Hungarian Spectrum

Hungarian austerity program: tougher EU demands

It was yesterday that Péter Oszkó, Hungarian minister of finance, and András Simor, chairman of the Hungarian National Bank, together representing the Hungarian government, met with Joaquin Almunia in the name of the Commission of the European Union to sign the latest agreement allowing Hungary to receive the third installment of the 6.5 billion euro loan from the EU. From the document it is clear that even tougher measures are expected from Hungary. Otherwise the next and final installment will not be forthcoming. The main demands are to: (1) stop all housing subsidies; (2) save forty billion forints by the time of the fourth installment on subsidies for the Hungarian State Railways (MÁV); (3) reduce expenses for running local governments by 120 billion forints; (4) introduce property taxes; and (5) reduce to two years instead of three government payments to new mothers.

As for housing subsidies, the government as of March planned only to reduce their size. That didn't satisfy the European Union. They want to put an end to all housing subsidies by July 1. Right now the government is thinking of a more modest plan that would allow subsidies for first-time purchases of apartments or houses by people under the age of thirty-five. The purchase price cannot be higher than 30 million forints. I can't see how that will satisfy Brussels.

The other sticking point is subsidies for young mothers. Parliament passed legislation that reduced the duration of the payments from 36 to 24 months, in keeping with the new EU demands. However, László Sólyom, president of the republic, refused to sign it. He wrote a letter to Katalin Szili, speaker of the house, in which he stated that in his opinion women should decide when they want to return to work. (Fair enough, but what does that have to do with the duration of government subsidies?) He considers women's employment important, but at the same time he thinks that the low birth rate and the problem of an aging population warrants the retention of the present practice. It is a well known fact that the ability of Hungarian women to stay at home with their children for an unusually long time didn't help the birth rate. Moreover, according to Klára Sándor, SZDSZ member of parliament, staying away from the workplace for three years reduces a woman's chances of returning to work. She claimed that the birth rate is higher in those countries where women's career opportunities are better.

Whatever László Sólyom thinks, it is unlikely that this piece of legislation will be scrapped, and not only because the European Union will not allow the current system to remain in place. Lajos Bokros just yesterday said in an interview that he didn't agree with László Sólyom, which may mean that most of the MDF parliamentary members will vote to keep the bill as is. SZDSZ made it very clear that they are sticking with their original decision. The mild-mannered Gordon Bajnai (one can only hope with some of the powers of mild-mannered Clark Kent, known to the world as Superman) said that he was sure that when the president fully understands the government's plans for establishing new day care facilities he will not object. My feeling is that Sólyom will have to swallow a big one and sign the bill.

As for the property tax. There is quite a discussion about what to call it. It was originally known as "ingatlanadó" (real estate tax) but is now referred to as "vagyonadó" (property tax) because it will be levied not only on real estate but also on other luxury items: planes, helicopters, expensive boats and particularly valuable cars. (I'd be curious to know how many Hungarians own any of these luxury items.)  But the original bill (still under discussion in parliament) is very muddled. As it stands, it will be levied only on real estate worth more than 30 million forints. Real estate tax based on market value is an entirely new concept in Hungary and it seems that there is no way of assessing the value of structures and deciding which ones are worth more than 30 million forints. Therefore, the idea is that the owners themselves should declare the value of their real estate. I don't think that I have to tell what I think of this brilliant idea. Somehow I don't think that millions of owners of apartments and houses will do a self-assessment and rush to declare that they should pay real estate tax. The authors of this stillborn tax scheme answer such objections by saying that the Hungarian equivalent of the Internal Revenue Service will check returns (How? By targeting certain addresses and then going on site for an appraisal?) and that personal income tax is also paid on the basis of a simple declaration (and we know how high the collection rate is in Hungary). One thing is sure: some members of SZDSZ will not vote for the bill in its current form. They rightly point out that many people own more than one piece of property. So even if none of the houses or apartments is worth more than 30 million, the owners should pay taxes based on the total value of their real estate assets. The party thinks--or at least this is what Gábor Horn says--that property tax should be levied locally as everywhere else in the world. SZDSZ also suggests that locally levied property tax should be deductible from national income tax. So far so good, at least based on the American model. But SZDSZ doesn't seem to be concerned that until now not one word has been uttered about taxes on commercial real estate holdings. This revenue stream is vital to local governments, at least in the U.S. Another strange aspect of the Hungarian tax code is that land is not taxed. Wow! Wouldn't it be nice to own thousands and thousands of acres of land ripe for residential or commercial development! SZDSZ's vote is essential but, once again, the party is unable to speak in one voice. While Gábor Horn talks about opposition to this bill János Kóka promises full cooperation.

The reason for the new tougher demands is the changed economic climate. When the original arrangements were made the prediction was for a 3% decrease in the GDP. By now the ministry of finance's calculations are based on a slump of 6.7%. As for Sólyom, only yesterday he announced that without the help of the European Union the Hungarian government would have had to declare bankruptcy. I hope he keeps that in mind when he has to sign the child-support bill he currently objects to.

The first fifty days of the new Hungarian government

Public relations are not a strong suit of left-liberal governments in Hungary. In fact, some MSZP voters just moan and say that the government's communication is outright dreadful. The opposition on the other hand is excellent in this department. For example, some of the relatively minor accomplishments of the Orbán government, like the Széchenyi Plan, were magnified beyond recognition in government communications. A couple of billion forints of investment in this plan was sold to the public as the cornerstone of the country's bright economic future. This kind of strategy might be successful for a while but it has its obvious pitfalls in the long run. What if the promises are not fulfilled? What if claims are contradicted by facts? Ever since 2002 Fidesz's strategy has been to repeat ad nauseum that everything is terrible. They built a whole election campaign in 2006 on the slogan that Hungarians' "lives are worse now than four years before." The only problem was that everybody knew this was simply not true. The problem was just the opposite: people lived too well. To my mind, Fidesz has been making the same mistake of late. I know people will counter: How can you say that when all opinion polls predict a smashing Fidesz victory? Yes, that's true, but how long can Fidesz keep saying, for example, as Péter Szijjártó did today, that the fifty days that have elapsed since Gordon Bajnai formed his government "have been fifty days of hopelessness"?  Not for long when the facts contradict this assertion.

Today Gordon Bajnai made sure that Hungarians understand some of the accomplishments of his first fifty days as prime minister. He and his closest co-workers made several appearances starting with Magyar Rádió in the early morning and continuing with a press conference while his finance minister had a long interview in the afternoon with György Bolgár on KlubRádió. As for his style, Bajnai was modest: "We don't have reason to celebrate but we should certainly give an account." He emphasized that the steps he and his government have taken will ensure long-term economic growth and will allow the country to extricate itself from the economic crisis. Bajnai, I think correctly, talked about the international community's positive opinion of his government's activities to date. He emphasized that his government doesn't really care about the election results of this weekend or next year; rather, he wants to ensure the economic well being of the country for decades to come. He mentioned the strengthening of the forint against the euro and the U.S. dollar and claimed that people who took out loans in foreign currencies decreased their payments by 400 billion forints. He mentioned that in the last fifty days the swap rate decreased by half. The IMF renewed its loan agreement with Hungary, and during the day there were half sentences uttered to the effect that perhaps the country might not even need the next installment. Sooner or later people will have to realize that there are improvements, especially if one can believe that globally the second half of 2009 will begin to show signs of recovery.

