Wednesday, December 09, 2009
They're delivering the grim news to the decidedly unlucky people in Ireland today, something that, at some point, is sure to happen in the U.S., but maybe not for a while.
Finfacts reports on Minister for Finance Brian Lenihan's 2010 budget that will see a wide swath of spending cuts totaling €4 billion and a few higher taxes, this following just a few years of faux prosperity back during the mid-decade housing bubble.
It was hardly worth it, was it?
Recall that, along with Iceland and Spain, Ireland was viewed as a great European success story not more than a couple years ago. As it turns out, it was no such thing - just a credit and housing bubble that provided only the fleeting illusion of prosperity.
Some details of the aftermath:
The Budget is expected to be the harshest in decades but that is of course relative. For those who do not have to worry about getting jobs or fear unemployment, the announcements today will not be life-changing.The Telegraph reports that hundreds of thousands of public and civil servants will receive pay cuts of between 4 percent and 20 percent.
Cuts in public service pay, social welfare, children's allowance and capital spending are expected and a new carbon tax is expected on fossil fuels.
Today's Budget is the first of at least four budgets, to restore balance to the public finances.
The Minister told reporters on Tuesday that “it is going to be the last of the very difficult budgets.”
Irish tax receipts are back to 2003 levels, while current spending has risen 70% from that period.
Despite the cuts today, borrowing will still be 12% of national output next year - - four times the Euro Stability and Growth Pact limit.
The country is borrowing almost €500 million each week and interest on the national debt will amount to €4.6 billion in 2010 up €2 billion from 2009.
That will undoubtedly happen here in the U.S. someday...