Looking back on The Coalition, one year later

It’s hard to believe that, one year ago, political Ottawa was in a tizzy of coalition madness, and even in the rest of Canada, the political interest alert system rose from “who cares” to “meh, wha?” Looking back one year later, who were the winners and losers and what are the lasting impacts?

In the short-term, certainly, while they may have over-played their hand the coalition was the right move for the opposition parties. With the Conservative economic update that ignored the worsening economic realities and instead tried to destroy their political opponents, the opposition parties had to act.

The coalition succeeded in forcing the Conservatives to introduce a budget in January that, while unfocused and imperfect, did make needed changes in areas such as Employment Insurance as well as spend billions in necessary stimulus to help the economy. It wasn’t the budget we’d have written, but it went much further than the Conservatives wanted to go because their feet were held to the fire by the coalition.

At that point, while I had misgivings at the time as well as quibbles with the strategy, Michael Ignatieff made the right decision in backing-away from the coalition. If they’d tried to take the government, after it has gone a long ways toward meeting their demands, the public would have revolted. No matter how constitutionally legitimate it would have been, in the eyes of much of the public it would have lacked moral legitimacy, and without such legitimacy no government can, or should, govern the people.

So, on the positive side for the opposition, the coalition forced the Conservatives to address the economic reality, dramatically change their policy in our direction, and bring in necessary economic policies to help Canadians deal with the recession. And for the Liberals, however messy the aborted leadership process triggered by the coalition drama may have been, it did get our new leader in place much sooner, saving us many, many dollars that could instead go into party coffers. We emerged with a new leader, a united party, and a healthy war chest.

That said, there were missteps and many negatives.

Did we overplay our hand by proposing a formal coalition, rather than just a Liberal government that would seek to govern with NDP and BQ support on a case-by-case basis? Certainly the NDP saw this as their opportunity at real power and wanted seats at the table. And it was important to demonstrate to the Governor-General and Canadians that the new government would be stable. But it made the separatist-socialist coalition messaging easy, and that resonated with Canadians. And we needed public support for legitimacy. We may well have over-reached.

Having Gilles Duceppe at the table for that press conference/photo-op was a mistake too. It lent credence to Conservative lies about the BQ being in the proposed government when they weren’t, and hurt our chances to sell this to the public.

And as much as it pains me, having Stephane Dion at the head was a deal-breaker for many Canadians. I argued at the time it had to be Stephane, and for us, there was no other viable option at the time. But he had just been pretty soundly rejected by the electorate and I talked to many Canadians who said, they’d support the coalition, but not with Dion. While he was the PM we needed, he wasn't the salesman we needed to sell it. It was another factor that made it harder for us to gain public support.

Looking back now, I’d have to say I total more wins in the Conservative column one year removed from the coalition crisis.

While they were forced into stimulus spending they’ve embraced it, using the opportunity to paint themselves as Conservative Santa Clauses with a multi-billion dollar slush fund. They’re showering money on their own ridings to cement their re-election chances and on key swing ridings they need to get to their elusive majority, all with giant prop-cheques emblazoned with the Conservative logo.

We can point out all we want that the distribution of funds is politically-motivated, that they’re blurring the partisan/government divide, but for most people any outrage is largely of the “a pox on all their houses” variety. Conservative popularity has largely held steady through this downturn. That’s a remarkable feat, and due in no small part to the stimulus spending forced on them by the coalition.

More long-term, the prospect of a future coalition government, which would be perfectly democratically legitimate and could be an antidote to both the perpetual minority governments that Canadians are tiring of as well as a good opportunity to unite the centre-left against the Conservatives, has been poisoned and will likely be a no-go for a generation.

We had to sell Canadians on the concept, and we blew it. We were hobbled by the factors mentioned above and we couldn’t overcome the Conservative campaign of smears, lies and distortions. Now the concept of coalition governments, which are the norm in so much of the rest of the world, is as politically toxic as, well, the green shift. Which is a victory for the Conservatives that greatly increases their chances of continued governance by playing the NDP and Liberals off each other. A divided left helps a united right.

So, overall, while the opposition parties largely played their cards as best they could and did achieve some tactical victories, in the long-game it’s Stephen Harper’s Conservatives that emerged as the winners from the coalition madness of one year ago. They continue to govern, their opposition is divided, they held (and even increased) their popularity through a punishing economic downturn, and are inching closer to majority nirvana.

It has been quite a year.

