From Socialist Voice, October 2010

Who rules Ireland?


We were told by the Yes side during the Maastricht Treaty debate in 1992 that the treaty would have no effect on the Government’s ability to run the country. Nothing could be further from the truth.
     Under the Maastricht Treaty, and as part of our membership of the euro zone, the government deficit (the excess of expenditure over revenue) has to be kept below 3 per cent of gross domestic product (annual output). The ratio of national debt (what the government owes) must also be kept below 60 per cent of GDP. This is called the Stability and Growth Pact, and under it the European Commission takes control if either of these percentages is breached. It then forces the Government to reduce the deficit.
     Ireland exceeded the deficit limit in 2008. The Commission agreed a plan for the Government to get the deficit down to 3 per cent by 2014. So, in early 2009 the Government was forced by the Commission to introduce a supplementary budget to cut the deficit by €2 billion.
     In 2010 the Commission forced the Government to cut expenditure by €4 billion. In 2011 the Commission will force the Government to cut expenditure, or increase taxes, so that the deficit is cut by at least €3 billion. In 2012 the Commission will force the Government to cut expenditure, or increase taxes, so that the deficit is cut by €3 billion, and so on. In 2013 and 2014 further cuts will be introduced so that the deficit will be reduced to 3 per cent of GDP.
     The Government wants to keep taxes low for its wealthy friends, so its emphasis has been on cutting expenditure rather than increasing taxes. It has therefore reduced the wages of the public sector and cut public services.
     While the Government can decide between taxes and cuts in public expenditure, it must abide by the guidelines set out by the Commission, and now it must get advance approval for its budget from Brussels.
     Finally, all these cuts reduce incomes in the economy, and this reduces spending, which in turn reduces output, thus putting more people on the dole.
[KC]

Home page  >  Publications  >  Socialist Voice  >  October 2010  >  Who rules Ireland?
Baile  >  Foilseacháin  >  Socialist Voice  >  Deireadh Fómhair 2010  >  Who rules Ireland?