The solid majority (MSZP and SZDSZ) behind the government facilitated legislation. A legislative marathon began a few days after Bajnai took office. A few numbers from the last fifty days: 21 pieces of legislation, 26 executive decrees, and 32 government regulations were voted on or acted upon. The legislative activity didn't stop for a minute. The decision was made to invest 1,800 billion forints (EU money) into the building industry, and the government established a fund of 1,400 billion forints to provide credit to middle-sized and small enterprises. Another 30 billion was put aside for a program for companies in financial trouble. Their employees worked for only four days and received wages accordingly while the fifth day was spent improving their skills at the government's expense.

The less popular legislative activity involved saving money on welfare programs, like thirteenth month pensions to 3.5 million pensioners or not giving an extra month's wages to 700,000 public employees. They reduced the salaries of ministers and managers of state-owned companies. Changes in the tax system are aimed at stimulating employment by reducing payroll taxes and boosting personal consumption by lowering the income tax.

And finally I would like to show two charts that appeared in today's Népszabadság. The left column of the first chart shows the expected budget deficit of EU countries for 2009. The worst are Ireland, the United Kingdom, Latvia, Spain, and France. Hungary's -3.9% is not bad, especially if we compare it to countries in the region: Poland (-6.6), Slovenia (-5.5), Lithuania (-5.4), Romania (-5.1), the Czech Republic (-4.3), or Austria (-4.2). The right-hand column shows the year over year drop in industrial orders as of March 2009. Again, although the situation is not rosy in Hungary it is better than in most European countries. As I said earlier, it will be difficult to maintain for another year that Hungary is in ruins and is a country of hopelessness. If I were an advisor to Fidesz I would suggest a change in strategy. Although a few polls indicated further erosion in the MSZP voter base, the declines are not substantial in spite of the severe cutbacks introduced by the Bajnai government. The European parliamentary elections will most likely bring a huge Fidesz victory, but if the MSZP doesn't lose its nerve the successful government activities should bring more positive political results. And the socialist party shouldn't lose its nerve because from their point of view it would be moronic to hold elections now when everybody claims that MSZP's popularity is at its lowest.

Let me reproduce here another chart of the year-to-date movement of the Hungarian forint against the euro. That is, how many forints does it take to buy one euro? The forint is still not as strong as it was at the beginning of the year, but it has gained strength in the last fifty days. And if we compare it to the high of the year, in the neighborhood of 316 forints to the euro, it has done remarkably well. A very strong forint has its pitfalls, as we all know. A weaker currency is good for Hungarian exporters. Admittedly, it is not so good for people who want to travel to other countries or for those who took out loans in foreign currencies. The lower bar chart shows the rates of unemployment in select European countries in addition to the EU average. The blue indicates the situation in March 2008 and the magenta a year later. Yes, Hungarian unemployment went up but not as dramatically as in some other countries. The European average in March 2008 was 6.7% ; today it is 8.3%. In Hungary it was 7.4% and now is 9.2%. Admittedly, the Hungarian rate is artificially depressed because the percentage of active workers in the population between the ages of 16 and 60 is very low by European standards. The new tax code may help to increase the size of the work force. Another government program is directed at welfare policy. People who are able bodied will no longer receive welfare payments gratis. They will either be employed by local governments in public projects or, if they haven't finished grade eight and are under the age of 35, they will have to go back to school.

One rarely has the opportunity to read in one place all the changes that have been made in the last fifty days. The sporadic news of positive steps is drowned out by the daily noise that predicts the total collapse of the country. Viktor Orbán, for example, doesn't say that his government's first job will be to lead the country out of the recession. Its "first task will be the removal of the rubble." I really doubt that this strategy will be as effective as it appears at the moment.

Gordon Bajnai is the new Hungarian prime minister

Today was the day. The so-called "civic organizations," apparently all five hundred of them, organized a mass demonstration in front of parliament to demand immediate elections. They claimed to be the voice of the "people." I must say that if five hundred "civic organizations" managed to gather only 5,000-7,000 people that is not a great feat. The number of demonstrators seems about right. With few exceptions this is average number, perhaps a little more, for a mass demonstration. My problem is with the five hundred civic organizations. I didn't even know there were that many in Hungary. In addition to the human demonstrators there were also sixty geese who were let loose by members of the Hungarian Guard. This is the newest form of protest against Gordon Bajnai, whose firm at one point was involved with closing a company that was exporting chickens and geese to Russia. The market dried up and the company went bankrupt. Bajnai apparently had nothing to do with the affair, but such trivial considerations never bother the Hungarian right. So, besides dealing with the human demonstrators, the police tried to catch the sixty geese as well.

After a while the peaceful demonstration turned out to be not so peaceful because there are always people who join in order to create trouble. In addition, in far-right circles there are visible signs of hostility among the various splinter groups. The members of the "civic organizations," for example, turned their backs on Gábor Vona, head of Jobbik, when he rose to speak. Most of the civic people left peacefully enough, but the 200 or so Hungarian guardists attacked the police and at one point even tried to overturn an ambulance. In the scuffle three guardists were slightly injured. About 25 "Goy Bikers" also arrived; they were ready to drive straight into the police cordon. Several policemen were injured in the fracas while over ten demonstrators were arrested. The Goy Bikers led about 1,000 people to the Castle district to give President Sólyom a petition with the request that he dissolve parliament, thereby allowing for early elections. The only problem with this brilliant suggestion is that President Sólyom has no constitutional authority to oblige.

Meanwhile inside the building there was a three-hour debate preceding the vote on Gordon Bajnai's acceptance as the new prime minister of Hungary. The first speaker was Ferenc Gyurcsány who in an elegant and moving speech asked politicians on both sides of the aisle to support Bajnai in the interest of the country. Bajnai in a sober speech emphasized that he has no political ambitions and he will concentrate on solving the country's economic problems. Again, he asked for the support of the opposition parties as well. The answer was swift. Tibor Navracsics made it clear that no help can be expected from his party. It is unfortunate that Navracsics's speeches are normally no more than ad hominem attacks on his political opponents. Today's speech was no different--to the great delight of his colleagues in Fidesz. Károly Herényi, as an independent but formerly head of the MDF caucus, also made a speech in which he criticized Bajnai's program mostly because it is not yet apparent whether the new prime minister's plans include reforms or concentrate only on austerity measures. Gábor Fodor of SZDSZ, known for his polite ways, felt that he had to say something about the uncivilized behavior of Fidesz and the Christian Democratic leaders after the Navracsics speech. At least Viktor Orbán forbade the Fidesz members to cackle during Bajnai's speech. Because this was their plan! On the other hand, he was the only party leader who refused to shake hands with the new prime minister.