Recommend this Post on Progressive Bloggers

Closing the stimulus door after the narrative got out

Many, many weeks (months, really) after the Liberal opposition began hammering on the partisan distribution by the Conservatives of stimulus funding, and many weeks after several media organizations did their own studies which largely supported the Liberal contention, we've finally started to see some organized response from the government.

The response comes in a CP story today, which reports Transport minister John Baird's office has done its own study that shows, surprise surprise, nothing to see here. In fact, apparently the big-heated Conservatives are over-favouring opposition ridings. Because they're just that generous.

CanWest's David Akin also crunched some of the numbers for a fund that is intended for educational institutions and found that it favoured opposition ridings. David is a straight-shooting journalist but I have a methodology quibble here: major universities tend to be in major cities where tend to be represented by opposition ridings, so the result would only make sense and doesn't render mute the point made by the other studies at all. Indeed, what would be more valid would be to look at the total number of ridings with major universities, and then see if Conservative university ridings were over-favoured on a percentage basis.

Certainly, there's lots of playing to be done with these numbers. As Baird's spokesperson said they have different funds for different purposes. His office's study was of a fund aimed at major cities, and since urban ridings skew opposition of course those numbers skew toward opposition ridings. Just as Akin's study of the education fund did.

But unless the Liberal and other media studies were of funds designed primarily for rural ridings (and they weren't) then their analysis stands, and Baird's cherry-picked study is just designed to distract from the already cemented narrative. And as Steve pointed out, their counter-argument falls apart there as well, as within rural ridings, the data shows Conservative ridings being favoured.

One of the major problems noted even in Akin's reporting is the difficulty, or imposibility, or getting full and complete numbers on government stimulus spending. The government can complain that these studies are incomplete, but their unwillingness to provide complete information makes a full accounting impossible and supports the thesis there is untoward activity because it makes it seem like they have something to hide.

Really, though, my point is this: the government is many days late and many dollars short on their response here. The narrative here has been set, and the logo cheque scandal cemented it: the Conservatives are playing partisan games with stimulus and are favouring their own ridings. And all Baird's studies and all Baird's spokespeople won't change that narrative at this point.

Who knows what the final numbers will show. When the auditor general gets involved in a few years it could turn out to be not that big a gap. As I recall, the "billion-dollar HRDC boondoggle" turned out to be a few thousand dollars in actuality. Didn't matter, the canard is still trotted-out to this day.

Whether the stimulus scandal will impact voting intention is another matter entirely, but Baird's spin notwithstanding, the public view here is set.

Recommend this Post on Progressive Bloggers

Back to blogging and catching up

I know I’ve been a bad blogger lately, but with a busy stretch at work, including trips to Nashville and New York City, it’s been hard to find the time to blog. And besides, I find a blogging sabbatical every now and again can be useful to recharge the batteries, not to mention step back from the partisan strife and gain a little perspective.

I’m back to it today though, so I thought I’d share some thoughts on some of the news and events that occurred during my absence.

Welcome to the Cheque Republic: Some have complained the Liberals have been going too big on the Conservative logos and MP signatures on cheques/partisan stimulus (and now expensive Go-Train ads) story. If they have gone overly big I don’t blame them one bit. They needed to do something to change the media narrative from Liberal suckiness and this is the kind of stuff the media love, so mission accomplished.

Is there an impact however beyond changing the channel? Remains to be seen. Certainty the cheques, and the analysis of stimulus spending favouring Conservative ridings spearheaded by Gerard Kennedy and now taken up by several media organizations, feeds a negative narrative of the Conservatives. Of course, the counter is, all politicians feather their own nests. True enough. The Liberals didn’t put party logos on cheques, but that’s a distinction most Canadians are unlikely to make.

This could be another in the “death of a thousand cuts” that eventually cause governments to fall, the jury is out. It certainly does take away the Conservative moral high-ground: they campaigned on being above all this. And it could be that what would be dismissed as the usual partisan pork-barreling will be viewed more negatively coming during an economic downturn, when the government had a responsibility to help all regions of the country that are suffering. We’ll see. These things can take a while to sink it, and this thing does stink.

As I said though, if nothing else it changed the channel for awhile, and that’s a good thing.

Liberals talk policy: I’ve been lamenting the Liberal Party’s unwillingness to talk policy outside of an election campaign, so I was pleased to see a change in strategy on that front with Michael Ignatieff talking Liberal policy on the environment, on early learning and childcare, and on womens issues.

