BLAME and denial have been two hallmarks of how we have handled recent traumatic change. The blame, I don't need to tell you about. Every day you hear people talking about how they/their members are being asked to pay for a problem that they didn't cause or benefit from. It is often highly paid union leaders who peddle this line. Ironic, given that fact that their own fat salaries -- being pegged to those of senior civil servants -- mushroomed during the boom years, as did the salaries and wages of all public servants.

But now, the Jack O'Connors of the world want to wash their hands of the whole dirty boom. Like Carmela Soprano, they were happy to take the benefits of the lifestyle, but none of the responsibility. Thanks for the diamond necklace, Tony, but I disapprove.

The people to blame for the boom were apparently those of us in the private sector as our capitalism ran riot. And, of course, the figureheads of it all were builders and developers and bankers. They should be the ones to pay for it, runs the blame argument.

The only thing wrong with that argument is that the private sector, from the top down, has paid hugely for the downturn. Most people who had any net worth in terms of property and investments have had it wiped out. Name me more than a handful of evil developers who are not now broke.

Those of us in the lower echelons of the private sector are paying the price, too. I have a reasonably good job. But I have taken a substantial pay cut, probably face more pay cuts, and I certainly won't see a pay rise in the near future. I am in negative equity to the tune of a six-figure sum and my future is anything but secure.

People I know who run their own businesses, while they may have had a good boom, don't sleep at night these days. Most worry for themselves, for the mammoth debt they accrued to build their businesses at a time when debt was A Good Thing, and, despite the caricature of the capitalist, they worry for their employees.

So that's blame. What about denial? There are two kinds of people in Ireland right now. Those who are in touch with reality and those who are wilfully ignoring it. And those who are choosing to ignore reality make up a curious and ragtag bunch encompassing all sorts of strange bedfellows. In the past week alone we have seen the denial gang encompass everyone from Enda Kenny to public sector union leaders to bankers.

AIB's decision to award a 3 per cent pay rise to its staff has to be one of the most extraordinary examples of hard neck in a year that has seen plenty of same. Where a bank that has failed, and had to be bailed out with essentially charitable donations from the general public, gets the notion that it can award pay rises at a time when the rest of the private sector is facing either pay cuts or job losses, is beyond any of us. It is evidence that the people running the bank are operating in a complete fantasy world. They are essentially asking hard-pressed taxpayers to hand over money to fund a pay rise for the entities that nearly tore the whole economy down. And that's before we bring into the equation that the banks continue to strangle commerce in this country by refusing to give even the most rudimentary credit to businesses.

Enda Kenny, who has become a roving idiot in search of a big idea, is also steadily spinning into fantasy land. In the last week he has presented two contrasting idiotic big ideas. In the Dail the other day he tried to harangue the Taoiseach into giving a commitment that no one on low or middle pay in the public service would have their pay cut. In other words, that there would be only negligible pay cuts in the public sector. Presumably Kenny would prefer to see the necessary money saved by laying people off from the public sector, or by massive cuts in social welfare.

Oh, but hang on, we're doing him a disservice. Enda does have an alternative Big Idea to save the money. He wants to abolish one of the houses of parliament, saving us the princely total of €25m. Excellent. So in 160 years we'll have achieved the €4bn we need to cut this year alone. Say what you will about the yahoos in the Senate, there is a lower proportion of them there than there is the lower house. And if €25m a year provides some sort of buffer between the baser instincts of the lower house and what gets enacted into law, if it provides some kind of pause for thought before we commit on things, then that's €25m well spent.

Of course, it actually doesn't matter what Jack O'Connor or Enda Kenny or the banks think. What really matters right now, in the run-up to this Budget, is whether Brian Cowen and Brian Lenihan are in touch with reality, or in denial. The messages have been mixed from both over the last few years. At times they have seemed to talk a bit of reality, but when it comes to acting they have tended to go back into denial.

This time, both Cowen and Lenihan seem to be talking tough. Both have indicated that pay and social welfare are the major components of public spending, and that if you can't adjust those then you can't have a significant adjustment. But experience tells us that we cannot rely on them acting when it comes down to it, when they are faced with days of protest, days of action and even strikes that are honest enough to call themselves strikes. No Government has ever had the balls to take on the public sector unions -- and, despite their strong words, there is no reason to believe Cowen and Lenihan will do it.

On past experience, what we can expect in this Budget is some kind of fudge. Despite the promise of no new taxes, they could tinker with merging the levies into the standard tax rates in such a way as to increase income tax. With that, they could decide that people retiring from the public sector would suffice as a way to save on payroll. And they could manipulate the numbers to claim they had achieved the savings required.

This would be the denial route, and would mean we hadn't done what we committed to do in terms of managing our economy. We would then effectively become, to our debtors all over the world, an economic rogue state.

If the Government chooses to engage with reality, it will make the necessary wage cuts and tell the public sector that as much as it reaped the rewards of the boom with huge pay increases, it now has to reap the whirlwind like all the rest of us -- that's what benchmarking truly means. The Government will need to be willing to face down apoplexy from the unions, always sticking to the line that this has to be done; we have no choice. It has to decide, with steel, that the future of the country is the greater good and that a month or two of political discomfort is a small price to pay.

Despite his tough talk in the last week, it is easy to imagine Cowen wavering. Cowen is the guy who, when he had an opportunity to cut the social partners loose last year, to actually govern, didn't do it. The social partners walked and Cowen had the perfect cover to move on without them, doing what needed to be done. And, instead, he called them back in.

He still seems wedded to the notion that you can please all the people all the time. He forgets that the only reason Bertie was able to do it was that we were, as the phrase went, awash with money. Back then, everyone could continue getting more pie because, almost despite us, the pie was getting bigger all the time (much of the pie being generated by the now demonised property market).

The one thing that could make Cowen stand up to the public sector unions is the fact that he knows this is his moment of truth. This has to be done, and if Cowen chickens out of doing it, there is someone else waiting in the wings who will do it, who is not wedded to the notion that the unelected social partners should be allowed to run the country.

Lenihan is looking more and more like a man who is willing to do logical, reasonable things that could be unpopular in the short term. He has somehow become detached from local politics and has become a statesman, acting unsentimentally, acting for posterity, and seemingly loosed from the shackles of looking after parochial concerns about being popular this week or next week.

If Cowen refuses to embrace the hand of history now, he could feel it shoving him off the stage, and he could find Lenihan standing in his place.

- Brendan O'Connor

Sunday Independent