The idea that social welfare recipients should take cuts is normally considered politically unacceptable. I have mixed feelings about the measures taken today.
On the one hand, when one looks at measures not taken (whatever legal reasons there may be) such as the failure to cut pensions for retired public sector workers (traditionally linked to pay levels which have now been cut) and the failure to freeze public sector increments, as well as measures taken such as the VAT and excise cuts (costing €257 million on a full year basis) and the range of dubious so-called stimulus measures (vouchers for cheap rail travel for senior citizens visiting Ireland from abroad?) one could conclude that these cuts were avoidable.
On the other hand, against a background of significant deflation and with wage rates falling and the potential for serious poverty traps (where people are better off unemployed than in low-paid jobs), one can argue that cuts in unemployment benefits may unfortunately be a necessary part of any policy mix aimed at limiting unemployment over the next few years. (This particular argument does not apply, however, to disability or carer’s allowances). Moreover, with social welfare spending taking up such a large share of total expenditure, it was not realistic to draw a line in the sand and declare it to be off limits.
As an economist, I can manage to hold both sets of opinions at once.