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In Ireland's deep budget cuts, an omen for a heavily indebted United States?

Irish Finance Minister Brian Lenihan, center, announced record spending cuts early this month.
Irish Finance Minister Brian Lenihan, center, announced record spending cuts early this month. (Niall Carson/press Association Via Associated Press)

The cuts, Byrne said, could not have come at a worse time. With Ireland facing a U.S.-style housing bust after years of speculative building, the salary of her husband, who sells house paints, has been cut in half over the past year.

The Byrnes are struggling to make payments on the house they bought during the boom years, which, as with many Americans, is now worth less than what they owe on it. The government cuts, she said, mean the family will need to drop the one treat they have tried to cling to even in rough times -- a weekly trip to McDonald's.

"I feel pushed as far as I can go, ready to cry," Byrne said, looking down at her accounting ledger on the family's kitchen table. "You might not think it's a lot of money to lose, but it makes a huge difference to us now that we're down. I know they say that Ireland can't afford it. But how are we supposed to deal with this at home?"

Yet the Irish know something about the price of running up a tab you can't pay back. A mountain of debt and a failure of political will to make difficult cuts, officials here say, were major contributors to the "lost decade" of the 1980s. The time was marked by near-zero net growth, soaring interest rates and mass emigration of Irish as unemployment climbed to nearly 18 percent.

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

An increase in spending through stimulus, economists argue, also would not bring the economic benefits it has brought the United States, largely because tiny Ireland imports the vast majority of its goods and services from neighbors. "Stimulus spending in Ireland would just be exported overseas," Ahearne said.

In part, the Irish are making cuts to shore up investor faith in government bonds, which have taken a beating in recent months as fears of a brewing international debt crisis have spread.

Economic penance

To date, the Irish are taking news of the sharp cuts with surprisingly little protest. Though union leaders are threatening strikes in coming weeks, no one expects the kind of violent unrest that may confront, say, Greece if it follows through on a pledge to make similar cuts.

Many Irish seem to view the cuts as cathartic, surrendering to a view that they deserve to suffer after buying in so completely to the reckless, credit-fueled growth of the late 1990s and 2000s. As the Irish seek penance for their excesses, they are gobbling up self-flagellatory bestsellers such as Fintan O'Toole's "Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger."

Yet some have criticized the government for what they view as a thinly veiled message encouraging members of a new generation of Irish to set forth overseas to find their fortune, as many of their parents, grandparents and great-grandparents did. The new cuts specifically target Irish 20-somethings who cannot find work, reducing their unemployment benefits, in some cases, by as much as 30 percent.

Analysts say thousands of young Irish have left for Britain, North America and Australia in recent months, with thousands more expected to emigrate next year.

"I feel like the government is telling us that Ireland can't support us anymore and we should take our chances elsewhere," said Shaun Kavanaugh, 25, an unemployed electrician. "I'm taking the hint. As soon as I save up enough money for my flight to Canada, I will be on that plane. I thought those days were over in Ireland."


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