Ireland Calling by John Spain
Fine Gael on the path to victory in Irish General Election
Posted on Wednesday, February 16, 2011 at 08:18 AM
- "Greed is good", especially in Ireland it seems with pillars of society on the take
- Vintage pamphlets offer a glimpse at the rules of 50s-era Irish Catholicism
- A leap of faith by Ireland, the exit from the IMF/EU bailout
- A temporary detour from ecomic issues to Irish soccer madness
- Give Britain a break after decades of Irish emigration to the UK
But no one believes them.
Everyone knows there's no money. So all the talk about spending hundreds of millions on this new program and a billion or two on that new program has zero credibility.
Then there's the problem that the parties don't agree with each other. They are all attacking each other, claiming that the policies of everyone else are wrong and their figures don't add up. Billions are being thrown around like confetti at a wedding or, given the state the country is in, like snuff at a wake.
Most ordinary people here don't understand what the politicians are talking about. And there's a strong suspicion that most of the politicians don't know what they are talking about either.
What everyone does understand is that we can't do anything without the nod of approval from the International Monetary Fund (IMF) and the EU. So all the arguing about policies and billions and all the bickering between the parties as they try to gain traction in the election is largely irrelevant.
The die is cast. Yes, there are some things that the next government will be able to do differently. But the changes will be small and they won't affect the big picture of massive cutbacks ahead.
There's been a lot of overly assertive talk about a new government renegotiating the bailout terms and burning bondholders. There's an implicit suggestion in most of this inflated rhetoric that a new government has the right to throw out the overall game plan even though the match is already underway.
The reality is, however, that the IMF/EU bailout deal negotiated by the outgoing Fianna Fail led government was signed on behalf of the Irish state. It's not something that a new government can walk away from.
The next government can't ditch the deal because, were it to do so, the IMF/EU could turn off the tap and leave us starved of the funds we desperately need to keep going in the short term. The reality is that the four-year plan and the target at the end of it are set.
What an incoming government can do is make some changes in the way we achieve the target. But it cannot change the target.
What that means is that a very small amount of tinkering may be possible. The IMF/EU will probably agree to some minor adjustments in the deal for the political optics, to make the incoming government look good.
But, they will not tolerate anything that undermines the overall four-year plan and the target of a more balanced Irish budget that lies at the end of it.
That means massive cutbacks, whatever new government is in power. The bailout deal for Ireland is tied to our agreement to reduce our budget deficit to an acceptable level over the four years from 2011 to 2014, and that means huge cuts in day to day spending by the government in that period.
At present our spending is one and a half times what we raise in tax, a level that is completely unsustainable and is pushing us towards bankruptcy.
The four-year plan began with the December budget for 2011, which is taking 6 billion off state spending here this year, a huge adjustment which has now begun to hit people with extra tax and lower state services. And there's another three years of huge cutbacks on the way.
The interest payments on the vast amounts we have to pump into the rescue of our banks is a mounting annual burden which will make it even more difficult to keep our annual budgets on track. Just this past week some EU experts claim to have found a 5 billion black hole in our figures, which will mean even higher adjustments will be necessary to achieve our deficit target by 2014.
That's the context in which this election is being held, and it explains why the public is so skeptical of our politicians right now, no matter what party they are from. Most people listen to the speeches and look at the party press conferences announcing yet more new policies with disbelief bordering on disdain.
The most interesting thing in the past week or so has been the weakening of support for the Labor Party and the strengthening of support for Fine Gael, to the point where Fine Gael forming a single party government is now a possibility.
However, that could change again in the coming week and the two main opposition parties might still be forming the next government together in a coalition administration. But even though they may end up having to work together, they have spent most of the past week bitterly criticizing each other’s economic policies, which is confusing voters even more.
The immediate reason for this is the battle for votes. But the root cause is the different approaches they have to dealing with the four-year plan for deficit reductions.
