Howard Rich

While American politicians continue to indulge the unsustainable excesses of a federal government already littered with unnecessary functions, other nations have wisely begun to read the handwriting on the wall.

What does it say?

Cut, cut, cut!

Take Ireland, which (like America) found itself buried under a mountain of deficit spending in 2009 as the global economic recession crippled income and revenue growth. Making matters worse, a huge speculative housing boom swept across the nation just prior to the bottom falling out of the global economy, which has made its recession even more severe. In fact Irelands unemployment rate is currently 12.8% - the third highest rate in all of Europe.

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Things got so bad that at one point last year, the Irish government was borrowing 400 million ($575 million) a week just to keep its head above water, with its deficit rapidly approaching 20% of its gross domestic product. At that level, the very financial survival of Ireland would have been at risk,according to the countrys finance minister.1

Sound familiar?

Its almost exactly whats happening in America, albeit on a smaller scale.

Yet while American politicians are pushing new socialist spending sprees and bigger government power grabs in 2010, Irelands government is doing exactly what the countrys businesses and families have been forced to do as a result of the downturn find ways to make ends meet.

In addition to slashing salaries for more than 400,000 government workers (including its top administration officials), Irish leaders have also shown a willingness to trim back numerous social welfare programs. All told, the Irish cuts will save as much as $6 billion this year and as much as $22 billion over the next four years.

Ireland is not making these decisions in a vacuum. In fact, the country has already learned the hard way that unchecked government growth does not translate into recovery. During the 1980s, a massive expansion of government debt (and a failure on the part of political leaders to make cuts when they were necessary) spawned anemic economic growth, soaring interest rates and an unemployment rate that soared to nearly 20%.

Irish economists refer to this period as the lost decade.

In the 1980s, we saw what can happen when you ignore the problem of overspending, Alan Ahearne, a special adviser in Ireland's Finance Ministry, toldThe Washington Postin December. We're not going to make that mistake again.2


Howard Rich

Howard Rich is the Chairman of Americans for Limited Government.