KEY POINTS:
Through the thickening murk of political claim and counterclaim about tax cuts and Government borrowing, a few things can still be seen fairly clearly.
One is that partisan squabbling along the lines of "You're borrowing for tax cuts", "No we're not, we're borrowing for infrastructure" is simplistic nonsense.
How much the Government needs to borrow is the cumulative bottom-line effect of all the changes affecting its revenue and its spending (operational and capital), not just some of them. Revenue is affected not only by voluntary changes like tax cuts but involuntary ones like an economic slowdown.
And on the spending side, it is not yet clear how much of the $800 million or so a year in extra capital spending National plans would be or could be clawed back from the increases in operational spending (averaging $3.6 billion a year for the next four years) that the Government plans.
Michael Cullen is right to point out that over time increasing crown debt will also increase the interest bill future taxpayers have to meet.
John Key is also right to argue that what matters is what you buy for that increase in debt. If the net effect is just to transfer debt from households' balance sheets to the Government's, what would be gained?
There might be a benefit if lower marginal tax rates (the tax on the next dollar of income) improve incentives to work, save and invest as National believes they would.
But it would not reduce our heavy national reliance on importing other people's savings, or the price we pay for that in higher interest rates.
If, on the other hand, the net effect is better infrastructure - so people, goods, energy and information flow more freely - that has to be good for productivity, incomes and the size of the tax base.
But that assumes there is the physical capacity to build more roads, lay more fibre-optic cable and so on than is already planned. The risk is that more spending on infrastructure will just get eaten up by higher costs, if we are up against bottlenecks in the equipment and skills required.
The target of keeping the Government's gross debt around 20 per cent of GDP over the next 10 years is a self-imposed one. A new government is free to change it.
The Budget showed the Government running small surpluses over the next four years - surpluses so small they could easily turn into deficits if the economic downturn turns out to be longer or deeper than expected in May, as seems likely.
That scenario would have Government debt climbing back to 22 per cent of GDP by 2012, from 18 per cent now, even without the extra couple of per cent Mr Key says his increased infrastructure spending would require. Would that matter? It might if the change in trajectory looked permanent.
So far the credit rating agencies give no sign of unease. But then the same agencies had no problem with sub-prime mortgage-backed securities. Right up to the point when they did. Big time.