There are two ways of reducing a deficit -- you can raise taxes or you can cut spending. All the parties want to do both at the same time, and it is the proportion of spending cuts to higher taxes that divides them.
In round figures, Fine Gael want to make three quarters of the savings necessary from spending cuts, with one quarter coming from higher taxation. Labor wants a half and half approach, which would mean much softer cuts in state spending but a jump in tax. (Fianna Fail are somewhere between the two, but they hardly matter anymore since they have no chance of getting back into government.)
Fine Gael have been pushing the idea of Labor as a “seriously high-tax party” last week, and this has resulted in the slide in Labor's popularity. The posters around the country suggesting that Labor leader Eamon Gilmore could be the next Taoiseach (Prime Minister) are now embarrassing, and there has been near panic in Labor over the past few days as they try to reverse their downward trend.
Gilmore's posturing as a potential taoiseach and his failure to convince people that he can deliver on his assertion that the bailout can be renegotiated have been very damaging for Labor. He's too long on grandiose rhetoric and too short on specifics for middle class voters who are struggling to get by already and are afraid of extra tax.
The panic in Labor led to a lot of backtracking over the last few days, with the party now saying it will not impose further increases in income tax for individuals earning under 100,000 a year. Which means that in a well-off home where a couple earns 100,000 each, they would not be asked to pay any extra taxes to solve the deficit problem.
And that means, of course, that there will have to be even more severe cuts in state spending, which will have the most impact on the poorer parts of the community that Labor traditionally protects.
Labor are being squeezed from both sides, with Fine Gael taking its liberal middle class voters and Sinn Fein and the left alliance candidates nibbling away at its support from the working class and the unemployed.
This was shown in the most recent opinion poll published on Sunday. The Sunday Business Post /Red C poll put Fine Gael support up three points to 38%, nearing the 40% mark it would need to pass to get an overall majority.
Support for the Labor Party fell back to 20%, while Fianna Fail fell to 15%. Support for independent (non-party) candidates rose three points to 14%, Sinn Fein was down three points at 10%, and the Greens were up one point to 3%.
The possibility of Fine Gael getting enough votes to form a government on its own, or with the support of a few independents instead of the Labor Party with all its baggage, is now a real one.
Certainly the momentum is with Fine Gael and if they were to pull it off it would be historic, both for the party and for the country. But it's too early to call just yet.
And doubts still persist about Enda Kenny's ability to perform as taoiseach, particularly at such a critical and complex time for the country. These doubts seem to be shared by his own party strategists who have been carefully controlling his exposure to the media.
He dodged the first TV debate last week, because it was to be a three way debate with Fianna Fail's Micheal Martin and Labor's Gilmore. This Monday his handlers let him take part in a TV debate on RTE because it included the five party leaders (with John Gormley of the Green Party and Gerry Adams of Sinn Fein added in). With five leaders arguing with each other his weakness in debate and his uncertain grasp of economics was not so noticeable.
He survived and did not do himself or Fine Gael any damage. So in spite of that rather bewildered look he gets when he's asked a financial question to which he does not have a prepared answer, Kenny looks like being our next taoiseach.
And he's already trying to play the role. Last week he had a meeting with the EU president and on Monday he had a meeting with the German Chancellor Angela Merkel before flying back to take part in the TV debate.
These meetings are really just publicity grabbers. They mean nothing because he is not in power yet. They look presumptuous, even a bit silly.
But as far as Fine Gael is concerned it's safer than answering questions from journalists trying to trip him up. All he has to do is get through the next week without messing up and he will be home and dry.
What will happen then, especially if Fine Gael need only a few of the more conservative independents to have an overall majority in the Dail (Parliament), is that we will have the most right wing government this country has ever seen.
And maybe that's what we need right now. Left or center left governments tend to be big spenders as they try to rebalance society by throwing money at it. Right wing governments cut spending and encourage citizens to fend for themselves.
And that's what people here are going to have to learn to do more of over the next few years ... whether they like it or not.