Thursday, December 20, 2012

Will the Newtown massacre finally force American to tackle its control of guns?

The closest that the vast majority of Irish can get to purchasing 
a gun exists only in replica form, such as the fake 
guns pictured inside a Dublin shop last year.
What is wrong with Americans, my daughter asked, her voice shaking with anger and frustration. She's 21, a third year college student, and she has a low tolerance for bull.

Like everyone else in Ireland, she was both upset and appalled by the slaughter of the innocents in the school near Newtown, Connecticut.  But she was outraged as well, outraged by the failure of Americans to do anything meaningful about the situation that allows this kind of tragedy to happen again and again.  

Why are they surprised that it's happened again?  Are they all stupid?  Don't they realize that gun control is the only way to stop it?   She demanded answers.

Of course I didn't have any answers for her.

The gun situation in the U.S. is so bizarre to people in most other civilized countries that it is almost unbelievable.  Yet so many Americans think it is defensible, necessary, even admirable.

To people on this side of the Atlantic, the fact that ordinary people in the U.S. can possess not only semi-automatic handguns but fully automatic assault rifles is seen as not just highly dangerous, but preposterous.  It cannot be justified under any circumstances in a modern, democratic country.  Yet so many Americans still believe that it is acceptable.

And then they claim they are surprised and shocked when a tragedy like Sandy Hook occurs?  

My daughter and I sat together in Dublin on the day of the shooting watching the late night news from America, first CBS, then Fox News. Bill O'Reilly looked like he had been pole axed from behind.  

There was no explanation possible, he said. There was nothing that could be done.

It wasn't a gun control issue, he said, because controls would not stop evil.  This was evil and evil would find a way.

Other commentators talked about waiting for the full facts about this latest shooter.  Or about tightening up on regulations to stop guns getting into the hands of people who are mentally ill or criminal.  

But they all admitted that such moves might not have stopped Adam Lanza.  It has been suggested that he had social issues, that he may have been borderline autistic.  It was suggested by one or two people who knew him that he was unstable, or heading in that direction.  

But at what point on the instability scale does being a shy, isolated loner, or a nerd, or someone prone to occasional outbursts of anger, register in an official way on public records that would disqualify that person from getting a gun?  How obviously crazy do you have to be?

And suppose you got your assault rifle a year or two before you became visibly unstable? What is there in the present control system in the U.S. to deal with that situation?

All of this, of course, is irrelevant in the case of Lanza because the guns did not belong to him, but to his mother.  This raises the question of what the authorities should be doing to prevent cases like this.

Does it mean that background checks and suitability checks would have to be done not just on someone who wants to buy a gun but on everyone in their family or even everyone who has access to their home?

The absurdity of this exposes the impossibility of making the present system of preventing gun massacres in the U.S. work.  There is simply no alternative to a radical shift in policy which will have the effect of removing all semi-automatic and automatic guns from possession by the general public.  

Indeed, if America was to follow the example of the rest of the civilized world even single shot guns, both handguns and rifles, would be removed as well and confined to very restricted use by legitimate hunters, sports people and gun clubs.

But that would probably involve constitutional change and we are all aware how difficult that is in the U.S., far more difficult than in Ireland, for example.  Without going that far, although I am not a lawyer or a constitutional expert, it seems clear to me that it should be possible to introduce restrictive legislation at federal and/or state level setting out rules and regulations for gun possession in the US that would be constitutional but still would move the U.S. much closer to the norm on guns in Europe and most other developed countries in the world.    

Much has been made out of the number of guns in circulation in the U.S. and the supposed impossibility of retrieving them.   This is nonsense.  A carrot and stick approach, with a buy back program and heavy penalties, including jail, for failure to take part within a time period would achieve results.  

The American people have solved much more complex problems than this.  The case for change is undeniable.

Niall O'Dowd quoted some statistics on IrishCentral a few days ago which tell the story -- murders with a firearm in one year: Great Britain 14; Australia 59; Canada 144; U.S., 9,369.  He left out Ireland, which in the year in question had 12 gun murders.

The numbers tell the truth.  The National Rifle Association and all the rest of the gun lobby can say all they want, but the message is clear -- gun control works.  