I’m sure there weren’t as many details as some would like, but it was a good pre-election step at outlining what the priorities of a Liberal government would be, including a commitment to clean energy, renewable power and cap and trade. I was pleased to see a commitment to national childcare re-affirmed as well. And for the cynics out there, I’ll note the Liberals had a system all put in place and negotiated with most of the provinces before the Conservatives and the NDP (and the BQ) allied to defeat Paul Martin’s government. Finally, the “Pink Book” on women’s issues not only speaks to a key Liberal constituency, it also puts forward meaningful and real ideas, such as micro-credit facilities for female entrepreneurs.

It’s a very good start on the policy front. Now the challenge is to get creative about getting the word out about the policy proposals, and start a debate on our issues.

Non-confidence if necessary, not necessarily non-confidence: Apparently Michael Ignatieff said last week the Liberals won’t move non-confidence at every opportunity, and will take each vote on a case-by-case basis. The media said this was a back-down from the Liberal hard-line taken post-Sudbury. Certainty came across that way. The Liberal Party insisted this was the position they’ve taken all along, so no change. If that’s the case, the nuance of that message had certainly escaped me. And I’d have to attribute that more to their failure to communicate the message clearly than to my ability to comprehend it.

Nevertheless, it’s the right course. Clearly, the election brinkmanship and being seen as itching to go to the polls without having established a compelling narrative and case was hurting us. Taking a breath, starting to work on developing that case (and talking policy), indicating a willingness to work on some issues while still maintaining your lack of confidence is a sensible course.

The polls turned bad quickly, they can turn around just as quickly as well. It will take hard work, discipline and sound strategy, but it’s more than doable. As always, the devil is in the execution.

King me: This whole public spat between the Governor General and the Prime Minister over titles and constitutional prerogatives is childish on both their parts. Harper didn’t need to call Jean out in public. Jean didn’t need to stir the pot further. They were like two squabbling children.

What bothered me more though was when I’d read comments about Canada “clinging to its British colonial roots” and other such nonsense. Look, I think it is time to have a debate in Canada about our constitutional monarchy, and about having an elected Canadian head of state. I don’t want Charles on our money.

But that said, I get annoyed when I see people talking down or saying we should dismiss or downplay our British roots. This is our history. We should embrace it, not hide from it. Yes, Canada has welcomed people from all over the world and we’re a country that allows them to keep and even celebrates their unique heritages, and that diversity and celebration contributes to the Canadian identity. But our British roots are strong and undeniable, and celebrating our diversity doesn’t mean forgetting where we came from.

So I say Rule Britannia, God Save the Queen, and The Maple Leaf Forever (original lyrics, please and thanks)!

Silence, shmilence: The NDP seem to be in a tizzy because the Liberals won’t rubber-stamp some environmental private member’s bill of theirs before the Copenhagen conference on climate change. And some of the NDP blog types seem to think there’s some kind of Liberal blog conspiracy not to talk about it, which is totally more plausible than just maybe we have other things to talk of more import than empty NDP posturing. Let me break the supposed silence though to say poppycock.

I don’t think taking the time to give due consideration to the bill, to hear testimony, and to get information on costing is all that crazy. Actually, it I think that kind of thing is parliament’s job. How do I know that? The NDP told me once.

Rushing the bill through before Copenhagen isn’t enough reason to sacrifice due consideration. Whenever the bill is passed the Conservatives will ignore it, the world won’t notice or care, and it will have no impact on the government’s climate change policy whatsoever.

What this NDP posturing is really all about is politics, and re-establishing the environmental credibility that was left in tatters when they allied with the Conservatives to demonize the Liberal green shift, a real and meaningful climate change policy supported in principle by much of the mainstream environmental community, for no other reason than partisan politics.

So no, I don’t see any particular reason to rush through their bill just so they can try to be credible on climate change again. Let parliament do its job.

Recommend this Post on Progressive Bloggers

Conservative stimulus run amok?

This ad appeared on my Facebook page tonight. Apparently Stephen Harper from Ontario wants to pay my credit-card bill, or something:


Unfortunately I didn't click-through and haven't been able to get it back despite much refresing, so I don't know if Harper really wants to may off my debts (offer only valid in Ontario, oddly, sorry Alberta) or if its (much more likely) just some kind of weird Facebook marketing mash-up that has nothing to do with the feds (FB can take your photos and use them for marketing) or Harper's shovel-gate stimulus bonanza (offer void when he learns I'm not in a Conservative riding?).

If the PM is reading this, though, while I don't have any credit card debt, if he wants to stimulate the economy by paying off my student loan he's more than welcome to.

Recommend this Post on Progressive Bloggers

(Video) Gerard Kennedy fights Conservative porkbarreling

Gerard Kennedy keeps kicking ass in question period, highlighting how the Conservatives are majorly diverting stimulus funding to their own ridings, while other areas with higher unemployment go wanting.

