In the pre-Budget debate, the trump card is each group's political agenda, in every instance outplaying facts. Opinion is dressed up as fact, political preferences as economic analysis.

One example is the claim that a tax cut at the higher rate of income tax is more inflationary than a cut in the lower rate.

Nothing I have read from the ESRI, the NESC, the Central Bank, the Department of Finance, the IMF, the OECD, IBEC and ICTU, ISME and SIPTU, bank economists and opinion writers has demonstrated any grounds for this claim.

As far as I can find out, there is no evidence and no studies show that #100 in the hand of a 44 per cent taxpayer, let alone a wealthy person, causes more Irish inflation than #100 in the hands of a 22 per cent taxpayer.

The opposite is probably true. The wealthier a person is, the more likely he or she will invest or save more of each new #100. A less well-off person has a greater immediate need for more goods and services. A more well-off person may also be more likely to buy luxury imported goods, which don't affect Irish domestically generated inflation.

Yet the argument is dragged out to oppose a cut in the higher rate of tax, because it seems that any ammunition against that heresy is fair.

Inflation is up? Can't cut the higher rate. Want to help the poor? Don't cut the higher rate.

Want to save social partnership? Don't touch the higher rate. IBEC wants to restrain wage demands? Postpone the higher rate cut. Want a happy society? Mustn't cut the higher rate.

Cutting the top rate of income tax is not the be-all and end-all of economic policy, but it deserves to be addressed without shoals of red herrings being dumped on it.

Such is the power of the ace of trumps in Budget season, ideology.

Now, back to the pension bond idea. Last week, Rosheen Callender, SIPTU's equality officer and a member of the Pensions Board, wrote a reply to my earlier piece in which I argued against the idea of a State pension bond instead of a tax cut. SIPTU proposes that "a one-off `pension present' of #500 per person" be given to two million people, including social welfare recipients who receive notional PRSI credits.

Virtually every adult in the State would get it. So at least it wouldn't be arbitrarily disbursed as I had feared. Ms Callender omitted reference to the cost of the proposal, as calculated by SIPTU itself, of #1 billion. It would add that much to the national debt.

SIPTU did not address the question of the new debt being created. Ms Callender says your #500 present should be invested by the State, that is, "secured by real funds and real investments, properly managed", which seems to suggest that the new debt would be matched by real assets.

She claimed that the proposal was not an alternative to a tax cut. I accept it was not presented as an alternative to those tax cuts sought by SIPTU. But think about the cash. Where does the money come from to allow the pension bond to be "secured by real funds and real investments"?

Not even the National Treasury Management Agency (NTMA) can buy shares and property without giving something in return, usually, cash. This cash would come from present day tax revenue taken from taxpayers and must be surplus to spending requirements. Otherwise, it wouldn't be available to be invested.

Since the revenue is surplus, keeping the pension bond money is a deliberate alternative to a tax cut, to allowing people to invest as they see fit. Ms Callender says that, contrary to my contention that the proposal would force people to invest in one asset alone - a government bond - the pension bond would actually form part of a person's pension savings. I was talking about the #500 amount only, the subject of the proposal. That #500 cash would certainly be locked by the SIPTU proposal into one government bond.

As regards interest, SIPTU wants a rate equal to GNP growth each year. But if the returns from investments exceeded the GNP bond rate, that would only emphasise the denial to taxpayers of those higher returns on their #500. If returns were lower, future taxpayers would have to make up the difference in paying the bond GNP rate.

The SIPTU pension bond proposal is a combination of a one-off payment to pensioners, a deferred benefit to social welfare recipients and the enforced locking-in of taxpayers' money into a government bond, which is State debt.

There are separate and valid arguments about welfare benefits. To mix them up with State-controlled savings ideas does no good at all. I don't think it is either fair or efficient.

Oliver O'Connor is contributing editor at Finance and Finance Dublin. E-mail ooconnor@indigo.ie