I find it interesting that Hungarian prime ministers in the last five years or so don't dare to tell bad news to the people, looking them straight in the eye. Either they burst out in a fiery speech among the party leaders as Ferenc Gyurcsány did in Őszöd or they tell their secret thoughts to foreign journalists as Viktor Orbán did yesterday. I don't think that this is a very good practice. It certainly worked against Gyurcsány, and I suspect the same thing will happen to Orbán in the coming months.
Gyurcsány for the sake of winning the election in 2006 kept the news of the dire economic situation under lock and key. A few days after the election there was the unexpected announcement that without an austerity program Hungary would not be able to survive economically. The news was bad enough, but Gyurcsány also made the mistake of saying that "it will not hurt much." Well, the Hungarian people thought otherwise.
Viktor Orbán in opposition talked about these austerity measures as a means of punishing the Hungarian people. It is difficult to figure out why a government would want to punish the people it represents, especially when these measures diminish its popularity. Anyway, that nonsense went on for four solid years: there should be no austerity measures, everything can be handled without them. The only thing that is necessary is to get rid of the "commies" who torture the people with these unnecessary measures. The "commies" are so unimaginative that the only thing they can think of are "restrictions," but economic growth cannot be achieved this way. When they come into power they will show how to grow the Hungarian economy and reduce the country's indebtedness without austerity.
Well, for eight inglorious months they have been trying to show that it can be done. By dithering for that long, except for one-off measures, they have done an incredible amount of damage to the economy and to the country's reputation. My feeling is that they would have gone on this way for a few more months because they are very afraid of the inevitable backlash. In the last three months the Fidesz camp has been slowly shrinking and by February I suspect there will be an even larger dip in popularity. Because at the end of January millions of people with more modest incomes will find that their paychecks became a little smaller instead of larger. That will be the day of reckoning. But all that is nothing in comparison to what is expected at the end of February when Hungary must show Brussels that it is making a serious effort to trim its budget in a fundamental way. Not by levying extra taxes on foreign companies and expropriating people's savings.
So, what did Viktor Orbán tell the two journalists that he didn't dare reveal to the Hungarian people? It's best if I quote the prime minister verbatim:
“Financial discipline is important. But when we restore financial discipline, it’s important to reduce the level of redistribution [as a percentage of GDP]. And this year, in 2011, that will be proven, we are reducing that. So I think that structurally the budget is going in the right direction.”
How is he planning to achieve this financial discipline? It seems that it will be done in large part by serious cuts in social services:
“We have to make it clear that the public pension fund cannot pay more out in pensions than it collects. It must be balanced so that we can regain long-term sustainability of the pension system.”
“Nobody can retire without reaching the age limit.”
“We have to provide jobs in the areas of the country where markets don’t. Morally, you can take the responsibility for that kind of cut [in unemployment benefits] if you can provide at least public work. My estimation is that it’s going to take six months from now to set up that system. From July, we have a chance to introduce that system.”
Let's take these pronouncements one by one. As for pensions, at the moment the amount of money received in social security payments is not sufficient to cover the government's obligation to provide for the ever-growing number of pensioners. If one takes Orbán's words at face value, it might mean a reduction in the amount of money current pensioners are getting. That sounds fairly unrealistic since it would be political suicide.
The second suggestion about the retirement age is also problematic. First of all, there are certain professions where employees are entitled to early retirement: policemen, soldiers, firefighters, for example. And we mustn't forget that it was only a couple of months ago that the Orbán government changed the law, allowing women to retire after forty years of employment. Let's say that a woman started working at the age of sixteen; she could retire at the age of 56, allegedly to help to raise her grandchildren.
As for the last sentence, it seems that he is planning to decrease unemployment benefits. Perhaps also shortening their duration and introducing public work projects for those who run out of benefits.
In addition, he mentioned a reduction in drug subsidies which will be a blow to the elderly, especially to those whose pensions are meager. Although the great master of words, Orbán's personal spokesman Péter Szijjártó, today asserted that drug prices will remain the same. Sure, the prices will be the same, but because of lowered subsidies the patients will have to pay more for them than previously.
Finally, Orbán talked about revamping the country's transportation system. One can only applaud this last item, but then why did the Orbán government reopen lines closed by the Gyurcsány and Bajnai governments that practically no one uses? One also wonders whether free transportation for those over the age of 65 will remain in force. Again, if the government touches that privilege there will be an outcry. We know that people usually get very upset when the government puts an end to an entitlement. I personally think that this privilege is a very bad idea, but I doubt that the government will dare to touch that sacred cow.
So, Viktor Orbán who for four years kept repeating that an austerity program was unnecessary had to realize that without it there is no way to get out of the perilous economic situation. But how can he not be labelled as his nemesis, Ferenc Gyurcsány, was–a liar? I don't know whether he will be able to pull this one off. But the new slogan is that this is not an austerity program, this is "the reorganization of Hungary." In order to make the bitter pill sweeter he announced that everything depends on 2011. If this year is successful, Hungary's fate will be secure for about ten years. For good measure György Matolcsy added that by 2013-2014 there will be an economic growth of 4-6% "if we do our job well, and why wouldn't we?"
I have the feeling that selling this program will be a difficult job.