Recommend this Post on Progressive Bloggers

If you don't build it, John McCallum will come.

Beware, Conservatives! If you don't build it, John McCallum will come.

Prior to meeting with the Burlington Chamber of Commerce, Liberal Finance Critic John McCallum stopped by one of the city's announced federal Infrastructure Stimulus Fund projects only to find no shovels in the ground.

"Canada is in a jobs crisis, yet Stephen Harper has missed his opportunity to create the new jobs we need," said Mr. McCallum. "Jim Flaherty said that these projects had to be going within 120 days after the budget in order to stimulate the economy. 211 days later, at the end of summer construction season, the budget has been an abject failure."

McCallum stopped by the park at Dundas Street and Kerns Road to view the progress that had been made with the $2.3 million promised by the Conservatives to develop it. There was no evidence of any construction.

"Stephen Harper is obviously stuck. He said back in early June that 80% of the Economic Action Plan was already implemented," said Mr. McCallum. "But millions of Canadians are scratching their heads wondering why they can't see any of it actually happening."
(more)

Recommend this Post on Progressive Bloggers

Civil service pushing back against Conservatives turning stimulus into pork?

An interesting post from Contrarian, who has a letter from someone who claims to be a senior civil servant with issues around the way the Harper Conservatives are doling-out stimulus funding:

An excerpt from the letter, for the rest visit the site:

Projects are selected based on the needs of the Conservative Member of Parliament in that riding as the first criteria. As a long time bureaucrat, I am used to dealing with politicians who revel in self-interest. Baird however, is the nastiest, most partisan creature to have ever run a large department. What is best for Canada isn’t even remotely of interest to him - what is best for his party and his own political ambitions drives his agenda entirely.

Recommend this Post on Progressive Bloggers

Almost all economic stimulus cash would keep flowing during election

Stephen Harper says an election would stop stimulus money from flowing. Stephen Harper is wrong. From CP:

More than 90 per cent of the economic stimulus planned for this fiscal year will continue to flow whether or not opposition parties defeat the federal government and force an election on Friday.

And that fact blows a big hole in Prime Minister Stephen Harper's best argument for avoiding a summer vote.

``I think it's largely bogus,'' says Allan Maslove, public policy and administration expert at Carleton University.

``Governments don't shut down (during an election), they continue to spend money. So all of those programs that were approved can go forward.''

Out of $22.7 billion in infrastructure and other stimulus measures announced in the January budget, Treasury Board officials confirm that parliamentary approval has already been received for
$21.1 billion.

Some $1.6 billion in stimulus, to be voted upon as part of the estimates Friday, would be stalled though by a summer election.

Recommend this Post on Progressive Bloggers

363,000 Canadians have lost their jobs since Harper's re-election

Some sobering numbers today fromStatistics Canada:

* The Canadian job market lost 42,000 jobs in May
* The unemployment rate jumped 0.4% to 8.4%, its highest level in 11 years
* In Ontario, the unemployment rate jumped to 9.4%, its highest level in 15 years

And since October, since the last election, where Stephen "lassiez faire I don't care" Harper promised if there was going to be a recession it would have happened already and said we should trust him because he's an economist, the Canadian economy has retracted by 2.1 per cent and 363,000 jobs have been lost.

And the government isn't helping. Municipalities are complaining they have "shovel-ready" projects ready to go, but the Harper Conservatives are stalling on the cash:

But so far, cities have not received the cash they need to break ground, Carl Zehr, mayor of Kitchener, Ont., said on Thursday at the annual Federation of Canadian Municipalities conference in Whistler, B.C. “Our shovels are ready, and we're simply waiting for the money,” he said.

Three months have come and gone without any cash flowing, a delay long enough that it likely precludes any project starting this summer, other mayors said. “This construction season is virtually lost,” Toronto Mayor David Miller said.

Harper and Jim "$50 billion deficit" Flaherty warned stimulus funds had to be out the door within 120 days to be effective. That deadline passed last week, and with only 6% out the door, their effort can only be termed a massive failure.

UPDATE: The headlines tell the tale:

Recommend this Post on Progressive Bloggers

You still shouldn't get old in an opposition riding

Canwest journalist David Akin is tracking government spending via his Twitter feed with the tag #ottawaspends, and there seems to be one inescapable pattern that's emerging: when your parents are ready to retire, ship them off to a Conservative riding.

Akin counts eight press releases on Monday from the government touting $426,554 for seniors programs -- all in ridings held by Conservative MPs.