Ildikó Lendvai's urbane and eloquent speeches will be greatly missed. Every time she spoke it was a delight to listen to the well formulated phrases and appropriate literary references. She was witty and sometimes cutting but always fundamentally polite. She is a good speaker and a great debater. I'm afraid that Attila Mesterházy, her most likely successor, will not be able to fill her shoes. At least not verbally. He stumbled several times when misreading the text in front of him. The other side was gripped with fits of laughter. Let's hope he improves.

The vote was no surprise. In order for Bajnai to become prime minister, he needed 193 affirmative votes. He received 204 yeas and eight abstentions. MSZP unanimously supported the candidate while out of the nineteen-member SZDSZ caucus sixteen voted for him and three (Béki, Gulyás and Velkey) abstained, breaking party discipline. Fidesz, KDNP, and MDF members were present but didn't vote. After Gordon Bajnai was sworn in, Ferenc Gyurcsány rose from the customary chair of the prime minister and moved to the very last row, taking his place there as an ordinary backbencher. I have a very high opinion of Ferenc Gyurcsány's intelligence and political savvy, but listening to Gordon Bajnai's measured words and looking at his calm demeanor I think that perhaps his temperament is better suited to the turbulent times Hungary is witnessing. In any case, as soon as Bajnai was sworn in the Hungarian forint strengthened. At the moment one euro is worth 288 forints. Only a few days ago it was close to 310. All the ministers, the seven new ones and the eight old ones, will make their appearance in front of the various parliamentary committes. The procedure has already begun. After all, time is of the essence.

Raising chickens in times of trouble

While Gordon Bajnai conducts marathon audiences with ministers and discussions with economists I will translate excerpts from an interview that caused quite a stir (and some uproarious laughter) in liberal circles. The interview took place last night on József Orosz's program, Kontra (KlubRádió); by today the transcript of the interview appeared in a blog attached to Népszabadság. For those of you who can read Hungarian here is the link: http://tinyurl.com/d4t353

The interviewee was Gábor Náray-Szabó, professor of chemistry at ELTE and a member of the Hungarian Academy of Sciences where, on the side, he also serves as head of the Academy's library. In addition he dabbles as an  "amateur" political philosopher. He considers himself a conservative and he joined the about seventy people who formed a group called the Batthyány Circle of Professors in 1995. This group belongs to what in Hungary is called the "lunar halo" of Fidesz--that is, those intellectuals, professionals, and artists who by and large support Viktor Orbán and his party. For example, a few years ago Orbán asked the Circle to develop a long-range, far-reaching vision for the country's future that the professors called the "St. Stephen Plan." It turned out to be a fairly useless treatise full of clichés. Actually, one is not terribly surprised that their efforts were a flop because the overwhelming majority of the members are scientists, physicians, and engineers.

After hearing the interview with Náray-Szabó I was curious enough about his dabbling in political philosophy to search for anything he might have written on the topic. I came across a piece entitled "Evolution and Conservatism." One doesn't have to go beyond the first few sentences to assess his philosophical prowess. He "came to the conclusion" that the essence of "the conservative point of view" cannot be summarized in one sentence, unlike Christianity or liberalism. Christianity boils down to "love thy neighbor as thyself" and liberalism can be reduced to a single tenet, "one can do anything freely as long as one does no harm to others." There was no reason to read any farther.

In yesterday's interview Náray-Szabó displayed another side: the amateur economist and politician. He outlined some of his ideas about the ideal solution to the current economic and political crisis in Hungary. József Orosz interviewed Náray-Szabó because he signed a declaration of 68 "public figures" in the name of the Batthyány Circle of Professors. The public figures, with the exception of perhaps two people, are Fidesz sympathizers or supporters and thus the declaration not surprisingly demanded early elections as the only solution to the current crisis.

The interview lasted about half an hour, and it's surprising how many words can be uttered in such a relatively short time. Therefore I will translate only excerpts. The first few minutes were spent on the pros and cons of early elections. Orosz tried to impress on Náray-Szabó that under the circumstances one can't waste about four or five months in campaigning, holding two rounds of elections, and then negotiating before the formation of a government. There is simply no time. Náray-Szabó was not convinced. First he gave as the reason for early elections the current government's "breaking the rules." When Orosz inquired what rules MSZP or Bajnai broke, Náray-Szabó responded, "they broke the unwritten rules of democracy." Orosz continued: "But the constructive motion of no confidence is not an unwritten rule. It is written down in the Constitution." Náray-Szabó: "Yes, but it is unusual." Orosz:  "Just because something is unusual doesn't mean that it is not constitutional and lawful." It was becoming obvious that our professor was a bit confused and unable to hold his own. But that was just the beginning. It got much worse.

Viktor Orbán a couple of years ago discovered a political science construct--"political illegitimacy," which basically means that if a government's support is very low it loses legitimacy. However, in ordinary English parlance "illegitimate" and "illegal" mean practically the same thing. The situation is the same in Hungarian. Náray-Szabó admitted at the end that what he means by "legitimacy" is no more than popularity. Therefore, I must conclude that Viktor Orbán's government was also illegitimate in the second half of his four-year term because its popular support was almost as low as this government's is today.

During the conversation we learned about a new idea from the right: they are organizing a "national pilgrimage" and the undersigned "public figures" as well as the professors are joining them. Náray-Szabó told Orosz that from each little village the pilgrims will start off and will all gather at one place, most likely Budapest. (An obvious holy shrine.) From here on I will translate the exchange.

József Orosz (JO): Will they start the pilgrimage from different parts of the country?

Gábor Náray-Szabó (GNSz): Yes.

JO: .... Pilgrimage? Let's say to Kossuth Square [in front of the Parliament]?

GNSz: For example, the way it happens at Csíksomlyó [a famous site of religious pilgrimage in Transylvania]. The pilgrims come from all over the place.

JO: So the pilgrims get to Kossuth Square but I gather that takes time, especially from different parts of the country.

GNSz: Yes, they will get here somehow, on foot, by car.

JO: Well, pilgrims normally walk, but let's be generous and allow them to come by car. Thus, they arrive on Kossuth Square. And what will happen there?

GNSz: They will say: here we are. We also think that we must start afresh and then there will again be a peaceful demonstration, there will be no violence but still they will show that this movement has a large following.

JO: But by that time there will most likely be a new government that will start introducing the new measures.

GNSz: Well, I will be curious how fast they will be able to implement these measures.

