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Thread: The Truth About the Deficit

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    Politics.ie Member making waves's Avatar
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    Default The Truth About the Deficit

    During the most recent edition of The Week in Politics, Paul Murphy, Socialist Party MEP, challanged government Minister Leo Varadker over his claims about the deficit facing the government and the claims by right-wing politicians that austerity is necessary.

    Today, Paul Murphy wrote to Leo Varadker pointing out the error in Varadker's claims using the government's own figures.

    Murphy stated
    "I asserted that the primary deficit for 2013 was, according to government figures, slightly over €3 billion. This is confirmed by the government’s ‘Medium Term Fiscal Statement’ from November 2012 ( http://tinyurl.com/aay5bhl ). The table on page 26 puts the General Government Primary Balance for 2013 at -€3,250 million, i.e. a primary deficit of €3.25 billion."
    Paul Murphy continues
    A separate figure is also given on that page of an ‘Exchequer Balance’ which gives a primary deficit in 2013 of €8 billion. Which figure is more accurate? Table 1c of the ‘Ireland – Stability Programme Update’ from December 2009 ( http://www.budget.gov.ie/budgets/201...inal%20SPU.pdf ) answers as follows:

    “The General Government Balance (GGB) measures the fiscal performance of all arms of Government, i.e. Central Government, Local Authorities, Health Boards (prior to 2005 – their replacement, the HSE, is part of the Exchequer), Vocational Education Committees and non-commercial State sponsored bodies, as well as funds such as the Social Insurance Fund and the National Pensions Reserve Fund which are managed by government agents. It thus provides an accurate assessment of the fiscal performance of a more complete “government” sector.” (my emphasis) It seems to me to be clear that the figure of the ‘General Government Balance’ is the figure that should be used.
    The rest of the letter outlines that Ireland refused to pay the banking debt the government would have a surplus for investment in jobs.

    It will be interesting to see if Varadker attempts to repudiate the government's own figures or again buries his head up his rear end and continues with forcing working class people in this country to carry the can for the debts of private banks.

    The letter can be found here - The Truth about the Deficit | Paul Murphy MEP
    Separate Church and State

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    Quote Originally Posted by making waves View Post
    During the most recent edition of The Week in Politics, Paul Murphy, Socialist Party MEP, challanged government Minister Leo Varadker over his claims about the deficit facing the government and the claims by right-wing politicians that austerity is necessary.

    Today, Paul Murphy wrote to Leo Varadker pointing out the error in Varadker's claims using the government's own figures.

    Murphy stated

    Paul Murphy continues

    The rest of the letter outlines that Ireland refused to pay the banking debt the government would have a surplus for investment in jobs.

    It will be interesting to see if Varadker attempts to repudiate the government's own figures or again buries his head up his rear end and continues with forcing working class people in this country to carry the can for the debts of private banks.

    The letter can be found here - The Truth about the Deficit | Paul Murphy MEP
    He set him right on the show.

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    Politics.ie Member Darren J. Prior's Avatar
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    Paul Murphy claimed that most of the money we are getting off the Troika is going to service the national debt.- pay bondholders to be specific- when according to Leo Varadkar on the programme most of it is going to fund the State. Well, what's the truth MW?

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    Politics.ie Member making waves's Avatar
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    Quote Originally Posted by Darren J. Prior View Post
    Well, what's the truth MW?
    Read the letter and the links to the government's own figures - Varadker was talking through his rear end.
    Separate Church and State

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    Quote Originally Posted by Darren J. Prior View Post
    Paul Murphy claimed that most of the money we are getting off the Troika is going to service the national debt.- pay bondholders to be specific- when according to Leo Varadkar on the programme most of it is going to fund the State. Well, what's the truth MW?
    its worse, we are now borrowing money to service the interest on the debt

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    So the national debt is all down to the banks.

    Can we get some details on that statement?

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    Quote Originally Posted by curiousorange View Post
    So the national debt is all down to the banks.

    Can we get some details on that statement?
    Read the bloody thing instead of spouting nonsense - this is not related to the national debt but to the deficit.
    Separate Church and State

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    MW and Murphy are correct. The myth that the deficit is based on day to day running of the state is a lie.

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    Quote Originally Posted by making waves View Post
    During the most recent edition of The Week in Politics, Paul Murphy, Socialist Party MEP, challanged government Minister Leo Varadker over his claims about the deficit facing the government and the claims by right-wing politicians that austerity is necessary.

    Today, Paul Murphy wrote to Leo Varadker pointing out the error in Varadker's claims using the government's own figures.

    Murphy stated

    Paul Murphy continues

    The rest of the letter outlines that Ireland refused to pay the banking debt the government would have a surplus for investment in jobs.

    It will be interesting to see if Varadker attempts to repudiate the government's own figures or again buries his head up his rear end and continues with forcing working class people in this country to carry the can for the debts of private banks.

    The letter can be found here - The Truth about the Deficit | Paul Murphy MEP
    The figures on the primary deficit are correct. Namawinelake provided them here.

    We

    But after the first couple of paragraphs Murphy goes off the wall. He notes the difference between the Exchequer Account and the General Government Account but forgets that it is the Exchequer Account that is the cash account. Unless there is more money in that account there is no extra money to spend. The General Government Account is done on an accruals basis.

    He doesn't want to pay the €9 billion of interest due this year and thinks we will still be lent money to spend that €9 billion as if nothing happened! Of our debt of €190 billion, €40 billion is due to the banks, so €150 billion of the debt is due to spending other than the banks.

    If the interest follows the same breakdown then €2 billion is due to the banks and €7 billion is due to everything else - paying the Guards, nurses, teachers etc. in the main!

    And the nonsense about bondholders is just that. This is where is €17 billion figure comes from:



    More than one-third of the bonds are in Bank of Ireland which the State only owns 15% and has already resumed raising bond funding outside the protection of the guarantee.

    A quick look at the post shows that the bulk of the bonds in AIB and PTSB are government guaranteed. That means they were issued after January 2010 when the Eligible Liabilities Guarantee entered into being. These bonds were issued after the music had stopped playing and this funding was essentially provided to the Irish government. There is one big bond in Anglo but that is a "covered" bond meaning that if the lenders don't get repaid they get the capital used as collateral for the bond. I've no idea what this is and given the bank in question I would let them have the collateral but there is no way we would gain by the full value of the bond. Finally, this is a relatively old bond list and it is hard to know how early redemptions/buy backs would have impacted on the figures.

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    Quote Originally Posted by Seanie Lemass View Post
    MW and Murphy are correct. The myth that the deficit is based on day to day running of the state is a lie.
    It is based on the day-to-day running of the state in the past - partly the 1980s and mainly 2008 to 2012.

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