Appalling as school shootings are, the bigger tragedy in the U.S. is the everyday body count due to the use of guns in ordinary criminality, drugs and domestic violence.

Last July, after the Aurora, Colorado massacre, New York City Mayor Michael Bloomberg said that 34 people were being killed with guns in the U.S. every single day.

"We've killed more than 400,000 Americans since 1968, when RFK and Martin Luther King Junior were assassinated. That is more Americans than died during WWII,” he said.

While this goes on in the U.S., the rest of the world looks on in disgust and disbelief.  As other countries have shown, it's not impossible to change.

In Scotland, for example, there was a school shooting in 1996 in which 16 children aged five to six and their teacher were killed.  One year later the U.K. banned the private ownership of all handguns of any size or type apart from airguns.  There has not been a school shooting anywhere in the U.K. since then.

Writing in the wake of the Aurora cinema shooting, I suggested that the U.S. could do worse than look to the system in Ireland for direction.

As I pointed out at the time, there are young men under severe stress in Ireland and other countries in Europe right now, but we do not see gun massacres happening here.  There are isolated, inadequate, resentful young men here, just as there are in the U.S.  A proportion of them will become delusional and dangerous, just as happens in the US.

The difference is that here it is very difficult to get guns, and almost impossible to get automatic weapons and large amounts of ammunition.

It's not rocket science.  It's simple. You stop gun crime by removing guns from the general population.  Yet that is something that America refuses to do.

The idea that true freedom must allow good people to have almost unrestricted access to weapons so they can protect themselves against the bad guys is flawed, and the figures quoted above prove that.

It ignores the fact that if there are very few guns around, it is much more difficult for the low level bad guy to get his hands on one.

The gun lobby argument that "guns don't kill people, people kill people" is also flawed.  The fact is that the more guns there are around, the more people get killed with them.

The reason is simple. Killing someone with a gun is easy; killing someone with a knife is harder, and also, there are no automatic knives that enable you to kill 26 people with a slight pressure of one finger.

There's no point in grieving for the Sandy Hook children if America does not do something about this because it's going to happen again.  America needs gun control.

That's the reality. It's a reality that almost all other developed countries have accepted, even somewhere like Ireland, in spite of our much more recent fight for national freedom and our rebel image as the fighting Irish. As I said, America could do worse than copy what we have done here.

In Ireland, you can't have a gun unless you can convince your local Gardai (police) that you are a farmer who wants to control vermin, or you want to use the gun for hunting in the countryside -- well over 90 percent of guns held here are shotguns and sporting rifles used for hunting or controlling vermin.  These weapons are usually single shot and never automatic.

If your reason for wanting a gun is to do target shooting, you have to belong to a recognized gun club where very strict rules will apply.  This includes where and how the guns are stored.  Almost no handguns (pistols or revolvers) are allowed in private possession outside of gun clubs.

Anyone who wants a gun here has to get a license from the police, which specifies the type of gun, as well as a small quantity of ammunition.  This has to be renewed every three years.

A separate certificate is required for each gun, and police are slow to issue more than one to a person without good reason.  Handguns are severely restricted with very few in private possession, and those are limited to small caliber guns or air guns.

Similar regimes apply in other countries and no one seems to find it a problem.  So why should it be a problem in the U.S.?

This week there are people all over America deciding on Christmas gifts for their children. Well here's an idea -- tell your children that one of your presents to them will be a promise that next year you will campaign for or support major change on gun laws in the U.S. And explain to them why this will be the best Christmas present the children of America will ever get.

Thursday, December 13, 2012

A budget of a thousand cuts is the latest austerity measure for the Irish

A young boy joined carers to protest last week’s budget cuts 
outside Leinster House in Dublin on Tuesday morning.
There were no big surprises in the budget in Ireland last week, the sixth so-called austerity budget in a row as the government battles to raise taxes and cut spending to match revenue. 

The reason was that all the bad news had been slowly leaked out over the previous few weeks to lessen the impact on the day.

So we knew all about property tax and increases in payroll "social" tax and cuts in child benefit payments and other adjustments like extra tax on alcohol, tobacco and cars.    

