Houston, we've got a problem
Ireland should scrap its Senate and reduce its number of public representatives
Overall, the government's response to the crisis here is still to keep the head down and try to pretend that everything is under control.
But cracks are now starting to appear. One or two of the sacked junior ministers have broken ranks to reveal how unhappy they all are with the government's performance, accusing Taoiseach (Prime Minister) Brian Cowen and senior ministers of not being up to the challenge.
Most of the fire has been directed at the Tanaiste (Deputy Prime Minister) and Minister for Enterprise Mary Coughlan. Picked by Cowen as his number two, Coughlan looks the part, but there are growing concerns about her competence and experience for a role that is so vital to Irish business at such a critical time. Mind you, when you look at her ministerial colleagues, it's not clear who would be any better.
Part of the government's "business as usual" posture is to expect everyone else to paper over the cracks as well, especially the media. Analysts and commentators who tell the unvarnished truth about how grim the situation facing us here is -- and if you want to know how grim, Google what the IMF had to say about us last week -- are accused of being "unhelpful," to use Coughlan's word.
The government says that all the negative comment about Ireland is damaging us overseas. So you can imagine the consternation there was here when they read that “Erin Go Broke” piece in The New York Times last week by the Nobel Prize winning economist Paul Krugman (famous because he warned that a global crash was coming).
To be fair to Krugman, he did not write the headline and it was not justified by the article. We're not going broke yet, but we are in dire trouble and he did not pull any punches in spelling out the problem.
Krugman, who must have been reading this column, pointed out that Ireland was in such a bind that it "is being forced to raise taxes and slash government spending in the face of an economic slump -- policies that will further deepen the slump."
Which is exactly the dilemma we were talking about on this page a few weeks ago. As I said then, we're doing it not because we're stupid, but because we have no other option. The cutbacks are being dictated by the international lenders who are becoming less willing to give us billions and billions to blow on current spending.
Which is why it is so important for us to cut day to day state spending here and get it back to a level that starts to match our tax revenues. It's okay for us to borrow to spend on capital projects that create employment and improve the country's infrastructure, which is the core of the Obama plan in the U.S., although Krugman is not too happy with him either. But our problem is that almost all our borrowing is going into the day to day stuff.
Critics of the cutbacks that are necessary here say that this would mean slashing spending on hospitals and schools, for example, hitting the sick and the young. But that ignores the huge savings that can be made in the enormous pay bill for state workers, and all the savings that can be made by cutting back on the number of the extended and additional state and semi-state agencies and programs that mushroomed into life during the boom and which we cannot pay for now.