Among the highlights:

*St. Catharines $19,700 Drawing and painting classes for seniors.
*Mount Forest $32,473 Lawn bowling club and Thames Valley Residents Assn.

Eight announcements, 100 per cent in Conservative ridings? This follow's Akin's report last week that of 32 grants to seniors groups since Feb. 17. only one went to a non-Conservative riding.

Now, of course governing parties always fether their own nests a little. Frankly, what offends me more is that the Conservatives are doing such a half-assed job of even pretending not to just be shovelling pork to their own MPs. Is a little more finesse to much to ask for?

Recommend this Post on Progressive Bloggers

Managing expectations

I've touched down in Los Angeles for a work trip for briefings with HP, checked into the Beverly Wilshire in Beverly Hills and I have two hours to go and enjoy the sunny, warm weather and look for movie stars before my first meeting. So I'm going to try to keep my comments on last night's budget vote short, so I can get out of my room.


I agree with much of what Steve said on the topic. I'm very annoyed with what happened last night. Let me explain why though. For the Liberal team this was a failure of communications, and of managing expectations.

One thing should be clear from the start: the Liberals were always going to pass the budget, and this associated stimulus funding. First, we believe in this time of economic crisis we need to get the stimulus flowing. Second, voting it down would have triggered an election. There's no getting around that. And even if we wanted an election right now, Canadians don't. Triggering an election no one wants would be stupid right now. So this was always going to pass.

Where we erred was in allowing the expectation to arise that anything else was the case. And it's our own fault. We made the right call in January, that's clear: pass the budget and get out of the way to get the money flowing. Attach accountability measures and quarterly reporting. If we don't like what we see, we vote no-confidence.

When this $3B fund thing came up it seems we wanted to try the same play: let it pass with accountability measures attached. We did well on the latter half of that equation, the accountability measures were reasoned and sensible. Where we erred was on the first half, with the "blank check" rhetoric we allowed the false impression to take hold we were prepared to vote the stimulus down. We never were, but we left that impression, which then makes it seem like we've fallen into the same huff and puff and run away mentality again.

Fact is, the accountability measures we wanted were passed before the main stimulus vote, with BQ and NDP support. So we met our strategic goal, but our failure to manage expectations casts it as a defeat. And we're letting the other parties spin it thay way, we're not getting our message out.

Yes, the Conservatives say they'll ignore the motion: then we can go to Canadians and say Harper is ignoring the will if Parliment and the accountability demanded by a majority of parliamentarians. And they have actually promised more reporting, so we'll know where this money goes.

Yes, they motion is non-binding. We always knew that. It was always going to be non-binding. The enforcement is through the quarterly reports, through voting non-confidence if they're not behaving responsibly.

The lesson I hope the Liberals take here is to manage expectations, and don't bring the rhetoric if you're not going to back it up. We're on the right track here, we're behaving responsibly and Canadians are onside. Let's not fall into the old huff and bluff habits.

What happened to keeping this brief? I'm off to Rodeo Drive.

Recommend this Post on Progressive Bloggers

Grandma, we're shipping you to Calgary

Via David Akin:

The government has announced 32 grants for seniors' groups since Feb. 17, and only one went to an organization located in a riding not held by a Conservative MP.

This isn't a new phenomenon, of course. The moral? Don't get old in an opposition-held riding. At least, not if you want to enjoy "inter generational movie nights", native beadwork, dancing, and storytelling, or scrapbook, all with government assistance.

(h/t Wherry)

BTW, speaking of tracking government spending and action -- or, dare we say, in action -- on maters economic, this is a neato new Web site that aims to do just that.

_____
**Help send a BCer to BC for the Liberal convention. Donations are tax deductible. Any support is greatly appreciated.

Recommend this Post on Progressive Bloggers

Video: Conservatives and the economy, Who's on first?

The economy was the opening topic in question period today, and particularly, what seem to be conflicting signals from the Prime Minister and his finance minister on the economy. Jim Flaherty on Thursday says more stimulus may be needed. ,On Friday, Stephen Harper says we're done, no more stimulus. It all left Michael Ignatieff to ponder, who's on first?



I, for one, found the explanation of Ted Menzies, parliamentary secretary to the minister of finance, rather unsatisfying. As did Ignatieff I'm guessing, judging by his post-question period scrum.

Recommend this Post on Progressive Bloggers

On coalitions, budgets and deficits

Note that I write this without having read or listened to any coverage of the throne speech, or the throne speech itself. That will come tonight. Going into the throne speech though, as I continue catching-up on my blogging here are a few thoughts on the next few days, and the way forward.