We didn't know about some of the "adjustments,” one of them being the cut in respite payments to carers, something that has proved to be so contentious that it could yet destabilize the government even though the overall amount involved is relatively small in terms of overall state spending. 

Carers are people who look after other people at home on a full-time basis -- like a parent looking after a severely handicapped child or someone looking after an elderly parent with Alzheimer's.

From the state's point of view, these people should be treated like heroes since they keep the loved ones they care for out of hospitals where long term care would cost a fortune.  The amount saved by the state as a result has been estimated at around €4 billion a year. 

Carers here get a basic payment of just over €200 a week from the state, and they also were getting an annual respite payment of €1675, to allow them have some "respite,” a short holiday or break from what is usually a demanding, year round 24/7 commitment. In this budget, that respite payment has been cut by €300. 

A meaner, nastier cut is hard to imagine.  This would be true even if most carers used the money for the respite break they were supposed to take. 

In fact, however, many of them were using the money not for a holiday but to tax or insure the car they need to take the person they care for out of the house occasionally, to medical appointments and so on.  Or they were using it to fill the heating oil tank for the winter, since many immobile people needing care also need higher home heating than healthy people.   

This is just one of numerous small cuts that were made in the budget in areas of state spending that affect the lives of the poorest or the most vulnerable in our society.  Extra payments for medicines for the poor is an example of another.  And there are many, many more.

But it's not just the poor and vulnerable who will have their lives made more vulnerable by this budget.  The lower to middle income families across the country are going to be hard hit as well.  These are the so-called coping class.

The trouble is since the boom and bust many of them are just not coping anymore.   And they now find that they are being squeezed even more.

Many of these would be people who bought properties over the past decade for which they paid boom time prices and which are now in negative equity.  They are struggling to pay their mortgages already and are now being hit with a new property tax.

They paid heavy stamp duty (like a sales tax) when they bought their homes.  It was six percent on an average house and nine percent on expensive properties.

During the boom it was quite normal to pay stamp duty of €20,000 to €50,000 when buying a property. People simply added it to the mortgage, borrowing enough to pay for both the house and the stamp duty.  And this is part of the reason so many people are now struggling to make their mortgage payments.

There was a wide expectation that when the new property tax was introduced in this budget, people who had paid heavy stamp duty in recent years would be allowed to offset that against their tax bill.   Instead they have to pay up the full amount of property tax like anyone else.

It's double taxation and it's clearly unfair.  But the government went ahead with this anyway.

Similarly, the government made no attempt to target child benefit cuts at people who don't really need the payments.  The payments are universal so all families get them, rich and poor. Taxing them would have taken about half of this money back from better-off families, while leaving payments to poor families intact. Instead of doing that, the government did an across the board cut which will hit every family in the country.

The property tax and child benefit cut will have most impact on ordinary middle income families here, with most of them down around €2,000 a year.  That may not sound a lot, but for families who are already living on the margins after a succession of austerity budgets it will make life even more miserable.

On top of the cuts, there are the extra charges and tax that people will have to pay.  The main one is the PRSI social tax (which is supposed to help pay the state's welfare bill) which is being hiked up.

Of course it's really an income tax since it is deducted directly from pay.  The effect will be to bring the marginal rate of tax on income for many ordinary people to well over 50 percent.

The problem for many families is that while they are being squeezed dry by the government, many of the "luxuries" that are in reality essentials for many of them are costing more and more.  The government is increasing annual tax on cars, for example, and petrol (gas) is going up as well. 

Some might say that a car is a luxury, but if you're stuck in a new housing estate miles away from work and schools and there is little or no public transport nearby, what do you do?

This felt like a budget of a thousand small cuts,  many of them hidden.  The cut to the carers respite payment, for example, hardly registered in the media on budget day but is now the hottest issue  facing the government. 

The reason all these small miseries were imposed by the government is that they began the task of making the €3.5 billion adjustment with the three biggest items in the budget off the table.  These were income tax rates, basic welfare rates and the Croke Park agreement on pay and pensions for state workers. 