JO: Can you imagine how fast they would be implemented without parliament? Most likely not at all.

After the pilgrimage was discussed, Orosz asked Náray-Szabó what should be included in the austerity program. First, not unnaturally Náray-Szabó emphatically stated that no money can be saved on education. Then he continued:

GNSz: One could sit down and negotiate with the multinational companies that to my knowledge have huge tax breaks and subsidies and tell them that we are in trouble and if the country goes bankrupt, these companies will be also in trouble. We should try to agree: they will get less support from the government.

JO: Then I would say, putting myself into the role of the government, okay Professor Náray-Szabó, we will decrease the subsidies but then the CEO of the firm will say, unfortunately in this case we will have to let 2,000 workers go. And that is only one company.

GNSz: Let me interject here that I heard that Hungary gets about 2 billion euros from the European Union while the multinational companies take about 8 billion euros out of the country. One would have to negotiate about this item. We would have to tell them: please don't take so much money out of the country. If they take out that much money the whole banking system will collapse.

JO: It will not because of the IMF loans.

GNSz: But that is exactly the problem. The IMF loans are not enough. If they were enough we would have no problems whatsoever. If they were enough we wouldn't have had a change of government. [Only God knows where Náray-Szabó gets that. The change of government has nothing to do with the IFM loans.]

JO: But if the Hungarian government were to forbid the multinational firms to take their own money out of the country, well, this means nationalization.

GNSz: No, it isn't.

JO: But, of course, it is.

GNSz: No, it is simply negotiation. These are not alms. This is the recognition of their own interests because if I kill the goose that lays the golden egg nothing will remain.

JO: But this goose is their own.

GNSz: They came here to produce profit. No?

JO: And they provide jobs, they pay wages and salaries.

GNSz: What I'm saying is that on balance they gain more from us than we gain from them. That's my opinion. What I'm saying is that we should change this ratio and in the long run they will be better off. The whole system will function, it will not collapse.

JO: So then we can count on several thousand newly unemployed people. What is the next item?

GNSz: Let me remark here that I don't agree with you that such a move would create huge unemployment. But let me continue, my next step would be to stop government investments that cost an incredible amount of money. I would postpone them for better days.

JO: So even greater unemployment figures.

GNSz: It's a real question how many jobs these projects create.

JO: Building of bridges, roads. Many people.

GNSz: But I don't see too many people moving about at the building of the metro.

JO: Because they are underground, that's why they are not visible.

GNSz: But I read in the papers that the piece of machinery that makes the tunnel is not working at the moment. Then where are the people?

JO: The people are underground because they are not only boring the tunnels but they are finishing them, they are laying down the rails, building the platforms. If we stop building the metro we lose the EU subsidies and in addition we add thousands of new unemployed people. If they come up from below ground to the surface where they cannot find work.That's the problem with your idea.

GNSz: I know that it sounds a bit utopian but it is still very important that if in the villages a few people could produce their own foodstuff, one or two chickens and other animals. This way at least they would not die of hunger. Today there is no foodstuff in the villages. [This is total nonsense too.]

JO: Who ever prevented people from keeping a few chickens?

GNSz: For example, the laws the government imposes in the name of food safety. One cannot exchange different parts of the pig among people because all sorts of stamps are necessary that makes food so expensive and therefore makes food production impossible.

JO: But you talked about providing only the family with food.

GNSz: Yes, yes.

JO: But even today they can keep as many chickens as they want, they can grow cucumbers, potatoes, parsley. Whatever.....

JO: So you've had three ideas up to now: they mustn't touch education, they should negotiate with the multinational companies, and stop large government investments. And we should grow some vegetables in the garden and keep a few chickens in order to solve the problems.

GNSz: No, I didn't say that. These are just a few ideas that should be considered seriously. Up to now I saw no sign of this kind of thinking.

JO: I wonder why not? Perhaps they don't take these things seriously. I mean the chickens and the geese.....

[GNSz says something here that the reason nobody is thinking about such things is because everybody is taking a narrow view of things from their own perspectives.]

JO: Let's assume that I take a larger view but I'm a fellow who lives in the middle of Budapest. Where can I keep chickens downtown?

GNSz: This would be good even for those people who live downtown. If there is peace and quiet in the villages then the villagers will not come to the capital as homeless people.

JO: Our situations are not the same; I cannot keep chickens.

GNSz: My idea is no solution for those who live in Budapest but, after all, only 18% of the population lives in the capital, all the others live in the countryside and half of these live in the villages.

JO: Well, in this case we city dwellers lost out again.

GNSz: Well, I wouldn't say that. After all, the living standards are still higher here.

JO: In this case we should give up our extra pay.

GNSz: Something must be done. We all have to suffer but general agreement is necessary to endure the suffering.

JO: But I can't make an agreement with the villagers because it doesn't matter how much I try I can't raise chickens.

GNSz: This is what one needs trust for and a team that enjoys this trust.

JO: Pardon, but isn't feed needed for the chicken?

GNSz: The chicken needs feed, but trust is necessary for the feeding itself.

MSZP has put its house in order

A few days ago most political analysts were ready to bury MSZP. Some of them were sure that the party would fall apart as a result of the events of the last two weeks. The president of an organization called MSZP Társadalompolitikai Tagozat (Social Policy Section of MSZP) actually wrote an article entitled "Endgame" in today's Népszabadság. I must say that Gyula Czöndör's timing was singularly bad because today all 188 members of the MSZP parliamentary caucus signed Gordon Bajnai's "Political Manifesto." Since SZDSZ supported the Reform Alliance's program which Bajnai's closely resembles it is almost certain that SZDSZ members will also sign. With the possible exception of József Gulyás. But even if he doesn't sign, there will be a comfortable majority. I might add that according to Károly Herényi even MDF members might support Bajnai's program once their experts have time to study the details. Therefore, it is something of a mystery to me why Tibor Navracsics thinks that Bajnai's program will not pass. Perhaps wishful thinking. The current Fidesz strategy is to call Bajnai's program no more than "the program of MSZP." The Fidesz description of Bajnai's program is "the package of hopelessness," the same phrase it used to characterize the earlier government program. It would be time to come up with something more imaginative, but my feeling is that there is some confusion at the moment in Fidesz.

