in European car races like the 24 hours of Le Mans.

(In July, a judge ordered Avenatti to pay $156,000 US a month in child and spousal support, while the couple tussles over access to his tax returns and other financial records.)

Meanwhile, Avenatti continues to seek backing for an eventual presidential campaign.

• WATCH: Rosemary Barton's interview with Michael Avenatti

On Sunday he was in Massachusetts, speaking at a fundraiser for left-wing Democrats.

Yesterday, he paid his third visit to New Hampshire in recent weeks, seeking to build momentum in a state that kicks off the 2020 primary season.

Avenatti recently formed a political action committee called "Fight PAC" to help underwrite his quest. Per its first filing this month, he has raised just under $12,000 US.

His biggest expense so far has been $4,500 on Facebook advertising. Most of his disclosure form is taken up with receipts for Lyft rides.

A few words on ...

A flagpole controversy in New Brunswick.

Quote of the moment

"It will not satisfy the public by just pinning this kind of matter on a few security and intelligence officers. Covering up this kind of savagery will hurt the conscience of all humanity."

- Turkish President Recep Tayyip Erdogan demands answers about the killingof journalist Jamal Khashoggi inside the Saudi Arabian consulate in Istanbul.

What The National is reading

• Dangerous Category 4 Hurricane Willa closes in on Mexico coast (CBC)
• Trump's evidence-free claims about the migrant caravan (NY Times)
• Suspected explosive device found at George Soros' New York home (CBC)
• Tiny homes for homeless vets planned for Calgary neighbourhood (CTV)
• U.K. government urged to tackle 'relentless' street harassment of women (Politico EU)
• Self-driving school bus test halted in U.S. (BBC)
• World's oldest intact shipwreck discovered at bottom of Black Sea (Guardian)
• Asian elephants could be the math kings of the jungle (Science Daily)

Today in history

Oct. 23, 1969: Sex education in schools

Forty-nine years ago, American communities were tearing themselves apart over sex education, denounced by some as a "communist plot" designed to undermine youthful virtue. But in Canada, we were taking a far more measured, mojo-killing approach. This half-hour Take 30 special goes coast to coast to explore the curriculum and seems to prove that health was the least sexy subject.

Take 30: Sex education in the schools

55 years ago

Duration 26:22

Take 30 surveys how school boards across Canada are teaching (or not teaching) students the facts of life.

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