Fine Gael and Labor made pre-election promises that income tax rates and basic welfare rates would not be touched, rash promises that have now come back to haunt them.

So there was no change in the basic income tax rates (although there was the hike in the PRSI "social" tax on incomes which has the same affect.)  And there were no changes in basic welfare payments like unemployment benefit and old age pensions (although the length of non-means tested jobless benefit was shortened and better off pensioners will now have to pay more of their own medical bills).

A much more imaginative approach to income tax and welfare and the link between the two could have been started in this budget and needs to be done soon if we are to incentivize business creators and workers to help us get out of the slump we are in.

The Irish welfare system pays people not to work and gives them many extra benefits for not having a job.  In Germany more than a decade ago the welfare system was changed so that welfare payments there pay jobless people to work in all kinds of activities like community service programs and so on.  You get very little for free unless you give back to society.

The Croke Park Agreement which guarantees pay levels and pensions in the public service (all state workers) was a major logjam in this budget.   In the big spending departments like health and education up to 80 percent of spending is on pay and pensions for staff, but because pay cuts are ruled out, making any meaningful cuts in their budgets involves hitting frontline services.

So, for example,  although school teacher's pay is not being cut, class sizes are going up (which affects students).

While student grants in universities are being delayed and student fees are going up, university teachers' pay (probably the highest in Europe) remains untouched.   

Then there is the scandal of the pensions for state workers which go on being paid at levels that are twice what many people who spent their working lives in the private sector paying into pension private schemes end up with.   And this is continuing while the state is desperately trying to save small amounts of money by cutting things like the carers respite payment.

This budget was not just unfair; it was incompetent and cowardly.  Instead of some blue sky thinking we got more of the same old ideas, a myriad of minor changes that eat away at the living standards of ordinary people.

And of course here was no mention in the budget of the elephant in the room, the huge burden of the banking debt repayments Irish taxpayers have been lumbered with and which are going to cost us billions in the years ahead, money the government might as well pour down the drain.   If the government had any backbone it would have told the European Central Bank by now that this party is
over.

It all makes a very bleak prospect for Christmas and the New Year.

Wednesday, December 5, 2012

Ordinary Irish suffer yet again as savage budget cuts will hit poorest

A Santa Claus protester held up a sign at a protest in Dublin last month.

This is budget week in Ireland but the bad news -- and it's going to be very bad news -- won't be revealed until Wednesday afternoon when the Minister for Finance Michael Noonan reads his Budget 2013 speech to the Dail (Parliament).  

So it will be after this column has gone to bed when the gory details of the Budget 2013 nightmare will emerge.  Of course we do know roughly what's going to happen, since we are no longer masters of our own economic sovereignty.  

That privilege belongs to the Troika (the EU, ECB and IMF) who lent us the bailout money to stay afloat three years ago and now lay down the law on our stony pathway back to fiscal balance and sustainability.

To meet the target for 2013 in the Troika's plan for Ireland, we have to reduce our budget deficit in the coming year by another €3.5 billion.  The government has said already that two thirds of this adjustment will be achieved by spending cuts, and one third by tax hikes.  That much is clear.

Also clear is that there will be a property tax, one of the things that the Troika is insisting on as a way of providing a steady revenue source for the state, like in the U.S. and most other countries in Europe.  

Part of the reason Ireland is in this mess is that property taxes here only applied when a property was sold, so when the market collapsed so did state revenue.    

Another change the Troika are keen to see is a targeting of welfare benefits so that only those in genuine need will get them; under our present system some welfare payments, like child benefit payments, are universal, going to all families regardless of income.

So we know the parameters of this budget. We even know some of the likely measures it will contain thanks to leaks to the media in the past few weeks as the coalition partners in the government, Fine Gael and Labor, have struggled to agree on what to do.  

As long as we follow the broad guidelines set down by the Troika and hit the target for next year's reduction in our budget deficit, the government is free to work out the small details of the spending cuts and tax hikes by itself.  

That's what the Troika says.  But, as always, the devil is in the detail.    

One reason this budget is so difficult is that over the last few years each annual budget has cut spending and found new ways of adding extra taxation.  There are no easy options left.