Those who imagined a huge internal struggle within MSZP were also wrong. It seems that there was an exchange of words between Ferenc Gyurcsány and Imre Szekeres but according to people present Gyurcsány didn't call Szekeres "untrustworthy and dishonest" or "not fit to lead the party." Perhaps something similar. Anyway, those commentators who revel in gossip and who immediately jump to conclusions already announced a power struggle between the Gyurcsány faction and the Szekeres faction. With great imagination they foresaw two socialist parties. Well, things didn't work out that way. However, from here on participants in such confidential meetings will have to leave their cell phones behind. The opposition finds this a terribly undemocratic move, but such a restriction is not unknown in countries with more established democratic traditions than Hungary. For example, lately in Canada. The next opportunity to come up with a new prediction for intraparty squabble was the alleged dissension over the nomination for the post of the party chairman. Observers were trying to figure out the ideological makeup of the alleged nominees and thereby predict the future course of MSZP. These speculations were also useless because in the end only one person was nominated for the post, a close associate of Ferenc Gyurcsány, Ildikó Lendvai. Lendvai is popular within the party and her election is almost certain. Her replacement as head of the parliamentary caucus will most likely be Attila Mesterházy, one of Lendvai's associates. Mesterházy is a  thirty-five-year-old economist with a very impressive background. Pictures of the two politicians below (or wherever TypePad puts them). The other two names mentioned as possible successors to Gyurcsány as head of the party, Péter Kiss and Imre Szekeres, will assist Ildikó Lendvai as managing directors. Otherwise, these two men will most likely remain in the new cabinet: Kiss as minister in charge of the prime minister's office and Szekeres as minister of defense. At least on the surface everybody seems to be happy.

I'm not so sure whether Viktor Orbán is happy. According to some analysts Orbán just talks about early elections but in fact is relieved that someone else will have to make the hard decisions and push through an austerity program. By next year, if all goes well, he can win the election easily and reap the benefits of Bajnai's efforts. I've waffled on this issue in the past. But by now I think that Orbán really wants early elections. First, I think that Orbán is so eager to be the prime minister of the country that he would even assume the odium of an austerity program. After all, he could put the blame for the country's troubles on the previous administration. Second, I'm sure that Orbán dreams of winning more than two-thirds of the seats. In this case he could start the new era he often talks about. Third, right now the situation looks overwhelmingly positive for Fidesz, but who knows what will happen a year from now. The Bajnai program might bring results and the victory might not be as absolutely assured or, at least, not as much of a landslide as it seems now.

There are some signs that the majority of the Hungarian people have resigned themselves to the fact that an austerity program is unavoidable. The latest Sonda Ipsos poll shows that 75% of the population will accept such a  program. Even pensioners seem to be coming around, though for now the evidence is only anecdotal. On today's TV news a reporter must have asked at least half a dozen pensioners on the street what they think. All without exception said that of course they are not happy but they understand: there is no more money. They have to sacrifice too. MSZP voters are optimistic: two-thirds think that things will improve with Bajnai. Fidesz voters are, of course, less sanguine but surprisingly only 37% of them think that things will get worse and 17% actually think that life might even get better as a result of the austerity program. Interestingly enough, although Fidesz tries to hide the party's intentions, 70% of the people think that Orbán and his team would have to do exactly the same as the MSZ-SZDSZ supported Bajnai government is doing. So, after all, perhaps people cannot really be fooled. They are starting to understand the facts of life, and that might be dangerous for long-term Fidesz plans.

Gordon Bajnai's austerity program

Gordon Bajnai is apparently a very quiet fellow. Someone with steady habits and a calm demeanor. Always polite but according to those who know him made out of steel. He doesn't say much but when he talks people listen. (And we can only hope not with the consequences of the E. F. Hutton ad from the 1970s and 80s: "When E. F. Hutton talks, people listen.")

Bajnai laid down some very tough conditions for accepting the nomination. First he announced that he would prepare a memorandum in which he would outline the main points of his plans and send this memorandum over to the MSZP and SZDSZ caucuses. He demanded that each parliamentary member sign that he/she is ready to support the program and will vote in parliament accordingly. He added that if he doesn't seem to have the necessary votes he will not even bother to show up at the MSZP congress on Sunday.

Yesterday morning the long-awaited "political manifesto" was released. When a few days ago Bajnai said "this will hurt," he wasn't joking. Most people I talked to looked at the terms and said: there's no way that the great majority of the MSZP caucus will sign this. At least there is no way that the old left-leaning members will ever support Bajnai's austerity program. This will be the end of MSZP. However, this afternoon I heard Tibor Szanyi, one of the most socialist of the socialists, say on József Orosz's program, Kontra, that he will sign it and will urge all his friends, including the most recalcitrant and unpredictable member, József Karsai, to do the same. I almost fell off my chair. How is this possible when only this morning, before he had a chance to read Bajnai's more detailed program, Szanyi had announced that "one doesn't need an austerity program but only a program of thrift," adding that Bajnai's program from what he knows about it is "not a left-wing program." Well, something must have happened at the meeting of the caucus this afternoon. Most likely the MSZP members realized that the stakes are too high and not accepting Bajnai's '"ultimatum" means early elections. And early elections would result in a humongous defeat for their party and such an overwhelming Fidesz victory that the present constitutional setup might be in jeopardy. How did Szanyi justify his sudden enthusiasm for Bajnai's program? He triumphantly announced that what changed his mind was that Bajnai didn't want to raise the value added tax (VAT) from 20 to 23%!

Well, indeed, Bajnai didn't do that, but he is planning to do plenty that might not be welcomed by a lot of people. I already heard a few pensioners swearing up and down that although they had been faithful supporters of MSZP until now they would never vote for the party again because this government is taking away the thirteenth month pension. Trade union leaders of public transport companies, civil servants, teachers are all up in arms. I haven't heard about the doctors and nurses, but I'm sure we won't have wait long.

So let's go through Bajnai's "Political Manifesto" outlining the conditions for handling the economic crisis. Bajnai first impresses on his readers the urgency of the situation that demands "immediate and determined action." There is no time to waste. They must move in order to have the supporting votes on these "unavoidable measures and painful sacrifices" in the spring session of parliament. He would  like to see some of the changes introduced on July 1. His main goal is to save as many jobs as possible in order to avoid social unrest and the further splitting of Hungarian society into haves and have nots. Keeping that in mind, he would like to achieve the relative stability of the Hungarian currency, he wants to reduce the deficit, and join the eurozone as soon as possible. In order to achieve these goals "the whole government structure must be revised in order to spend less on administration." Also the tax burden of employers and employees must be lowered. Bajnai would like to give "first aid to mid-sized and small Hungarian businesses that provide two-thirds of the country's jobs." Last but not least there must be a stimulus package. The money for that will come from European Union subsidies. The government will spend 1,800 billion forints to make sure that the building industry doesn't collapse. One mustn't forget about the IMF and convergence obligations either because this is the only way to make sure that the country doesn't lose the trust of investors. As soon as the stabilization of the forint is achieved, the interest rate can be lowered.

After these introductory remarks Bajnai outlines "the chief elements" of the program that aim at decreasing expenses immediately, not next year as originally planned. How is he intending to do that? First, he wants to freeze the salaries of public employees for two years. That would entail changing the terms of an understanding arrived at between the government and the public employees' representatives. From 2010 on there would be no thirteenth month pay for public employees. In the future they may receive extra bonuses depending on the fortunes of the economy. He would also give less money to local governments from the central budget.

