There are some election certainties, and one of them is the report from the government advisory body Studiegroep begrotingsruimte (The Study group budgetary space), writes Wouter Bos.

We can also be sure of the contents of the report. Of all the policy options open to us, the Study group always wants us to go for the one with the biggest number of cutbacks. According to the Study group, we’re looking at €20bn in 2017. And that is on top of Rutte’s €18bn and the Kunduz coalition’s €12bn.

One of the members of the Study group is Coen Teulings, director of the government’s macro-economic think tank CPB. This is an interesting fact for anyone familiar with recent history. Rutte’s famous €18bn cutback figure, which should be achieved in 2015, comes from the Study group report of 2010.

At the time, the CPB didn’t think €18bn all that relevant. Teulings said he thought it would be much better to shore up government finances with €30bn in the mid and long-term (in order not to saddle the next generation with debt) than to try by hook or by crook to cut back €18bn in the first four years.

He allegedly said the same thing during the formation talks in the summer of 2010. The story goes that when Dutch National Bank representative Lex Hoogduin, Nout Wellink’s designated successor, failed to come up with enough arguments to counter the proposal, Rutte withdrew his support for Hoogduin’s candidacy for the DNB top job.

Repeat

The question is are we in for another clash between the economic sense of the CPB and the political phantom numbers of the Study group? We are. More than that, it’s already happening but not many people have picked up on the fact.

On July 19, the CPB published a report on cabinet budgetary goals in which it apologised for earlier mistakes and misunderstandings. Then it dropped a bombshell: in order to consolidate government finance in the longer term, the government need only cut back €2bn in 2017 provided it follows this up with €5bn resulting from reforms (in the housing market for example). €2 billion! That is ten times lower than the Study group figure of €20bn!

Of course the CPB realises this would contravene our European obligations which it says entail a cutback of €13bn, still €7bn short of the gigantic cutbacks of the Study group.

Leaving the figures to one side, what is the political significance of all this?

Classic argument

First of all we have to realise the classic argument which the whole political spectrum has been using for the last decades – that we can’t saddle the next generations with an insurmountable deficit – cannot be used to justify cutbacks to the tune of €20bn when €2bn in 2017 will do.

This also means the European deficit reduction guidelines have become largely obsolete. These guidelines date from before the crisis and were meant to force countries to put their finances in order.

If we follow these guidelines to the letter not only will we not leave the next generations in debt, we will hand over extra wealth as well. In the light of the fact the next generations will be richer than the present generation and will (in all these calculations) pay an equal amount of tax, this is nothing short of scandalous.

Cynicism

The final argument to push through the €20bn is used by the Study group as well: shouldn’t we just get on with the deficit reduction and the cutbacks so we’ll have something laid by in case we get hit by another (financial) crisis? The answer to this is that the same argument could be used to do the opposite so economies get a chance to recover and be stronger when the next blow comes.

What really worries me about this argument is the cynicism which underlies it. If we are so afraid another crisis will play havoc with government finances, we should do something about the financial sector, not present the taxpayer with yet another bill. Wasn’t the most important lesson to be learnt from this crisis that it should never be allowed to happen again?

Wouter Bos (48) is a partner at professional services firm KPMG where he is responsible for healthcare. He was political leader of the PvdA and finance minister and deputy prime minister under Jan Peter Balkenende from 2007 to 2010.

 This article was published earlier in the Volkskrant