Wednesday, February 04, 2009

The Spectre Coalition and other scary stories.

Anyone still standing up for free markets in Canada has heard the smug scolding of partisans. "Well just look at the alternative! Think about what would have happened if the COALITION had been in power! There would have been WAY MORE SPENDING and NO tax cuts!! You just have no idea what's politically feasible. Harper had to bring in a big-spending budget in the long-term interests of Canadians!!11one!"

Well, you've probably heard it with more foaming at the mouth, but that's the gist of it. It's time to stop the madness.

So let's look at these claims one by one:

First - what would have happened if the coalition was in power? Well, first let's assume that Ignatieff was ever willing to go ahead with the coalition and he wasn't just pulling a Quebec and threatening that he just might do it! if he doesn't get his way - though I have my doubts - it would have been political suicide - it's not the biggest problem with this defense of the budget.

Would a Liberal-NDP coalition have shelled out even more deficit spending? Probably, but I seriously doubt it would be significantly worse than what we got from the Tories. Canadians might be in favour of deficit spending these days, but that doesn't mean they'll take as much as anyone would give them. I have a really, really hard time believing Canadians would have swallowed anything more than around 15% more spending (that is, I think the absolute highest deficit most would accept would be around $100 billion) than we had dumped on us already, even with Jack Layton taking a spot in cabinet.

When the Globe and Mail (not exactly a bastion of conservative thought) uses phrases like "Harper Shovels the Money," it is not big spending for a Conservative government, it's just big spending.

"Ah," say the Tories with a condescending air as they ignore everything the free market defender just said, "but what about the tax cuts? You wouldn't have
gotten those from The Coalition."


Again, I'm not sure this is true. Maybe we wouldn't have gotten across-the-board, broad based tax cuts from a coalition, but we almost certainly would have gotten something similar to what we saw - cuts aimed at lowering the tax burden on lower
income Canadians and the middle class. Besides, the cuts we got weren't as great as advertised.

"Anyone who thinks Harper and Flaherty should have just stuck to their guns and refused any deficit spending simply has no idea what's politically feasible and what's not." To some extent this is true - Canadians probably would not have accepted a budget without some sort of bailout/stimulus spending, and a lot of free market advocates aren't willing to accept it because they know the effects it will
have on the economy and believe that, as an economist, Harper ought to as well.

But this lack of political will is partly Harper's fault. Before the new year Canadians were largely opposed to big deficit spending. Perhaps if the Tories had stuck to anything since Dion decided to grow a pair in December we wouldn't be in the political situation we're in. (Though the picture might not be as bleak as we think.)

That aside, though, while spending might have been politically necessary (and I'm willing to concede that that's the case), certainly the volume of spending put forward last week wasn't politically necessary - they could have gotten away with spending less. The fact that some spending was necessary doesn't mean that $85 billion dollars in deficit spending was necessary.

Further, Flaherty could have put forward some serious tax cuts instead of glamming up the scheduled increases in the personal exemptions. A further cut to the GST would have been politically popular and something that the average Canadian could see as an attempt to "stimulate" economic activity. And in the same way that most Canadians opposed to deficit spending will tolerate it, most Canadians opposed to trimming the fat from government would have tolerated some if only the will had been there.

"But! Think of the long-term interests of Canadians!" Tories will cry!

Yes - let's!

Let's think of the fact that this budget has set fiscal conservatism back by a decade and thrown out any credibility serious small-government advocates have by tossing out the last support from any successful political party of their ideas. Let's think of the fact that if Harper had proposed more modest spending and fallen on the budget, even this would have been better for conservatives because when all the opposition's spending didn't produce recession-ending results, the Conservatives could stand on their record and bring in the dramatic cuts to government that will be needed after this spending orgy has passed. Let's think of the fact that when the spending doesn't produce results for Harper, either, the "alternative" on the table will be to ramp up spending even further.

Let's think of the fact that these days political discourse in Canada consists of four teams in the House of Commons trying to out-Liberal one another.

The long term interests of Canadians, indeed.

"Well, that's what you get when all you're quoting is the Liberal media," Conservatives will eventually sneer.

Ah, yes. The Liberal Media - almost as nefarious and spooky as The Coalition. How could I have forgotten them?

But apparently what "the Liberal media" is up to these days, according to partisan
Conservatives, is accusing the government of not being fiscally restrained enough, supposedly because they want to turn conservatives on the Conservatives. But the Liberal media I know (and certainly the Toronto Star) wouldn't risk convincing Canadians that a tax cut is the way to go just to get in a few digs. They're reacting the way they are because this is a really. big. budget., not because it's some sort of conspiracy.

Besides, where should I be getting my news? Exclusively from Conservative Party press releases? Look. When you are calling Andrew Coyne a raging Liberal for his comments on the government's budget, you need to start considering the possibility that you've got the blinders a little too firmly in place.

And before any Tories go one step further and accuse everyone who criticizes the budget of jumping ship, let me point out the obvious and say that criticism of the budget and support of the Harper government are not mutually exclusive.

So there you go. Defenses debunked, so spare me the scare tactics. I won't lose any sleep condemning Harper up and down for this budget because condemning it is what anyone who believes we have to reduce the size of government should be doing.

Cross-posted to The Shotgun. Hat tip to about a quarter of everyone I know.

1 comment:

revanche said...

The G20, including Canada, agreed before Christmas to provide a stimulus representing 2% of GDP to put a floor under this economic crisis. That's what we got.

Whether you, me, or Harper believe in Keynesian "stimulus's" or not is not really relevant. Apparently the rest of the G20 does, including our biggest trading partner. I don't see Canada as having much of a choice.

I disagree with you when you suggest Harper should have fallen on his sword to make Iggy wear the recession. Sure, there might be some partisan benefits; however, it would have been horribly wrong for the country.

One expert I remember suggested the coalition threat probably wiped out tens of billions more from the economy in a single week in terms of consumer and business confidence than any planned "stimulus" could hope to counter later.

What a waste.

Consider the harm to the economy of a needless election as Canadians, business and governments wait another 3-4 months for arguably the same stupid budget.

More waste.

The same voters who elected a Conservative minority also elected their provincial counter-parts and city mayors. All politics is local. These are the leaders on the front lines and have been working for months to co-ordinate their efforts with the Feds. This is a federation and those leaders deserve responsible government in Ottawa, not more partisan games.

I understand many conservatives are disappointed with this budget. They are disappointed Harper chose to govern rather than plunge us into another election, or worse, a constitutional crisis.

Harper did the right thing. He gave us a compromise budget and the stability the country needs to start making decisions again.

That's good enough for me.