The age limit for retirement would also change. The earlier plan to raise the retirement age was painfully slow. At the moment it is 62 years but there are so many ways to retire early that the actual average retirement age is around 58 years. The plan produced a few weeks ago would mean that the whole process would begin only in 2016 (starting with people born in 1954) and would go on until 2027 (people born in 1962). Every year 4 months would be added to the retirement age that would eventually (in 2027) reach the desirable 65 years. Bajnai seems to have different ideas. He is not specific but he would start the whole process sooner and yearly they would chip off not 4 months but half a year. The promised pension correction for 2009 will be moved to 2010 and there will be no extra month of pension.

Further restrictions on benefits would include "sick pay." Currently if a doctor certifies that is a person is so sick that he is unable to work he receives 70% of his pay for six months as compensation. Half of this is paid by the employer. A friend of mine, the owner of a small business, finds this whole thing rather unfair. As he says: "It is not my fault that one of my employees becomes sick." Well, from here on instead of paying 35% for work not performed he will have to pay only 30%. This is still quite generous. Child support, which has been going up and up for years, will be frozen at the current level for two years. If a "child" goes to college his parents will receive child support until the age of twenty-three. That is, at the moment; Bajnai wants to lower it to twenty. If Bajnai asked me I would lower it to eighteen. I just heard, for example, that Hungarian university students are not so eager to get part-time jobs as their colleagues in the west. Then comes the notorious gyes (gyermekgondozási segély) and gyed (gyermekgondozási díj). If a woman worked at least 180 days prior to giving birth to a child, she is eligible to receive 70% of her earlier gross income. That is called Gyed. It seems to me that the same person, or even a grandparent, is also eligible for Gyes (28,500 Ft/per month). For three years a woman can stay at home with a newborn. And, of course, if she has another child three years later she will receive another three years of Gyed and Gyes. That is indeed unique in Europe and if it is unique there one can imagine that it is unique in the whole world. Bajnai's plan is not to abolish it or to decrease it to a more acceptable three or six months; rather, he modestly calls for a reduction of the benefit to two instead of three years. I think it is a generous offer although I'm sure Hungarians will not share my view.

The government will temporarily stop assisting young couples with children to buy a first home. A family is currently eligible for a great deal of help from the government. After one child 900,000 Ft., after the second one 1.5 million, after the third 1.4 toward the down payment on a home. It keeps adding up. The government currently is also pitching in by paying part of the interest on the mortgage. This whole nonsense will be stopped. In 2009 the government will also decrease subsidies on gas consumption and on distance-heating. After 2010 they will stop all subsidies. In addition less money will be given to public transportation, especially to Hungarian Railroads (MÁV) which is 40-50 billion forints in the red every year. There will be less money for Hungarian public radio and television. MTV is a very expensive TV station without much to show for it. Hungarian farmers are currently getting generous subsidies from the European Union, and the Hungarian government also pitches in. Hungarian contributions to the farmers will shrink.

And this is just the beginning. I'm sure more is in the offing. It's time for Hungary to live within its means.

What we know about the current Hungarian situation

In a way I would prefer to continue my short biography of Ferenc Gyurcsány. But I have the feeling that my readers would prefer to hear about current events and short-term predictions rather than the 1980s and Gyurcsány's student years in Pécs. (I'll return to that on a slow news day.)

I'm trying to avoid passing along every rumor that reaches the ears of a third-rate reporter and then is sold as hot news. Most of these stories sound unlikely if not outright unbelievable. The reporters also seem to have a penchant for trying to create panic by outlining scenarios that all predict the certain failure of a smooth transition from Gyurcsány to Bajnai. Both SZDSZ and MSZP are fractured (true enough), so there won't be the necessary votes for Bajnai to become prime minister of Hungary (wrong). The problem with this scenario is that we know the exact number of SZDSZ members who voted against Bajnai. I reported on that yesterday. We also know that out of about 120 members of the MSZP caucus present at the Sunday meeting only four abstained and one didn't vote. Even without the members of MDF who, by all indications, will support the constructive vote of no confidence Bajnai should be fine. So what's the problem? One has the feeling that Hungarian journalists love chaos and trouble. Then perhaps they can write more riveting articles about the impending doom.

Since I'm not trying to sell papers or write episodes of The Perils of Pauline, let me outline briefly the pieces of information that seem credible. (1) Ferenc Gyurcsány decided to resign as party leader when it became obvious that the candidate for the post of prime minister would come from the inside. Two names were mentioned, the first a member of MSZP and the second politically unaffiliated--József Gráf, minister of agriculture, and Gordon Bajnai. If Gráf were to become the candidate Gyurcsány would resign because in his opinion the posts of prime minister and head of the party should be held by the same socialist politician. In Bajnai's case he would resign because they are close friends; if he remained the leader of the party it would look as if he were the puppetmaster and the new prime minister the puppet. (2) Currently there are two serious contenders for the post of chairman of MSZP: Ildikó Lendvai and Péter Kiss. But the field keeps widening. Imre Szekeres, minister of defense, is another frequently mentioned possibility. Kiss says he would accept the nomination but suggests Lendvai. Lendvai says that she would rather stay on as head of the MSZP parliamentary delegation. She claims that she is no good at administration. Next Sunday the nominating congress will have to make its decision. (3) For me the most interesting piece of news today was János Veres's revelation that Bajnai's austerity program is practically the same as the one he and his ministry worked out at the end of January and suggested for immediate acceptance. At that point he didn't get the nod from either the cabinet or the parliamentary caucus. In fact, Veres claims that he had already outlined his plan last summer at an MSZP retreat at Dobogókő. Not only did his plan get rejected only to resurface with a new advocate heading a new government, but it seems almost certain that he will be replaced as minister of finance. A new government, an old/new economic plan, a new minister of finance. (4) According to information the media received (which might just be part of the rumor mill) Bajnai is already talking about personnel changes in the cabinet; at least five people will be leaving.

And finally. What will Ferenc Gyurcsány do once he's no longer prime minister and head of the party? He made it clear that he is committed to continuing his political career. Although he said that he will remain a member of parliament, surely being an ordinary back bencher is not exactly Gyurcsány's style. One conceivable scenario was that if Ildikó Lendvai becomes chairman of the party then Gyurcsány could head the caucus. But no. Gyurcsány rejected that as well. He did, however, mention a position he would like to occupy: heading the Táncsics Mihály Alapítvány, the theoretical think tank of the socialist party. Here I'm speculating, but let me suggest what Gyurcsány has in mind. He is planning to work on making MSZP a truly social democratic party that would meet the challenges of the twenty-first century. A party of which he would be the logical head.

