Ireland is in a state of disaster as the government is pressured to hold elections and bailout its reckless banks.

On Nov. 16, Irish Prime Minister Brian Cowen told the country’s parliament that “Ireland has made no application for external support.” Just five days later, on Nov. 21, however, the European Union accepted Ireland’s formal request for a rescue package worth more than $100 billion.

During the Celtic Tiger, a term referring to Ireland’s economic boom between 1995 and 2007, Irish banks handed out loans for real estate that ended up depleting the country’s financial sector. The government is set to take control of two of the largest banks, the Bank of Ireland and the Allied Irish Bank, to get a grip on the failing economy. According to CNN Money, Ireland’s debt will cost it 98.5% of its entire economy this year, and that’s after the government has cut $20 billion from its budget since 2008.

Intending to cut another $20 billion over the next few years, the government is lowering the minimum wage and the social welfare budget, as well as eliminating over 24,000 public sector jobs. The unemployment rate is currently at about 13%, causing many people to emigrate and look for work abroad.

To secure the bailout money, Ireland announced an austerity plan that is supposed to bring the country’s 32% deficit down to 3%. While Cowen said the plan would essentially tax the rich and go easy on the poor, he noted that everyone should expect to feel the increase.

“The size of the crisis means that no one will be sheltered from the contribution that has to be made toward national recovery,” he said.

Part of the plan is to leave Ireland’s corporate tax rate intact. Compared to most other European corporate tax rates, like France (34.4%) and Germany (29.8%), Ireland’s is particularly low at 12.5%. The rate has brought big-name companies like Microsoft and Intel to Ireland, and that has boosted jobs and exports. Supporters of the austerity plan say that raising the rate will scare away the companies and dig deeper into Ireland’s debt, but the critics are saying a higher rate will give the country some of the money it needs.

The bailout money totals at $114 billion from both the European Union and the International Monetary Fund. The Irish government is currently working on the 2011 budget, which has to be finished by Dec. 7.

The controversy has led to public demands of new elections. Cowen and his fellow politicians have agreed that pushing through a new budget is of utmost importance and that the political infighting needs to take a back seat. However, Cowen has said that he will call an early election, most likely in January. Michael Kennedy, a senior official in Cowen’s governing party Fianna Fail, told the New York Times that he expects his party to have Cowen “stand aside and a new leader come forward.”