I wanted to build this up for dramatic effect, but, oh, I can't help myself. National's tax cut is perfectly affordable, and they laid out exactly where it's coming from: **NATIONAL IS FUNDING THE ENTIRE TAX CUT PACKAGE OUT OF A $12.8b INCREASE IN DEBT OVER FOUR YEARS**! Waaaaaaaa!!!!
Where's this $12.8b Wally? In the fine print, of course. It's always in the fine-print...
It's a very simple and seemingly innocuous line in Key's press release yesterday:
Gross sovereign issued debt is forecast to be approximately 1% higher relative to GDP than currently by the end of the forecast period.
Well, this is harmless, isn't it? According to Treasury forecasts, gross debt will be $34b in 2008/09, or 19.1% of GDP. So what's one more percent? Nothing, really. Just $1.78b, and well, what's a billion or two among friends?
But read it again. It's "1% higher than currently", not "1% higher than currently forecasted". He's not comparing it with debt as a percentage of GDP in 2008/09, he's comparing it with debt as a percentage of GDP in 2004/05.
The 2004/05 gross debt is 25.3% of GDP.
(If you know what this means, you can proceed to the run-around-screaming part. The rest of you should continue reading.)
So what he's saying there is that gross debt will be approximately 26.3% in 2008/09, or a whopping $12.8b (7.2% of GDP) higher than what it's currently projected to be.
There. Big fat $12.8b Wally. Found.
Stuff the spending cut, waste cut, baby-selling, etc., etc., there's enough debt there to fund the entire tax package. I blame my not picking this up yesterday on sleep deprivation. But anyway, here you go.
I had some more speculation about where the money was coming from before, but frankly, I don't think we need to speculate any more.
Of course, there's a flip side to this, too. National will be saying that, sure, it's a massive increase on *forecasted* debt levels, but it really is only 1% of GDP - it's the forecast that's the dodgy result, because it takes into account ol' Mad Doctor Cullen paying off debt when there's no need.
And there's a genuine case for that. But put it this way: Under National, the government will have $12.8b more debt in 2008/09 than it would under Labour. Is this good or bad? I don't know, but at least now we can have a debate over what the appropriate debt level should be.
Right, I'm going off to my poker game, two hours late. Now, where'd I leave that $12.8b...
[Update: Tried to contact John Key, but he told me to talk to their researcher, who can be reached in the morning. My friend, a spindoctor in the opposition's opposition, told me that if I got it wrong, he would have set me straight there and then. So I guess I'll see what happens tomorrow...]