Unprecedented. Much like the year in which we live, the Government's Budget for next year is unprecedented.
raditionally in Ireland, governments spend big during booms. They slam on the brakes when crashes come.
This time is different.
Since the outbreak of the pandemic, the Irish government, much like its peers across Europe, has ramped up its interventions in the economy in a way that has not been seen outside wartime in modern history. Tuesday's Budget promises to continue doing the same into next year. This vast expansion of the role of the State will be financed by borrowing.
The good news is that the Government these days can write IOUs with next to no interest on them. The bad news is that the only reason interest rates on government borrowings are so low right now is because the European Central Bank is printing money to buy them. How and when this money-printing programme ends will determine how future Irish budgets are framed.
Readers should be aware that this time is different, not because a magic money tree has been discovered in the grounds of the Department of Finance which previous generations of mandarins failed to locate. It is because one of the biggest central banks in the world has used its balance sheet to fund its member governments.
In the seven years your columnist has been writing in these pages, I have urged successive governments at Budget time to do more to pay down the huge debt that was accumulated during the property crash and the years of ensuing slump.
Alas, that didn't happen. As a result, we enter this recession with a mountain of public debt. The State owes roughly €200bn, which is one of the highest public debt levels in the world when measured per taxpayer. This week's Budget plan will add €35bn to this mountain in the hope that we can weather the Covid calamity.
Given the balance of risks, this kick-and-hope strategy is the least bad one. Massive public spending gives some chance of limiting the economic damage of the pandemic. By boosting extremely weak underlying demand - that is the willingness and ability of households and businesses to spend - it will help keep the economy ticking over. If the virus can be banished by next year, we can probably live with the additional debt.
That remains a matter of speculation. The scale of government intervention is a matter of fact.
Public spending - by its widest and EU-comparable measure - will exceed the €100bn threshold this year. It is expected to reach €109bn next year.
As readers will see from the accompanying graphic, we have been there before. In 2010, government spending spiked up to exactly the same figure, owing to the bailing out of the banks. This time, much of the economy is being bailed out.
The Government hopes that this time will also be different when it comes to the amount of cash it takes in from taxes and other sources. In contrast to the last crash - when revenues collapsed over a three-year period and took another three years to recover to pre-crisis levels - the Government expects the effect of the pandemic on revenues to be minimal, both this year and next. The official projections are for only a small dip in total government revenue this year and a full rebound to 2019 levels next year.
These optimistic projections are despite the Government not hitting people or businesses with any revenue-significant taxes. During the last crash, very hefty hikes in income taxes were imposed and the Universal Social Charge introduced.
If the Government's tax-and-spend projections come to pass, it will be cause for national celebration. We will not have dodged a bullet. We will have dodged a nuclear missile.
Another part of the Government's budgetary strategy that differs from the past is investment. Spending on infrastructure not only boosts the economy when the money is spent, it adds to the capacity of the economy to grow in the future.
Historically, when governments have had to cut spending, they have cut investment spending much more than day-to-day spending. That happens for reasons of political expediency - not building a road leads to a lot less opposition than trimming public-sector pay or reducing welfare benefits.
This time the investment budget is not being cut. Core investment spending, known in the jargon as gross fixed capital formation, has risen by more than €1bn this year. It will rise by more than half a billion in 2021.
But beware of politicians talking about 'investment'. They usually misuse the term, describing any spending on their pet projects as 'investment' when it isn't.
The overwhelming share of the additional expenditure so far, and that which is budgeted for in 2021, has been allocated to day-to-day spending. Less than one euro in 10 will go on core investment.
That raises the question of what happens after Covid. History teaches that recurrent government spending is fiendishly difficult to cut. Once committed to, the interest groups which benefit fight tooth and nail to keep what they have. Too often, politicians won't fight back, and measures that were designed to be temporary become permanent.
Some policy measures deserve to become permanent. Two unpopular ones in that category are carbon taxes and a higher retirement age.
A gradual rising of tax on carbon will incentivise people to buy more fuel-efficient cars now or the next time they change their car. It will do the same when it comes to homes and their renovation. If we are to cut greenhouse gas emissions, carbon tax is one of the best ways to do it.
If we don't want to overburden the young with pensions of the old, we all need to work longer. We are living longer lives. And that is true even with Covid.
A magic money tree will not provide for more years of leisure. In the interests of inter-generational fairness, the review of the pension age announced in the Budget should find that we will all have to work longer.
