"Quit whining about the budget
Colby Cosh, National Post, Published: Friday, January 30, 2009
Maybe I'm getting old. I'm having trouble working up the same chest-thumping outrage over the new federal budget that other conservative, libertarian and generally just plain crusty commentators have displayed. Could it be a sign of declining testosterone? A side-effect of medication? I share the canonical right-wing view that deficits are a bad thing, but I feel puzzled at the surprise so many are exhibiting over the discovery that we do not have a right-wing government -- that the Conservatives, in the House of Commons as it is currently constituted, must meet some other party's criteria to obtain support for a budget. Surely we all did the math the morning after the election?
There does seem, at times, to be genuine confusion about this. The hypothetical Liberal-NDP-BQ coalition government is so palpably unpopular a concept in English Canada that the Conservatives, having presented a budget that will inflate government spending 9% in one year, are perhaps being blamed implicitly for kowtowing unnecessarily to an empty threat. I can barely began to list how many factors this assessment overlooks. But let us try.
Deficits are rightly unpopular with the public, but in the specific circumstances of a global economic contraction and falling commodity prices, they are not unpopular with economists. It is a conservative principle that a government should, barring unpleasant surprises, spend within its means and take no more from the taxpayer than it can use; occasional deficits follow from this premise. It must not be much fun for Jim Flaherty to have to announce one, but it was simply shameful for him to be heckled in the House by the opposition, as he was, when he pointed out the indisputable fact that economic forecasts are inherently subject to uncertainty. And, as Nassim Taleb would want me to point out here, it's not even a well-behaved, cleanly Gaussian type of uncertainty.
The least conservative way to deal with an economic crisis coupled with a looming deficit is to raise taxes. The Conservatives did not do this: they cut taxes and faced the music. Had there not been extra spending to go along with the tax cuts, they would have been butting up against the consensus of the economics profession -- and yet the stimulus package we got is much smaller than that of the United States, and comports with those pledged by European governments, who are starting out with much higher debt burdens.
The package looks even better if we factor out spending that was inevitable in the future anyway. There are no ambitious new social programs in this budget of the sort that the NDP or the Liberal left wing would have forced down our throats. We got a home renovation tax credit instead of thousands of new social housing units for the working poor. We're getting bridge upgrades and electronic health records instead of nationalized child care. In general, the state is hastening to meet obligations it has already accepted (for better or worse), not taking on new ones.
Michael Ignatieff's threat to pull the rug from under the Conservatives was mostly empty, but a threat must be judged by the magnitude of its consequences as well as its likelihood of being carried out. English Canada would have disapproved of Jack Layton being a minister of the Crown with a hotline to Gilles Duceppe. But Quebec would have taken a different view, and right now Quebec is where the low-hanging electoral fruit are. You can't wrap yourself in the Maple Leaf there unless you want it bedecked with egg.
Stephen Harper no longer faces a Liberal leader that Quebecers despise; Ignatieff has even supported his decision to recognize its "nationhood" for extra-constitutional purposes. And a coalition government could have enjoyed up to the statutory five full years to establish its bona fides and ride out the economic crunch. The exercise might even have ended up in a full merger. In the end, if he had insisted on the principles of the November fiscal update and abandoned Canada to the tender mercies of the coalition, the Prime Minister might well be facing accusations of weakness today from the same people now calling him a sell-out. Having insisted on his right to form a government, he cannot now reasonably recoil from the task of governing. He has forced Ignatieff to accept a share of responsibility for the results of the stimulus without conceding any of the power to administer it.
Ignatieff seems determined to run as a man who signed up for a coalition, but was never in favour of it, and who passed a budget, but reserves the right to criticize its effects. This is being described with words like "shrewdness." Let's call it what it really is: cowardice and duplicity."
Colby Cosh, National Post, Published: Friday, January 30, 2009
Maybe I'm getting old. I'm having trouble working up the same chest-thumping outrage over the new federal budget that other conservative, libertarian and generally just plain crusty commentators have displayed. Could it be a sign of declining testosterone? A side-effect of medication? I share the canonical right-wing view that deficits are a bad thing, but I feel puzzled at the surprise so many are exhibiting over the discovery that we do not have a right-wing government -- that the Conservatives, in the House of Commons as it is currently constituted, must meet some other party's criteria to obtain support for a budget. Surely we all did the math the morning after the election?
There does seem, at times, to be genuine confusion about this. The hypothetical Liberal-NDP-BQ coalition government is so palpably unpopular a concept in English Canada that the Conservatives, having presented a budget that will inflate government spending 9% in one year, are perhaps being blamed implicitly for kowtowing unnecessarily to an empty threat. I can barely began to list how many factors this assessment overlooks. But let us try.
Deficits are rightly unpopular with the public, but in the specific circumstances of a global economic contraction and falling commodity prices, they are not unpopular with economists. It is a conservative principle that a government should, barring unpleasant surprises, spend within its means and take no more from the taxpayer than it can use; occasional deficits follow from this premise. It must not be much fun for Jim Flaherty to have to announce one, but it was simply shameful for him to be heckled in the House by the opposition, as he was, when he pointed out the indisputable fact that economic forecasts are inherently subject to uncertainty. And, as Nassim Taleb would want me to point out here, it's not even a well-behaved, cleanly Gaussian type of uncertainty.
The least conservative way to deal with an economic crisis coupled with a looming deficit is to raise taxes. The Conservatives did not do this: they cut taxes and faced the music. Had there not been extra spending to go along with the tax cuts, they would have been butting up against the consensus of the economics profession -- and yet the stimulus package we got is much smaller than that of the United States, and comports with those pledged by European governments, who are starting out with much higher debt burdens.
The package looks even better if we factor out spending that was inevitable in the future anyway. There are no ambitious new social programs in this budget of the sort that the NDP or the Liberal left wing would have forced down our throats. We got a home renovation tax credit instead of thousands of new social housing units for the working poor. We're getting bridge upgrades and electronic health records instead of nationalized child care. In general, the state is hastening to meet obligations it has already accepted (for better or worse), not taking on new ones.
Michael Ignatieff's threat to pull the rug from under the Conservatives was mostly empty, but a threat must be judged by the magnitude of its consequences as well as its likelihood of being carried out. English Canada would have disapproved of Jack Layton being a minister of the Crown with a hotline to Gilles Duceppe. But Quebec would have taken a different view, and right now Quebec is where the low-hanging electoral fruit are. You can't wrap yourself in the Maple Leaf there unless you want it bedecked with egg.
Stephen Harper no longer faces a Liberal leader that Quebecers despise; Ignatieff has even supported his decision to recognize its "nationhood" for extra-constitutional purposes. And a coalition government could have enjoyed up to the statutory five full years to establish its bona fides and ride out the economic crunch. The exercise might even have ended up in a full merger. In the end, if he had insisted on the principles of the November fiscal update and abandoned Canada to the tender mercies of the coalition, the Prime Minister might well be facing accusations of weakness today from the same people now calling him a sell-out. Having insisted on his right to form a government, he cannot now reasonably recoil from the task of governing. He has forced Ignatieff to accept a share of responsibility for the results of the stimulus without conceding any of the power to administer it.
Ignatieff seems determined to run as a man who signed up for a coalition, but was never in favour of it, and who passed a budget, but reserves the right to criticize its effects. This is being described with words like "shrewdness." Let's call it what it really is: cowardice and duplicity."
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