A good start to the new year

2012 is looking up, with two achievable and realistic debt justice initiatives being proposed this week. By Michael Taft.

Ever since the crisis began, progressives have been on the back-foot, forced to react to the agenda driven by the orthodoxy. However, 2012 has started on a more hopeful note. There have been two initiatives that can provide the basis for a common-sense counter-agenda, not only capable of winning considerable support throughout society but – and this is always key – of winning.

First, is the letter signed by 60 social activists, academics and artists in the Irish Times today. They call on the Government to introduce an emergency budget to reverse current austerity policies and introduce measures to grow the economy through an investment programme that can create jobs while increasing taxation on high income groups and re-investing the revenue back into domestic demand.

Not only is this call for an emergency budget grounded in the reality of the Irish economy (in 2012 we will still remain mired in recession with employment falling and debt rising), it is also lays out an achievable goal. The emergency budget, similar to the Jobs Initiative last year, is something the Irish Government can do within the parameters of the EU-IMF bail-out deal, namely:

  • Releasing money the Government already has (in cash and assets) for investment projects that can create jobs; this money doesn’t have to be borrowed or found out of new taxation or spending cut measures.
  • Increasing taxation on high income groups (their income, capital and/or property) has a minimal impact on domestic demand but using the revenue to put back into public services and starting to reverse some of the social protection cuts – that, too, will increase employment and demand, and, so start to remove deflationary pressures in the economy.

Would this solve our economic problems? No. But it would start moving us in a different direction. And if a little bit of investment and expansion starts helping, then a lot more would bring even greater benefit and start to fundamentally change the agenda.

The second initiative was launched on Wednesday – Anglo, Not Our Debt – by social organisations comprising trade union, community, faith-based, global justice, environmental and academic sectors. They are calling on the Government to suspend payments of the Anglo-Irish/INBS promissory note and invite the ECB into negotiations with the intent of achieving a 100% write-down of the debt.

We all know that repayment of the Anglo debt will inflict a terrible burden on the economy and society for years to come. It is estimated to cost over €80 billion over the next 20 years – paying off the debts of a dead bank.

The call for suspension and renegotiation is forensic and well-targeted. It is not about ‘burning the bondholders’ or repudiation or default, not that I have any problems in principle with any of these. But what it does do is avoid the accusations that are constantly thrown back at those campaigning for debt justice.

  • It doesn’t create a credit event, spreading contagion throughout the European financial system. The promissory note payment is between public agencies.
  • It does not collapse the merged Anglo/INBS bank; the promissory note is maintained on their asset sheets.
  • It does not demand the Irish Government act in a unilateral manner – the act of suspension is an instrument to force a multi-lateral solution: one that is satisfactory to all parties.

It is a demand for something the Government can do, if it has the political will. It would strengthen their hand - if a party continues making a payment, what's the incentive for the other party to negotiate? And if the Government did this they would have the support of everyone in the country.

So here we have two achievable and realistic initiatives capable of winning widespread support, two initiatives that can actually be realised:

  • An emergency budget to invest, create jobs and raise domestic demand
  • Suspension of the Anglo-Irish promissory note in order to renegotiate this odious debt

Now let’s go out and make these a reality. {jathumbnailoff}