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Managing expectations? Bit too late for that, lads


Careful Now: Finance Minister Michael Noonan said last week that we would have to raise taxes in order to pay for tax cuts

Careful Now: Finance Minister Michael Noonan said last week that we would have to raise taxes in order to pay for tax cuts

Careful Now: Finance Minister Michael Noonan said last week that we would have to raise taxes in order to pay for tax cuts

The flurry to manage expectations last week was comical to behold. Our leaders are stuck in a terrible bind here. On one hand, it is in their nature to want to be the first with the good news and to be the first to suggest things like tax cuts, so they seem in some way responsible for those tax cuts if and when they come. That is the nature of being a politician.

So the likes of young Simon Harris, Michael Noonan's new boy in Finance, has been jumping up and down talking about tax cuts, while others, even more senior and who should therefore know better, have been telling us for weeks that lower-paid and middle-income people will need to be looked after. The Health and Education Ministers have been making it clear they want no more cuts and Leo even wants a top-up in the Health budget.

And who could blame them for wanting to say popular things, having been so viscerally hated since they got into Government? Finally, they feel that this could be their moment in the sun, the moment when they will finally be appreciated for bringing us back from the brink.

But on the other hand, they know that these days it is important to look responsible and to have the moral high ground over the bad old days of giveaway budgets and crazy promises. Responsibility has been a major part of the branding of this Governnment. They have sold themselves as an antidote to the madness of the cowboys in Fianna Fail and their tents in Galway.

And, God knows, when you are moving towards betting the whole house on property again, it's important to keep other distinctions between yourself and the bad men in Fianna Fail. So they try to keep their serious faces on and they make a great show of proceeding with caution.

The problem is that our politicians recognise that the whole country has gone giddy again, and the bad part of them loves a giddy electorate. A giddy electorate is not giving out non-stop and throwing eggs - metaphorical or otherwise. A giddy electorate wouldn't go so far as to like the Government, but they certainly don't put as much effort into hating them. A giddy electorate won't be so quick to run into the hands of Sinn Fein and assorted anti-austerity types. A giddy electorate is much more likely to decide in 18 months time that they are happy with the way things are and plump for more of the same.

And why wouldn't people be giddy, sez you? Having suppressed all positivity for nearly seven years now, people feel ready to live a little. They were fed up of being fed up. And suddenly there are apparently reasons to be cheerful. You can't open the papers these days without being confronted with more good news.

Even the news during the week that the Government took a billion more off us than they should have was greeted as great news altogether. It is always extraordinary how a government feels it deserves a clap on the back for taking in extra taxes. You'd swear this was money they earned somewhere, or money they got for being good at their jobs. In reality, it's money that we earned and they just took more of it from us than they had planned to. So now we are expected to celebrate the fact that they might not take that billion off us again in the Budget, because they took it off us already.

The Government was in self-congratulatory mode about the whole thing. Enda Kenny said the fact that the Government took an extra billion off us was "evidence that the plan is working".

He did not explain which plan that was exactly. Did he mean the memorandum Fianna Fail agreed with the Troika, which has been the guiding principle of our economic plans for the lifetime of this Government? Or did he mean some other plan of which we are unaware, a plan marked 'take more taxes off the people and then act like that is a good thing'. Because it's hard to know what the plan is right now, apart from to keep bringing down our deficit at a time when we should probably be running a deficit in order to stimulate growth.

Noonan was slightly more honest about it, saying that this success is due to the programmes followed for the last three years. Which is essentially an admission that we are now reaping the rewards of having followed the Troika plan that we had no choice but to follow. Apart, of course, from the fact that we managed to avoid most of the structural reforms that would have safeguarded the economy a bit more into the future. But let's not ruin the giddiness with buzzkill talk like that.

Of course, you would have to say that the €1bn miscalculation in tax was due in some part to increased economic activity. And the signs of that are all around us, as long as you're willing to be selective. And for anyone who wasn't believing the good news, David McWilliams himself demonstrated a bit of exuberance in the Indo the other day. Macker admits he may have been in denial about what has been happening for the past while and he reckons now we are turning a corner. And you would tend to take his optimism slightly more seriously than that of the Government's usual good-news cheerleaders in the media.

The most potent sign of the giddiness is, of course, the property market, where Paddy likes to play. And Jaysus we don't do things by half when it comes to property, do we? Having had the boomiest boom, and then the bustiest bust, we just can't wait to throw ourselves back into the property thing with gusto.

So there are people queuing to buy houses whether they need to queue or not, and while people are pretending to be all responsible and concerned about rising property prices, anyone who owns a house in Dublin can barely contain their glee at the idea that they are a quarter richer this year than they were last year. They know it's wrong and that it will possibly end badly, but like the politicians, they can't help themselves.

And then, of course, we all got excited about the fact that Super Mario Draghi is going to flood the European banking system with money, though you'd wonder how much of it is actually going to reach the real economy. And the only people who seem to benefit from lower interest rates are those on trackers. We certainly haven't seen too many cuts in other borrowing rates in line with cuts in the ECB rate. Although your savings bank will use the latest cut as another excuse to bring the interest rate they pay you on your savings close to zero.

But still the people are giddy and exuberant at all this and the politicians are secretly thrilled and hoping all this good news will last 18 months and inflation will start to wipe all our sins away and growth will swallow up our deficits. But, as Joan Burton pointedly put it the other day, "We won't be able to meet everyone's pent-up expectations all in one budget."

And that's precisely the problem. There's been too much of that damn good news, not least coming from politicians. And now we all have expectations. And the quasi-religious penitential view we have been sold of austerity - that pain is the cleanser and that we will be rewarded for all the flagellation, has led to huge, pent-up expectations.

People pretty much think austerity is over and they have also been led to expect tax cuts that they will actually feel in their pockets. Because, apparently, we deserve it now.

And having disseminated all that good news and all those vague promises, the Government are now panicking and trying to get people back to a bit of reality. To the point that they are tying themselves in knots about it. Michael Noonan ended up saying during the week that we would have to raise taxes in order to pay for tax cuts.

Yes, it was all about managing expectations last week, but it was a bit too late for that. The Pandora's box of delirium has been opened.

So now, the Government could now find itself in the bizarre position that the first relatively neutral budget in years, the first non-savage attack since 2008, could provoke huge anger among people, because their expectations have been stoked so much by loose talk about tax cuts and no cuts in anything else.

And then, no doubt, the politicians will waddle off scratching their heads, muttering about how we're never grateful for anything. But ultimately, it's their own fault for wanting to be loved.


Sunday Independent