The Taoiseach, Brian Cowen, has told the Dáil that the current rate of social welfare spending cannot be maintained.
Finance Minister Brian Lenihan, meanwhile, has warned that having 50% of the workforce paying no tax is no longer viable.
They were speaking during a special pre-Budget debate which heard a Fine Gael proposal to boost jobs by cutting employers’ PRSI.
Speaking at the start of the debate, Mr Lenihan re-iterated that €4 billion in savings must be found.
He said he is acutely aware that families and businesses are being affected by the deteriorating economic circumstances.
He said that the Government will ensure that the burden of adjustments will be spread evenly.
The Minister said the Government has a three-pronged strategy to tackling the problem and repeated that €1.3 billion savings must be found in the public service pay bill.
Fine Gael's Richard Bruton questioned if the Government had the vision, courage or capacity to make the necessary Budgets, and accused the Government of lacking ideas.
The Fine Gael Finance Spokesman also said Brian Lenihan's speech was a sad piece of script that lacked vision.
Labour's Finance Spokesperson Joan Burton said her party accepts €4 billion in savings must be found but said it seems the Minister is targeting the low paid, social welfare and the health system.
She said that only some sectors of society are in the firing line to make sacrifices while others, who can easily afford to take a hit, are assured that their pot of gold is safe.
Sinn Féin's Arthur Morgan said the Government have failed to come up with stimulus measures to kick start the economy. He said NAMA and the Special Purpose Vehicle is a huge con job.
Earlier, the Minister for Finance said the priority for the Government was to stabilise the deficit.
He said the world economy 'has turned the corner' and added that it is fair to say that there is light at the end of the tunnel.
The Taoiseach re-iterated that the current level of social welfare funding cannot be sustained in present economic circumstances.
Mr Cowen told the Dáil that the Government will carefully make the decisions which will bring about the necessary savings to restore growth to the economy.
He also said the public sector must also contribute to making those adjustments.
The Taoiseach said that the necessary decisions must be made now, otherwise growth will not return to the economy.
Fine Gael leader Kenny said he accepted that €4 billion in savings must be made and said the Government should, as his party suggests, cut PRSI.
He said a General Election is needed to give a proper mandate to those who have to make the tough decisions.
Conluding the debate, Tánaiste Mary Coughlan said she had not heard anything from the Opposition which would stabilise the deficit.