Some of the most obvious waste in spending has been stopped.  Hidden areas that could yield extra revenue have been exposed and taxed.   Most of the low hanging revenue fruit has already been picked as we tried to cut the deficit by a few billion over the past few years.  Now on top of that we have to find another €3.5 billion in cuts.  

Another reason getting the figures in this budget to add up is so difficult is because of the rash promises made in the election two years ago by Fine Gael and Labor. Fine Gael promised no income tax increases, while Labor pledged that core welfare benefits would not be cut.  Clearly, since we are now scraping the bottom of the barrel, something has to give on these promises.  

We have one of the most generous welfare systems in Europe, with benefits paid at very high levels.  Welfare for those out of work is more than one third higher than similar payments in Britain, for example. The basic state pension here is also much higher than in Britain and in most other European countries.  

Other state payments here -- like the aforementioned child benefits – and payments in many other smaller entitlement programs, are extraordinarily high in comparison with other countries.

An example would be statutory maternal leave from work, with an Irish mother entitled to 42 weeks leave from her job after having a baby, 26 weeks of which is paid for by the state at a rate of around €250 to €300 a week and may be topped up more by her employer.

The last time I looked there was no mandated maternity leave with pay in the U.S.  I'm not saying that is a good thing, but the contrast with Ireland is striking.

The bottom line here is that Ireland has become very much a welfare state on European lines in recent decades, and over the recent boom many of these entitlement programs and payments were inflated supposedly for social reasons but in reality to buy votes in elections.  

This has resulted in a situation in which some lower income families here find it as rewarding (and a lot easier) to live off the state than to hold down jobs.

By the time you add up the value of unemployment benefits, rent allowance, fuel allowance, other allowances, free family health care for those out of work and other payments, it is hard for employers to match the value in pay.  Plus staying home saves travels costs and other expenses.  

Saying this here is heresy, of course, because it challenges the orthodox perspective; one economist who was foolhardy enough to do so last year was bitterly criticized.

But the evidence is all around us and the effects on our society are clear.  

The trouble with entitlement programs paid at a high level is that they quickly become the norm for those who receive them. Cutting the level of payments leads to a ferocious backlash and accusations that the vulnerable are being targeted.

We have already seen this here in the “grey power” reaction when the government tried to take free health care away from better off pensioners who could afford to pay for their own medical needs.

Any objective assessment of Ireland's welfare system and other state programs which give people entitlements to services which some could pay for will show that they are very generous by the standards of other countries.

The simple truth is that the country cannot afford this anymore.  And we cannot go on borrowing to pay for it.  So reductions are inevitable.  

If the Labor Party insists that "core" welfare payments cannot be cut, then higher eligibility requirements to reduce the number getting payments will be needed.  

The other big item on the spending side of the budget equation is the pay of state workers here, which is protected under the Croke Park Agreement.   This agreement was supposed to deliver efficiencies that would allow the government to cut costs by reducing numbers while maintaining pay levels.  

It has not worked, no matter what the unions say.  Pay levels here for middle and senior workers on the state payroll (civil servants in government departments, doctors, nurses, teachers, police, and so on) all remain high by European standards and take no account of the state being bust.

It has now emerged, for example, that teachers here are entitled to an extra six weeks paid maternity leave on top of that outlined above, despite the fact that they already get long summer holidays when the schools are closed!    

On the revenue side of the budget equation, there is now widespread acceptance that we are at, or close to, the maximum level at which income tax can be applied here.  Our top rate is 41 percent, but there are two additional "social" taxes applied to income which bring it to well above 50 percent.  

The top rate kicks in at a relatively low level of income, equivalent to around $40,000 for a single person.  As a single person, anything you earn above that level, you lose about half of it in tax.  

As if that was not enough, all the other indirect taxes, like sales taxes, motor vehicle taxes, fuel tax, levies on pensions savings and insurance policy taxes -- there's a tax here on almost everything you do apart from breathing -- have all been ratcheted up over the past three years as the government tries to squeeze more and more revenue out of ordinary people.

And of course the property crash has left a lot of people in negative equity, struggling to pay high mortgages for houses that they cannot sell even if they want to.

