Spending cuts and tax hikes, the two policy no-nos of any economic downturn, are being employed in Ireland to try and close their rapidly ballooning budget deficit. Tax receipts implode during recessions, prompting pro-cyclical moves like those discussed above which only makes matters worse. That’s what makes reversing a recession so tricky. Fortunately for Ireland, no matter what they do domestically, an economy that small will respond more to external factors than anything internal. Irish pols should pray for the US stimulus binge to pay dividends.