* The phrase Coalition if necessary, but not necessarily coalition has come to make more sense during the weeks since perogy madness. The fact is, things have changed a great deal since then.

Last year, based on the economic update, bringing down the government and replacing it with an opposition coalition was absolutely a justifiable play, and the right thing to do. The Conservatives had shown themselves unwilling to be reasonable and to address the real economic concerns of Canadians. They escaped that judgment by the skin of their teeth, and bought themselves time.

Now with the budget we’ll have an entirely different set of circumstances to judge than we did last time, and just because a toppling/coalition was right then doesn’t necessarily mean it’s right now. And we need to frame the question correctly. Do I think a coalition government would be better for Canada that the Conservatives? Sure. But that doesn’t mean we should go ahead and topple Harper, budget be dammed. Canadians won’t accept such a move.

Only if Harper comes in with a budget that, like the economic update, fails to rise to a level of action and seriousness needed can we contemplate bringing them down. And even if the budget doesn’t do everything we want can't just bring it down. It won’t be a Liberal budget. But if it moves far enough in the direction we want then we need to let is pass, considering the coalition threat a success and continuing to hold Harper to account in the future. And yes, over time, the coalition becomes less of an option, so going forward we need to demonstrate our readiness, and willingness, to force an election if necessary, particularly if Harper decides to play the confidence game again.

I’ll say it again though, Canadians will not accept a coalition that's a mere power grab. It needs to be justified on policy grounds based on Harper’s action, or inaction. This isn’t our chance to simply do what we couldn’t in an election. That dog just won’t hunt.

* A few points on deficits. First of all, yes, the opposition has been advocating spending increases that will necessitate a deficit, and most observers have accepted the need for a period of deficit spending until we’re out of this economy. The fact is, though, the $64 billion deficit over two years figures that the Conservatives pre-leaked is higher than it need be because of Conservative financial incompetence, their inability to see this storm coming until a month or so ago, and their complete squandering of the substantial surplus the previous Liberal government left them.

The Conservatives squandered the surplus on high spending that doesn’t seem to have bought us much (I can’t honestly say where it went, but went it did), and hugely expensive cuts to the GST that took many billions of dollars out of government coffers. And they eliminated the Liberal tradition of a $2 billion contingency reserve to cushion unexpected difficulties.

A deficit at this point would still have been largely inevitable, but it need not have been near as big. Conservative mismanagement, and their ideologically-driven crusade to strangle the federal government’s fiscal capacity, has left them with very little room to maneuver now that times are tough, and an even bigger hole to climb out of than would have been necessary.

* Finally, the budget. It certainly seems like the spending will be there. The question, though, is where will it go. I’ve already outlined at length my preferred methods of fiscal stimulus, and the problems inherent in the broad-based, and permanent, middle class tax cuts Harper has been signaling he favours.

In addition to the method of stimulus, I’m going to be looking for a plan and roadmap to get back out of deficit, and permanent tax cuts would make that doubly difficult. Infrastructure projects are a one-time expense. But tax cuts, besides being ineffective stimulus, are permanently lost revenue that can’t only be made-up by tax increases (politically unsaleable) or why cuts to program spending.

And that’s my fear with this budget. It’s no secret Harper wants to strangle the federal government’s fiscal capacity, rendering it permanently unable to play a strong national role. I’m fearful they will use the guise of this economic crisis to push through large permanent tax cuts that, while ineffective as stimulus, will neuter the federal government and force massive cuts to program spending down the road.

Such a move, while more wily than the political gamesmanship of the economic update (voting against tax cuts is much harder than voting against ending pay equity), would be just as dangerous to Canada, and would have to give the opposition serious pause.

Recommend this Post on Progressive Bloggers

On Michael and tax cuts, and politics too

Michael Ignatieff had a well-attended town hall meeting in Halifax yesterday, an event which seems to have generated a whole heckuva lotta coverage on the CP Wire. I'll deal with a few of them in separate posts, beginning with the economy.

If you've been reading this corner lately you'll know I've been interested in the upcoming budget and the forms of stimulus under consideration. I'm strongly supportive of a comprehensive package of infrastructure funding and feel its our best and most effective stimulus option.

Therefore, I was pleased to see Michael say a Liberal-led government would get the infrastructure money flowing more quickly so we can get shovels in the ground:

He said he would get a team together to call municipal leaders across the country to find out what infrastructure projects they need and how fast they can get started. That got the attention of Halifax Mayor Peter Kelly, who was sitting near the back of the auditorium.