One possible prime minister: György Surányi

Yesterday Medián published the results of its poll on the Hungarian public's reaction to Ferenc Gyurcsány's resolve to ask for a constructive motion of no confidence against himself. As part of the survey Medián asked about possible successors to Gyurcsány. Lajos Bokros's name is the best known. Eighty-seven percent of the people know who he is. Péter Kiss, minister in charge of the prime minister's office, is next in line with 71% followed by László Békesi, finance minister in 1994, and Gordon Bajnai, minister in charge of the economy in the present government, each with 69%. Then came György Surányi, former head of the Hungarian National Bank, András Simor, current bank president, each with 67%, and finally, József Gráf, minister of agriculture, with 66%. So, with the exception of Bokros who has been the subject of numerous front-page stories of late, the possible successors are pretty well clustered in terms of name recognition.

By now I feel safe in dropping from my scorecard all the members of the current government--that is, Gráf, Kiss, and Bajnai--because after the first meeting of MSZP and SZDSZ it was evident that neither party wants a politician or a member of the cabinet as the next prime minister of the country. That leaves four possibilities from Medián's list. Let's start with the clear losers from the poll: László Békesi and Lajos Bokros. Their popularity is low: only 39% of the population think that either should head the new government. The most controversial figure is Lajos Bokros, perhaps because people remember only too well the "Bokros package" of 1995 and are also aware of his draconian ideas about future austerity measures. Békesi, one of the architects of the Reform Alliance, is also well known but unpopular, perhaps because Hungarians consider even the Reform Alliance's program too drastic. The clear winner with 47% is György Surányi, followed by András Simor with 42%. Simor already announced that he hadn't been asked and, if he were, he would say no. I don't think that he has to worry. Yesterday a new name surfaced: Tamás Mészáros, an economist and president of Corvinus University (formerly Karl Marx University of Economics).

If I had to handicap this "race" I would put the odds in Surányi's favor, especially since he was seen this morning leaving the headquarters of SZDSZ. Although there have been rumors in the last two days that Surányi would head a "national government" only if Fidesz supported him, it's unlikely that these rumors have substance. First of all, Viktor Orbán talks only of early elections; Fidesz would not support any interim government, "national" or not. Moreover, the relationship between Surányi and Orbán was rocky after the formation of the Orbán government when Surányi was the president of the Hungarian National Bank.

So who is György Surányi?  He was born in Budapest in 1954 and graduated from the Karl Marx University of Economics (today Corvinus University of Budapest) in 1977. After graduation he worked at the Research Institute of Finance (Pénzügykutató Intézet) attached to the Ministry of Finance. In 1986 he left the Institute to work for a year at the World Bank in Washington. In 1990 he was chosen to be the first chairman of the independent Hungarian National Bank. His stint at the National Bank was brief; a change in the law in 1991 gave Prime Minister József Antall the opportunity to name Péter Ákos Bod, an MDF member of parliament, to the post. Apparently at that time Surányi was quite close to Fidesz (then in opposition as a liberal party) and during 1992 and 1993 he met frequently with Viktor Orbán. However, after that date the relationship between Surányi and Orbán soured. It's not clear what drove them apart, although according to an article that appeared in Élet és Irodalom in early 2000 Orbán already at that point wanted to achieve economic growth with the help of the state, an idea Surányi fiercely opposed. After Surányi lost his job at the National Bank he became president of CIB Bank, an affiliate of the Italian Intesa Sanpaolo.

In 1994 MSZP won the elections and Gyula Horn formed a government with SZDSZ. Péter Ákos Bod, the chairman of the National Bank, was not one of Horn's favorites and Horn made no secret of the fact that he "couldn't work with Bod." I remember so well his exact words. Under pressure Bod eventually resigned and for a good three months there was no chairman of the central bank. And during the winter László Békesi, the minister of finance, announced his intention to resign, giving Horn two months to find a replacement. So there was no central bank chairman and the finance minister was on his way out. All the while the country was in dire economic straits. At last Lajos Bokros was named minister of finance on March 1, 1995, and, on the same day, Surányi became central bank chairman. His great accomplishment as bank chairman was his successful fight against inflation. Inflation in June 1995 was 31%, by the end of 1996 only 23.6%, a year later 18.3%, and all the way down to 10% in the last few months of 1998. This accomplishment brought Surányi international recognition. While he was in office the Hungarian forint also became partially convertible. However, inflation remained stuck at the 10% level, and Surányi suggested to the Orbán government that they introduce a more flexible foreign exchange policy because their monetary policy kept the forint too strong. Details of Surányi's proposal are not known, but it was rejected. Interestingly enough, as soon as Surányi left and Zsigmond Járai was named as his replacement the changes necessary for a weaker forint and complete convertibility were introduced.

In any case, Surányi's relations with Fidesz had become strained even before the Fidesz-Smallholders coalition won the elections. Prior to 1998 a study for internal use written by the economists of the Hungarian National Bank that was critical of the economic plans of Fidesz got into the hands of the socialists, who used it in their campaign. Orbán was certain Surányi was somehow complicit. [A footnote to Fidesz's economic plans during the campaign. The economic goodies promised to the population were extravagant;  if the promises had been kept, all the accomplishments of the Bokros-Surányi team would have been undone. However, as we know, Orbán didn't honor his promises and instead pursued a strict fiscal policy in his first two years in office. The victim of these campaign "lies" was László Urbán, who was initially proposed as the new finance minister. However, Urbán happened to say that "there is a difference between the campaign and government programs." At that very moment, Urbán's political career came to a screeching halt.]

Surányi served his full six-year term, which expired in 2001, when he returned once again to head CIB Bank. Once out of public office he didn't say much about monetary and fiscal policy, but here and there he criticized his successor's policies. He considered both Járai's efforts to lower inflation "by artificial means" and the Orbán government's spending spree in its last two years harmful.

In 2006 he was asked by Ferenc Gyurcsány to take part in the work of Convergence Council that was to prepare a program acceptable to the Council of the European Union. The gist of the convergence program was to lower the deficit to under 3% in the shortest possible time in order to receive subsidies from the Union designed to help the less developed countries move closer to the more developed west.

Surányi received many prizes and accolades. For instance, in 1993 the World Economic Forum named him the "Global Leader for Tomorrow." In 1996 Euromoney honored him as "The Best Central Bank Chairman in Central Europe." Tomorrow, if it still looks as if Surányi is a viable candidate I will try to outline his current ideas on the path Hungary should follow in this world economic crisis.

The Reform Alliance's program is dead

Although parliament is just beginning discussion of the government's planned economic reforms, according to information that leaked out earlier the cabinet, on the advice of its economic experts, has rejected the program of the Reform Alliance. The government is pretty certain that there will be enough votes to defeat the program put forth for discussion by SZDSZ and MDF. Of course, the government is right. Fidesz in no way supports the program. Thus a very small minority will vote for its acceptance: at most about 25-30 people. But, of course, then comes the second round: the government's own proposal.

