The gridlocked Irish political system is verging on failure in implementing government austerity. The Greens can't bring themselves to abandon silly Celtic Tiger era promises not to introduce third level fees,a decision that could reduce universities to junior colleges in all but name and lead to a brain drain to the fee paying colleges in the UK and the US. Health Minister Harney admits that the billions in cuts in the health services must come from the residual budget slice left over after pay and pensions guaranteed by Croke Park,an approach that will gut frontline services. Her redundancy plan for clerical staff is unattractive compared to generous pay and golden handshakes and will find few takers. While Social Welfare Minister O'Cuiv is saying nothing is off the table,the government lacks the political strength to make major savings in social welfare. How would it look if public sector pensioners on pensions of €30,000 a year up were protected by the Croke Park agreement while old age pensions a fraction of that were cut?
The key to Ireland's economic future is a budget that will impress the bond market that the government is serious about austerity. That would drive down Ireland's punitive interest rates,allowing deficit financing to continue. But the government lacks the votes for a realistic budget,especially with Fianna Fail backbenchers like Mattie McGrath from South Tipperary distancing themselves from the government.
Would a general election clear the air and give a government the mandate needed for austerity? Austerity is a hard sell when some politicians and political parties will try to gain political advantage by claiming simplistically that taxing the rich can solve most or all of our problems.Labour's Gilmore has been very successful with soundbites that attack the government without giving specifics on how Labour would deal with the deficit. Maybe the electorate would see through this but more likely it seems prepared to give Labour a chance as a radical alternative to traditional civil war politics. So chances are an election would result in a Fine Gael/Labour Coalition with Labour an equal partner,a coalition that would repeat the gridlocked politics of the Garret Fitzgerald era.
In that event,the bond market would almost close down to Ireland,threatening economic chaos. The Irish may be giving two or three cheers for an IMF directed EU rescue in a matter of months. The public sector won't be cheering,though,as their pay and pensions would be slashed.