Our debt clock is jumping off the wall – don’t ask the poor to stop it

HOW much is enough?

When do we shout stop? More to the point perhaps, how do we shout stop? I’m talking about the national debt and how we manage it. There’s a website that shows how our national debt is climbing, minute by minute, hour by hour. Just click on to www.financedublin.com/debtclock.php

I clicked on it on Sunday at exactly one minute to six, just before the news. It showed a constantly rolling figure, but when I cut and pasted the figure into this article, this is the grand total that came up – €86,874,440,746.

One minute later, at six o’clock exactly, as the Angelus bell started to ring on the radio, I cut and pasted the figure again. This is what appeared. €86,874,478,750.

That’s an increase, in just one minute, of €38,004. It could hardly be more frightening, could it?

Of course, a website like the one I’ve mentioned has an axe to grind. The website in question describes itself as the “bible” of the Financial Services Centre in Dublin and is published by Finance-Dublin magazine.

Although it admits that the bank bailout has been a “serious” and “major” contributor to the way in which the national debt has rocketed upwards, its real message is that the ongoing crisis is caused by the gap between current government spending and the revenue coming in.

And guess what? The solution, naturally, is that Brian Lenihan should cut even more than the €3 billion he is proposing to take in next year’s budget.

Talking about our credit rating, the magazine says, “a positive result could be achieved by a decision from the Irish Government that it will address the issue of Ireland’s deteriorating credit ratings head-on in the forthcoming budget by going further than previously announced in cutting down the spending programmes for 2011-’12 on capital and current account than the (now clearly inadequate) €3bn it has previously signalled for the 2010 budget …” Well, we all know where that will lead, don’t we? Last year, the Government cut the allowance paid to carers by €8 a week. People with a disability, whose only source of income is the disability allowance, were also cut by €8. That’s about €416 a year. In just one minute, every minute, the national debt goes up by the amount we have taken from 91 carers, or 91 people with disabilities, or any combination of the two you care to imagine. In just one minute.

But there’s another way of looking at that, of course. A lot of pain was inflicted in the last budget on people who had done absolutely nothing to cause the problems we face. They were, in the main, people who had no powerful vested interest or professional advisers to look after them, no magazines reflecting their point of view. They were just people who depended on the very modest allowances they received to maintain a basic level of dignity in their lives. All that pain, all that loss of dignity, didn’t in the end save us even one day’s national debt.

And you really would have to wonder, wouldn’t you, how anyone representing the financial services sector has the neck to suggest that more pain should be inflicted on the people who didn’t cause the problem, when we seem to be a million miles away from the day when the financial services sector puts its own house in order.

The truth is it is the banking and building collapse, and the consequent disappearance of a number of sources of revenue, that have contributed almost 100% to the mess we’re in. You can easily get a feel for how bad that mess is, and how quickly it came upon us, by re-reading documents from a few short years ago.

Take the National Treasury Management Agency, for instance. When the agency was established in 1990, it took more than three months’ tax revenue just to pay interest on our national debt. But in the NTMA’s annual report of 2005, it was able to boast that Ireland’s total national debt – not just the interest, but the whole thing, had been reduced to the equivalent of around eight months’ tax revenue.

When he launched that report, the then NTMA chief executive Michael Somers said Ireland had the second lowest GDP-to-debt ratio in the countries that made up the EU before its expansion to 25 members in May 2004. “Apart from Luxembourg, we’re the lowest among the original member states,” he said.

Just five years later, our national debt stands at about 70% of our national wealth, and the cost of servicing that debt is right back at where it was when the NTMA was founded.

Of course, our debt was even higher (as a proportion of our national wealth) in the more distant past, especially in the 1980s and early 1990s.

But we were a poorer, struggling country then, entirely dependent on EU support for nearly everything we tried to do. As the Celtic Tiger took hold, the proportion started dropping like a stone, but as it collapsed, the proportion started shooting up again.

There can be no sharper commentary on the illusion that the Celtic Tiger represented than that, surely. In the 10 years from 1997 to 2007 our debt to wealth ratio went from 74% to 25%. In the three years since the bubble burst, the ratio has gone from 25% right back to well over 70% again.

And we all know how that happened. Years of reckless lending, cheer-led and incentivised by mountains of tax breaks and incentives, built an economy founded on sand. Bad politics combined with bad business, and both were fuelled by an ideology that passionately believed there could be no such thing as a greedy or bent businessman. The only greedy ones where the dole spongers and the layabouts who wouldn’t work for a minimum wage in a fast-food restaurant.

PERHAPS that ideology is alive still. Perhaps that’s the reason why kites are being flown now about forcing people to work for the dole and about getting rid of the minimum wage altogether.

Pay people, especially vulnerable people, what the market will bear – that seems to be the message. If some of the speculation around possible budget measures is to be believed, the hit on people who are vulnerable and defenceless will be even worse this year.

It will be scandalous if it happens. Not only did poorer people contribute nothing whatever to the problems we now face, they also, by and large, benefitted least from the growth. There is no acceptable reason why they should be asked to carry other people’s burdens now.

And it would be totally useless, utterly counterproductive. It wouldn’t even make the tiniest dent in the debt. I’m writing this article on Sunday evening. I started at 6pm and it’s now about four hours later. I’ve just logged on to the debt clock again, and in the time I’ve been soldiering away, the debt has gone up even more – this time it’s €86,883,385,377.

In four hours, it’s gone up by just under €9 million. You tell me why the poor should take responsibility for that, when we all know who is really to blame.