Thursday, August 27, 2015

Our Addiction to Balanced Budgets May Need an Intervention

“There is always a storm. There is always rain. Some experience it. Some live through it. And others are made from it.” Author Shannon L. Alder

Recently NDP candidate and former Saskatchewan finance minister, Andrew Thomson, stated on Power and Politics, that cuts were inevitable, in order to balance the budget.

In Saskatchewan, he cut funding to education, though it still didn't balance the books.  He had to take money from the province's contingency fund, including almost a half million dollars for advertising, that he had balanced the books, when in fact, he had not.

Hiding deficits for politicians is not uncommon.  Jim Flaherty did it in Ontario and Joe Oliver is doing it now.

But in defence of Thomson, Flaherty and Oliver; we have become the enablers of their addiction to the high of being good economic managers.  They had to hide their red eyes and red ink, so they didn't have to come before us in shame, or ruin their chance for re-election.

The question we need to be asking ourselves, is why balanced budgets are so important.  Does it really matter if the federal government runs a deficit?

Political consultant and commentator, Will McMartin, discussed this recently in the Tyee.  He begins with the announcement that the Conservatives would present a balanced budget.  However, he implies, so what?
A closer look at the country's finances, however, raises a simple question: why all the fuss? The budget is a thin slice of the Canadian economic pie, and interest costs on our debt are shrinking to near-giveaway size. Ottawa is just one of three government levels, and taken as a whole our government spending is very much under control. 
The federal budget represents just 15% of our overall economy.

The Blame Game

There has been a lot of debate recently, over what political party is responsible for our perceived debt/deficit "mess".  Since only Conservatives and Liberals have ever formed government, it narrows the debate down to those two.

The biggest targets are Brian Mulroney and Pierre Trudeau.  However, John Diefenbaker, also ran consecutive deficits, but that is not how their legacies should be judged.

Diefenbaker was a visionary, who fought for a united Canada.  He gave us the Canadian Bill of Rights and stood up to the Americans, who wanted us to join their missile defence program.  He may have made mistakes, but his deficits were created in part, by a new universal hospitalization program, and an enhanced Old Age Security.

Lester Pearson also left a deficit, but what defines him, are the many contributions he made.  He expanded Diefenbaker's hospitalization plan, to give us universal health care and introduced student loans and the Canada Pension Plan.  He also created the Order of Canada, and moved toward abolishing capital punishment.

There's no denying what Pierre Trudeau did to move our country forward, as he also expanded social programs, and created a more just society, with the Charter of Rights and Freedoms.

Even Brian Mulroney, whose tenure was mired in corruption, left his mark on making Canada a better country. He created eight new national parks, finalized the U.S.-Canada acid rain treaty, and brought in the Environmental Protection Act.

He is also credited with giving us NAFTA, not necessarily a good thing, but it did help Canada in the short term.

All of these men were big idea guys, who had the courage to make things happen.

Diefenbaker's idea:  a united Canada with a focus on human rights.

Pearson's: nation building and making Canada a diplomatic player on the international stage.

Trudeau's:  nation building with a focus on rights and freedoms, and an inclusive society.

Mulroney's:, a desire to bring Canada into the 21st century, with a focus on business and international trade.

Who cares if they left deficits when those deficits represented only 15% of our GDP?  Look at what we got in return?

I know that a lot of people are critical of NAFTA.  I'm one of them.  Not only did it hurt our manufacturing sector, but it has forced subsequent governments to adopt programs of deregulation, to meet the terms.  Unfortunately, more deregulation may be required, since we are now the country most sued, for not meeting our nefarious commitments.

Election 2015: a Psychedelic Trip to Bizzaro-land

When Thomas Mulcair was the environment minister in Quebec, and wanted to privatize water, shipping it in bulk, he said that "the environmental laws protecting water are considered barriers to trade." (The Press, Charles Cote and Mario Clouthier, June 16, 2004 ).  Mulcair helped to draft NAFTA.

Everything has become a "barrier to trade", that will exacerbate with even more international trade deals.

But what about the barriers to helping Canadian society?  We were told that these deals would lead to economic prosperity.  Where is it?  I guess we should have read the fine print, that said only economic prosperity for the top 1%.

During the 2008 economic crisis, the Canadian government bailed out our banks with over 100 billion of our money.  They bailed out companies, and sprinkled largesse over Conservative ridings.  They built libraries and indoor soccer fields for private religious schools and set up an advertising campaign called the Canada Economic Action Plan that would have rivalled Joseph Goebbels propaganda ministry.  (Yes I said it).      

We found money for that, by adding to our deficit and debt.  Adding it to the 15% stake in our country's GDP.  So why can't we do the same for the Canadian people?  

We need a National Housing Strategy, a National Food Program, and we need to expand our healthcare to include dental and prescription drugs.  We need a subsidized tuition program, help for our seniors and our veterans, and an environmental plan that works.

Those things are not drains on our economy, but a viable way to grow our economy, that will create good, full time jobs, while reducing poverty and homelessness.    We will see the value for the dollars we spend.

A recent poll shows that Canadians are OK with deficits.  They have different priorities and Justin Trudeau has tapped into that:
That suggests that it’s Mr. Trudeau whose position is in sync with the majority’s mood. The Liberal Leader has refused to rule out running a deficit, arguing he’ll have to see the extent of the “mess” the Conservatives have left in the public finances. 
It is the NDP, traditionally to the left of the Liberals, who have launched the most blistering attacks on Mr. Trudeau for opening the door to running a deficit. Under Mr. Mulcair, the New Democrats have sought to allay concerns about their economic policies by insisting they will balance the books, despite the slowdown in the economy.
What an odd turn of events. 

I'm glad that Trudeau is bringing the Liberal Party back to its roots, that put Canadians first. Now the NDP have to find their way back to the days of Tommy Douglas.
Many people have called me a socialist, but like Will McMartin, the author of the first piece I linked, I'm a conservative.  Although actually a liberal/conservative.  Common sense solutions to social problems.  Grow the economy and the budget will balance itself.

Or maybe I'm just a Diefenbaker, with a dollop of Pearson and a splash of Pierre Trudeau.

Not such a bad thing to be.


  1. "I'm a conservative"

    A conservative republican? No thank you.

    But back on topic. Replacing our current welfare system with a basic income would free up enough money to balance the budget while increasing social spending to at least pre-Harper levels. There might even be room for a tax cut or two.

  2. Complete and absolute rubbish. Here is a link to an on-line article that points out what is wrong with balanced budgets and deficits. Course if you are rich or well-off you are happy to see deficits. You make out like banksters.