Analysis: Is the Government preaching prudence while pursuing populism?

The Government is being bombarded with warnings from organisations with economic expertise as it finalises its budget proposals.

With the State still in debt to the tune of €200 billion, it is hardly surprising that various bodies are advising the Coalition not to ease up on austerity and instead present another tough budget.

Nevertheless, Taoiseach Enda Kenny has made clear feel-good tax cuts will be the big focus of next Tuesday’s announcement.

The “burdensome” combined 52 per cent rate on higher incomes will soon be no more for the so-called “squeezed middle”, whether through adjustment to tax bands or rates.

Minister for Finance Michael Noonan has said that, contrary to what was anticipated previously, there will now be no need for a new round of spending cutbacks and tax increases next year.

Modest prudence is the order of the day, it seems.

A three-year plan will be announced alongside the Budget, which will dangle the tantalising prospect of further income tax reductions in the years 2016 and 2017 to follow the modest moves that will be outlined for 2015.

Make no mistake, the Coalition parties view this Budget document as the first draft of their next General Election manifestos.

Of course it would be dull if the alphabet soup of economic organisations agreed with everything that the Government was proposing on the economic front.

But when the IFAC, OECD, ESRI, IMF and EC - among others - are all arguing that any deviation from the path of fiscal consolidation is premature, can it be entirely wise for the Cabinet to ride roughshod over their advice?

The simple explanation is that the “dismal scientists” who advocate the continuation of harsh measures for a population ground down by six years of cutbacks do not have to go before the people for re-election.

Politicians of all hues will always shy away from unpopular measures in the guise of offering hope and the electorate, despite being battered and bruised by previous experience, will want to believe.