What all of this means is that in this budget the government needs to show a new approach and some new thinking.   It's not enough to tinker with the present tax and spend structure anymore.  Radical reform and change is required, particularly on the spending side.

The Irish state -- government, civil service and all the rest of it -- is now much bigger than the country can sustain.  How many non-governmental organizations (quangos) with staff on the state payroll and with guaranteed state pensions can we afford?

There are hundreds of them and, despite promises, only a handful have been wound up. How many embassies do we need?  How big an army?  The population of Ireland is only half the size of London, yet we have to carry the expense of an entire country, one led by politicians with serious delusions of grandeur.
There is no sign of us tackling any of the sacred cows in Irish life.  An example would be the costs associated with the pretence that we are reviving the Irish language.

We go on paying teachers to spend hours every day teaching compulsory Irish in schools even though no European languages (or Chinese, or Russian) are taught in Irish junior schools and companies like Google have to import hundreds of workers here as a result to fill jobs in customer support services.

And we go on paying for not only a full Irish language news service but an Irish TV station, even though research shows that the audience is tiny.

I have nothing against Irish.  It is just one example of the many sacred cows in Irish life which cost a fortune and which we can no longer afford.  Long may Irish continue, but it has to stand on its own legs and so do all the other sacred cows we have here, instead of being supported by the taxpayer.

Any serious examination of Irish public life shows up wide areas of very expensive government activity which really have no place in a country that is broke.

Our Arts Council, for example, had a budget this year of over €60 million to promote the arts.  Close to €1 million was spent on a week of Wagner concerts in Dublin.  

Again, I'm all for the arts, but are the people who stand over this kind of thing living in the real world?

In an effort to save money, while continuing to pay obscene pensions to retired bankers and top civil servants, the government has cut the number of home help hours to families with disabled children, elderly people who need round the clock care and so on. In doing so they are undermining a program designed to keep such people out of hospital by helping families to look after them at home.

But then these vulnerable people -- and the family members who look after them -- are not among the sacred cows of Irish life. That's what is wrong with our attempts to reform our state finances.  

Mean, miserable cuts and extra taxes are loaded on to ordinary people here while the lofty pretensions of the Irish state carry on regardless.  To change this requires a fundamental shift in thinking at the top.  

Bold, radical moves to curtail state spending while protecting the vulnerable are possible.  But they would require the wholesale slaughter of sacred cows.  

That makes it very unlikely that we will see any real change in approach in this week's budget.  What we are likely to see is the status quo in Irish society -- and their pay, often state pay, and guaranteed pensions - being protected as much as possible.

Meanwhile, all the middle income people will be forced to pay even more to keep the circus on the road.  They will be forced to pay more even though research this year showed that, after paying all their essential bills, 1.8 million people here had only €100 a month left over for themselves.

The gigantic elephant in the room in this debate is, of course, the repayments the country is making on the banking debts that were "guaranteed" by the state, which means they were transferred to the taxpayer.   Just to deal with the two worst banks involved, Anglo and Irish Nationwide, is costing us over €50 billion.

The two had €31 billion in debts, mainly to foreign bondholders, and we borrowed the money to pay this back.  The bondholders have now all been paid back and we're scheduled to pay that borrowing back over 20 years or so, at around €3 billion a year (the interest bill is around €19billion).  

The last government was railroaded into this by the ECB, because they feared a collapse of any Irish banks would cause financial contagion across Europe.  There is no moral basis for it whatsoever.  The two banks are now closed.

The bondholders should have been burned. Instead this huge unsustainable debt was loaded on to Irish taxpayers.  

The other banks here, between them, have had another €30 billion pumped in so they could pay their debts, and again the Irish taxpayer ends up carrying the can.  

So all the pain that will be unleashed this week to narrow the budget deficit by €3.5 billion will be unnecessary suffering because we will be sending roughly the same amount out of the country in debt repayments.  And this is set to go on year after year, until 2030 and beyond.

Last week Greece was given another debt forgiveness package by the Troika. But this government has managed to get nothing for Ireland.  

So we go on paying.  Is it any wonder so many young people are leaving?