"I’d phone you and say, ‘What do you need?’ " the Liberal leader said to Mr. Kelly.
"I’ve got a list," the mayor hollered back. "$1.2 billion."

Mr. Ignatieff said Stephen Harper’s Conservative government has been "astoundingly slow" in getting infrastructure money out the door, something he said has to change.

"We’re in a crisis. We’re in a serious crisis," he told reporters. "And I would rather err by doing it fast and making the occasional mistake — which then you, the voters, punish us for later — than sitting there saying, ‘Have we got all the boxes ticked?’ "

I have also been making the point that in my view, and in the view of many economists (with the exception of the alleged economist occupying the corner office in the Langevin Block) that tax cuts are extremely ineffective as stimulus. They will, by and large, be pocketed and not spent, defeating the purpose.

That's why I was disappointed to hear this from Michael:

"I think it’s going to be important to get stimulus into the Canadian economy fast, so we may be looking at tax cuts very quickly, tax cuts targeted at medium and low income, to boost their purchasing power fast," Mr. Ignatieff told the crowd of 200 at Neptune Theatre.

When asked later what form those tax cuts might come in, Mr. Ignatieff told reporters he’s in favour of the kind that are permanent, rather than a one-time break.

I'm disappointed to see Michael buying into the tax cuts as stimulus argument, but I can't say I'm surprised. It's politics.

*Why is Obama pitching large tax cuts as part of his stimulus package in the US? Politics, he needs to win over congressional Republicans for his larger stimulus package.

*Why do I fear Harper pushing large tax cuts masquerading as stimulus? Politics, he would want to both a) force the opposition to either support bad policy or vote against tax cuts so he can run an election on it, or b) further reduce government revenues in support of his ideological mission of dramatically shrinking the size, scope and power of the federal government.

*And so why is Michael speaking our for tax cuts as stimulus? Politics.You might not win an election running on tax cuts, but you sure won't win one running against them. So while I'm disappointed in one sense, in another a little political judgment every now and again isn't a wholly bad thing.

The litmus test for me, however, will be in what size and kind of tax cuts the Liberals propose. I do take some solace in the fact Michael was talking about “tax cuts targeted at medium and low income (earners).” I think the lower down the income scale you go, the more likely it is any tax cut will be spent rather than saved, increasing the likelihood of some stimulus resulting. So any tax relief, and I have said some minor relief as a sweetner wouldn't necessarily be a bad thing, must be targeted.

The majority of stimulus spending however must go to temporary infrastructure spending. Besides being more effective, the key word there is temporary. Remember, we're going into deficit to finance this, and we'll need to come out of deficit soon. (And if history is any indicator, it will be a Liberal government called on to balance the books). Infrastructure spending is a temporary expense. Permanent tax cuts (temporary would not be politically salable) would mean a permanent drain on government revenues, meaning the foregone revenue would need to either be recouped through a) tax cuts, or b) cuts to program spending. If history has taught us anything, it's that tax cuts won't pay for themselves.

While I recognize the need to position us in a politically salable position around tax cuts ahead of the budget, I hope we bear in mind the need to balance good politics with good policy, as well as Harper's true conservative motive in pitching tax cuts: making the federal government small enough to drown in the bath tub.

Tax cuts if necessary, but not necessarily....no, scratch that...

Recommend this Post on Progressive Bloggers

Let's stimulate our colleges and universities

As we discuss stimulus and appropriate forms thereof, this article is timely. While we fight to save manufacturing jobs we need to keep in mind that, by and large, the manufacturing jobs of yesterday that were the underpinning of our economy are not going to be the economic engine of tomorrow. If we're going to expect our young people to train for jobs in the industries and fields of tomorrow, and older workers leaving the manufacturing sector to retrain, then we need to have the capacity to make that happen:

The nation's colleges and universities aren't equipped to handle a sharp increase in enrollment. Some are already turning away applicants; others are canceling courses and letting staff go as their endowments shrink.

This suggests that paying people to go to university or community college – through the Employment Insurance Fund or some other retraining allowance – won't be effective.

Without more classroom space, more teachers and more courses, only a lucky few will get in the door. Without more creativity on the part of both policy-makers and educators, Canada's post-secondary system will be a victim, not a beneficiary, of economic circumstances and political expectations.

This is a deeper problem and debate than just how much stimulus and where and how, but it ties into the potential effectiveness of any stimulus programs, as well as the long-term health of our economy. An educated, trained workforce means a shorter down-turn. But tax cuts won't create training spaces. Nor well direct training grants to individuals. Creating capacity requires increasing post-secondary transfers and working with the provinces to ensure the funding goes where its needed quickly and is actually used to build capacity.