The government rejected the Reform Alliance program because its economists, after studying the proposals, came to the conclusion that if the program were introduced economic growth would slow by an additional 0.5% in both 2009 and 2010. By 2011 the problem would be even greater: 1.0%. They claim further that the program would take a deficit currently under 3.0% and increase it to 3.4%. The other problem is that inflation under the Reform Alliance program would be higher than that anticipated by the government. In the next three years inflation would be 0.7-0.8% higher than current projections. In addition, although the number of jobs would increase in the private sector the overall number of actively employed people would be lower than today due to cuts of about 8-10% in the public sector.

Péter Róna, an American trained banker and economist currently residing in Hungary, projects even worse results. According to him the Reform Alliance program would give rise to a serious decrease in the population's purchasing power. As opposed to the Ecostat/Hungarian government projection of a 3.5% decrease in GDP Róna thinks that the Hungarian economy will shrink by 5%. But, he continues, if the plans of the Reform Alliance become a reality that number might be as large as 7 to 9%.

In addition to these opinions there is an article by an economist who in the last few years has supported SZDSZ's reform zeal. Yet the very title of Károly Attila Soós's piece tells his opinion of introducing "reforms" that are basically nothing more than a series of severe austerity moves: "Wrong refoms at wrong time!" (Népszabadság, March 16, 2009). He goes so far as to say that even the government's very mild reforms will be counterproductive in the midst of an economic crisis. He considers raising the value added tax (VAT) harmful, hurting the poorer strata of society and lowering consumption. The cartoon that accompanies the article tells a lot. The caption reads: "It was neglected a bit but perhaps the therapy will help!" János Kóka, head of the SZDSZ caucus, seemed to like the boxer metaphor because today in parliament he talked about László Papp, the famous Hungarian boxer, who won gold medals in 1948, 1952, and 1956. What would have happened to him, asked Kóka, if someone had tied Papp's hands and put a stocking on his head? This is obviously what is happening to Hungary thanks to a government that is too afraid to jump into the middle. Kóka also compared the Hungarian economy to an overweight athlete who smokes and carries a forty-pound sandbag on his back.

Once he finished with the athletes, he moved on to medicine. Hungary is sick. At first, people thought that the country had a mild cold, but then it turned out that it had the flu, and by now it is clear that it has pneumonia! The government has been doing nothing for six solid months. Kóka announced that if the Reform Alliance's austerity program is accepted "it will hurt much and many," but these drastic reforms are necessary to win the game or get well again. He did admit that perhaps SZDSZ had a hand in Hungary's economic woes, but only insofar as they didn't insist on greater reform plans while in a coalition with the socialists. He seemed to have forgotten the botched healthcare reform (in SZDSZ hands) and the Fidesz inspired referendum that put an end to even that.

I'm inclined to side with those who say that in the middle of an economic crisis one doesn't venture into unknown territory with possibly grave consequences. One doesn't even know the extent to which Hungary will be affected by the global financial crisis. It has problems of its own making, of course, which the government is working to remedy. But the hit to the Hungarian economy will also depend on the depth of the crisis in the countries that are Hungary's trading partners. No deep reforms in Hungary will address that issue.

Gloomy Hungarians, a survey

Given Hungarian pessimism and the tsunami of frightening assessments coming from economists and politicians I'm not surprised that sentiment is downbeat. Medián, a respectable public opinion polling firm, released the results of its latest surveys on attitudes to the economic crisis and reactions to the proposed remedies. Medián wanted to know two things about the programs. First, people's familiarity with them and, second, their opinions about the programs' effectiveness. For the second question respondents were supposed to grade the programs on a scale of one to five, just like grading in Hungarian schools.

The most amazing finding, to my mind, is that 51% think that Fidesz has a program and that it is the best of all. The best is not very good, only kind of middling (3.1). One can fairly safely assume that the people who claim to know the program are Fidesz voters by and large. If that is the case, 51% is not a large number in comparison to the results of opinion polls on party preferences where the Fidesz percentage is well over 60%. But it is interesting that half of the population sees a program where there is none. The attractiveness of the Fidesz "program" lies in its vagueness and its Pollyanna assessment of the situation. The program of the Reform Alliance is also familiar to 51% of the people but it scored only 2.5. (Considering that 1 is failure, this is not exactly a ringing endorsement. In the American grading system a D+ or C-.) The government's program is the best known: 60% of the people claimed knowledge of it and it got the dismal score of 2.4. [I'm a bit puzzled that Medián in addition to the government's program also specifically mentioned the program of MSZP because I for one am not aware that MSZP has a program different from that of the government. Perhaps this was just a way of giving respondents the opportunity to compare party programs--apples to apples. Whatever the case, 46% of the sample claims to be familiar with the MSZP program. Not surprisingly, it got the same grade as the government.] Respondents think that MDF and SZDSZ also have programs distinct from the program of the Reform Alliance these two parties support. People think even less of these programs: they are barely passing with a grade of 2 (D).

As of the beginning of March 75% of the respondents considered the economic crisis the dominant public issue. In February, people's interest was still equally divided between the economy and the murder of Marian Cozma. Moreover, the number of pessimists is growing. In January only 60% thought that the crisis would last longer than a year but by now an additional 10% has joined their ranks.

People were both pessimistic and self-serving in their responses to proposed remedies. About the same number of people support tax cuts as reject any reduction in expenses. Overwhelmingly popular are cuts in personal income tax for the middle class and raising taxes on the wealthy. Almost everybody rejects the idea of raising VAT (value added tax) to compensate for the losses created by lowering personal income tax. More than 50% of all questioned think that it really doesn't matter what kinds of changes are introduced, people won't be better off and the number of people paying taxes won't be higher. So basically it doesn't matter who does what, nothing will be better. When people were asked which reform program they found most attractive the answers followed the general Fidesz vs. "the others" split in the survey. Almost half of them (49%) didn't like any of them. Twenty-four percent preferred the government's program, 12% sympathized with that the Reform Alliance, and only 5% with the very radical ideas of Bokros, while 10% had no opinion.

As far as personalities are concerned, there is no star. On a scale of 100 Orbán received 38, Gyurcsány 26, and Bokros 24. Both Orbán and Gyurcsány still have large followings among the party faithful: Orbán received 70, Gyurcsány 65. Three-quarters of those surveyed heard of Viktor Orbán's speech but most of them considered it lacking in concrete proposals. I assume that even Viktor Orbán realized that this vagueness is not to his advantage and in the last few days he made his rounds on different TV programs. Each time he dropped a few hints of a possible austerity program, always overshadowed by positive messages. At one point he said that eventually perhaps even a fourteenth month pension might be possible! Yesterday Péter Szijjártó came out with a proposal for cuts in sales and excise taxes: only five percent of VAT on basic food items and lower taxes on gasoline. A winning political formula--lower taxes and more government benefits. The economics are something else.