Gone Send Into Fiscal Space.

In Blog by Shane RagbagsLeave a Comment

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This week saw the new minority government put forward its first budget. The media discussion leading up to it gushed about how much of a golden shower our benevolent leaders would graciously piss down upon their various voting blocs. Shane Ragbags takes a look at how things played out.

You might recall the formula for shilling this budget has been in circulation since before the election – the “fiscal space”. It will be with us for the foreseeable future, and you can’t escape it because every eurozone government now deploys the same verbal gibberish. Try as you might want to, but in this fiscal space, no mainstream media outlet can hear you scream.

Budgets traditionally have been very secretive affairs, controlled ever more tightly at an executive level. The previous government administered budgets through the tiny Economic Management Council gang of four.

Before that, the cabinet was in theory responsible for agreeing it collectively – making concrete what was broadly agreed by a programme for government between parties. Which themselves would be based on party programmes and manifestos, agreed by the memberships and voted upon by the general public.

Though, Taoisigh and Finance Ministers would often declare measures on the day to the surprise of even their own cabinet colleagues, we can see a clear trajectory approximating to a distancing from popular control and input.

Dail Reform of sub-committees, the lack of a single party or coalition numerically dominating the Dail with its own votes was supposed to lead to a new open and participatory process. The fragmented political system would need to find a new framework for buying off enough votes, without cutting the legs from underneath themselves and collapsing it all prematurely.

How could the Fine Gael government produce a budget that its supporters liked, while trying to increase its support – the same support which may hitherto support coalition partners Fianna Fail and Independent Alliance? Why would FF and Independents Alliance vote for a budget that leaked their own support away to their direct rival. Well, they pretended to have fights on different secondary points, and each was allowed to be seen to win on something which shores up their share of the support.

This is of course unsustainable, and is only designed to last until protest movements and new oppositions are pacified and demobilised. A very often repeated quote of Noam Chomsky explains the strategy:

“the smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum….”

So, while there was very lively debate about whether the average Jo should or shouldn’t get the price of a pint back a week from their USC, or whether first-time house buyers should or shouldn’t get a grant for gaffs – the parameters remained as narrow as that. The fiscal space from which goodies could be dished out after a decade of fiscal self-mutilation numbered about €1.2 billion.

In a Leprechaun economy with a GDP anywhere between 2 and 300 billion euro per annum, less than €2 billion euro for goodies isn’t even the crumbled up bits at the bottom of a bag of Kings crisps. It’s less than half of what the budget deficit fell by between 2015 and 2016.

And because we talked incessantly about the fiscal crumbs, we didn’t talk at all about most of the €60 billion of the budget or the how the several hundred billion euro economy is organised. I mean, is the economic status quo working out well?

The state is in the deepest housing crisis in its history, the health system is in collapse, the education system can’t and won’t pay its teachers, just as public transport workers. Sure, who needs those things?

We pay about €7 billion euro a year in interest alone on the national debt, which is just a bit less than what is spent on education in the entire year. This national debt which has gone from being virtually none before the crisis, but is now valued at about €200 billion for all the bailouts we were made to give. Not to forget, the government are diving on the grenade of Apple’s unpaid tax bill, pleading with the powers that be that they not collect the €13 billion euro.

The debt isn’t even in the same section in the budget as the fiscal space – it is in a category called “Non-Voted Spending”, which tells you all you need to know about what role managers and technocrats really see for democracy.

The government also made a commitment that the debt as a proportion of GDP would fall from its already austere target of below 60%, to 45% (hat tip to Jimmy Dignam of the Workers Party). Which can only mean and happen with, an unbroken and unbreakable supply of your money every year to pay for it into the future, indefinitely.

Not only do those bailouts have to actually be paid for, but the stock markets can’t have delinquency on the payments undergirding the government bonds market – and the entire financial and zombie banking system on top of that.

That, basically, is why the results of the budget originating in this brave new Dail Reform era, is fundamentally the same as the Economic Management Council Troika years which preceded it.

You can have all the weird and wonderful soap-like drama and characters in government or near budget negotiations, but there is only one game in town – paying the debt as enshrined in the Fiscal Treaty rules. The Fiscal Treaty outlaws investment, limits expenditure and basically starves the economy as it sucks up everything not nailed to the ground to ensure the banking debt gets paid.

You can have any budget, from any government or coalition non-agreement pantomime you want – so long as the end product is the exact same. The only thing that’s certain in the zombie mind of the undead neoliberals?

Debt and taxes.

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