And this comes back for me, again, to the conservative mantra of cut taxes to the bone. Sounds nice, but the fact is, taxes pay for things. Such as building capacity in the PSE system. And it's an investment that we should all be happy to make, because an educated workforce benefits all of us.

Putting $100 back in my pocket won't give us a more competitive workforce better able to compete in a global economy, and it certaintly won't make my job any safer.

But investing it in the PSE system will.

Recommend this Post on Progressive Bloggers

Stimulus, yes, but how?

As we begin to move out of the holiday season and draw closer to the return of Parliament and the unveiling of the budget that will decide the face of this Conservative government, we'll begin to see more speculation, and planned leaks and trial-balloons, about what may be contained therein.

Just today I noted four different media stories, including one with comments from finance minister Jim Flaherty himself, pushing tax cuts, including further corporate tax cuts, as the appropriate stimulus for the next budget.

A piece in the Globe floats a “corporate tax holiday” for a year. Just let all corporations take a year off paying taxes. How much will this cost us? They can't say, but assure us it's not that much. Less than $40 billion to be sure.

Over in the National Post, they claim the pressure for corporate tax cuts is rising. OK. To support this they quote one source, the president of the Canadian Taxpayers Federation. A guy with his finger on the pulse, to be sure. Despite already substantial corporate tax cuts on the books, he wants more, and now.

A CP wire piece laments the lack of personal tax cuts from past budgets coming into effect this week. With increases in payroll taxes, most Canadians will be a tad worse off, tax wise. Unless they have the money to put into tax-free savings accounts, that is.

And finally, in another CP piece, Flaherty hints tax cuts may be on the way in the upcoming budget, as a way of boosting consumer confidence:

``There are a couple of ways to stimulate the economy. One is spending on the infrastructure side and other ways, and tax reductions _ leaving more money in people's pockets _ is also stimulus to the economy,'' Flaherty told reporters at a news conference.

``We've been reviewing other (tax) options,'' he added.

With the Conservatives having strangled government revenues over the past few years as part of their dogmatic quest to reduce the size and capacity of the federal government, the fact is it lacks the resources for more than minor tweaking of the tax system without massive deficits that would be economically unacceptable and too difficult to climb out of when the economy rebounds.

And besides, I'm not convinced that tax cuts, either corporate or personal, will do much of anything to provide stimulus or meet Flaherty's stated goal of improving consumer confidence.

Times are tough. Canadians are concerned about their jobs, and are cutting back discretionary spending and saving more in case they get into trouble. This, of course, has a trickle-down effect throughout the economy. Although, my delaying buying that beautiful 40” LCD HD TV I've been coveting probably effects the Japanese economy more than ours. or maybe the South Korean economy, I'm undecided on brand.

Nevertheless, it's a problem. But is putting, say, an extra $100 in my pocket through tax cuts going to make me more likely to pull the trigger and buy that TV? No. I'll likely save the $100, because a) it's not that much money, and b) my underlying concerns remain. And as for corporate tax cuts, the fact is substantial cuts that will give us extremely competitive rates are already on the books.

The way to increase consumer confidence is to increase our confidence we'll still have jobs in six months. Little tax cuts won't do that. Instead of sending everyone $100, pooling that money and putting it to work building infrastructure is a far more sensible policy. First of all, it creates jobs to build things like roads and bridges and subways. Good-paying jobs that will put money back into the economy, and return tax revenue. It will also create lasting infrastructure that will increase our economic competitiveness, for sound infrastructure is one of the cornerstones of a strong economy.

Minor tax cuts would be an expensive flash in the pan that would simply be the Conservatives pandering to their base, and trying to put the opposition parties into a difficult position by making them either support bad policy or vote against tax cuts. This is the same kind of political maneuvering at the expense of good public policy that got Harper in trouble with his economic statement. While this would be much more of a finesse-play than cutting public party funding was, it would still prove Harper has learned little except how to be a better snake. Some minor tax tweaks would be fine, but in my view the bulk of the stimulus in the next budget must be directed to infrastructure spending.

Going into a large deficit to cut taxes doesn't make sense, unless you plan to raise taxes to get back out. And who is really going to propose that? They'll just say we won't have to raise taxes, don't worry about it, enjoy your lollipop, it'll be fine. But it won't. If we're agreed on the need for a deficit budget, let's not be stupid about it.

This is an opportunity to invest in our future. Let's not waste it for trickle-down ideology.

Recommend this Post on Progressive Bloggers