The Conservatives left a $0.3 billion deficit in 2014-15 deliberately, knowing their budget was going to be defeated and hence leaving room for an immediate campaign pledge to move their timetable up a full year.
The fact that the Liberals and the NDP both accepted the initial Conservative timetable (balance by 2015-16) gave the Conservatives additional reason to bump the thing forward a year — since they could now symbolically differentiate themselves from the opposition parties (who were now locked into essentially the same timetable anyway).
- The coming debate over what exactly will be cut, allows the Conservatives to position themselves as the true fiscal conservatives, bringing private sector discipline to the operation of government.
- The current budget timetable is designed to be exceeded. For example, the official budget projects only a $4 billion reduction in the deficit in 2011-12. With GDP growing and the stimulus spending being unwound, this will be vastly exceeded (just as the government just exceeded its own budgetary target for 2010-11 by a whopping $13 billion). Count on Mr. Flaherty to stand up in the Commons next year, to rousing applause from his side, to announce that thanks to his “prudent management,” the true deficit for 2011-12 will come in several billion dollars lower than the official $32 billion target. You heard it here first.
- These phony optics don’t change the fact that the spending cuts will still be very painful. $4 billion in spending cuts, accompanied by normal multiplier impacts (like the estimates contained in the government’s own Economic Action Plan reports) will reduce GDP by close to half a percentage point, and would eliminate tens of thousands of jobs. More likely than not, we will need that GDP and those jobs, given the storm signals already visible on the horizon.
- But the whole “advance-the-balanced-budget-by-a-year” shtick provides political cover for the coming and utterly unnecessary pain, because tonight almost no-one is asking why we would want to do this in the first place.
The federal debt as a share of GDP (the true constraint on the long-run fiscus) is already declining. The crisis in Canada is not our deficit, it’s mass unemployment (still 2 million by the broad measures), corresponding hardship in households and communities, stagnant and polarizing incomes, and the risk of another round of macroeconomic turmoil.
The primarydebate should not be about what gets cut, but why we’re cutting in the first place. It sure isn’t about converting a $0.3 billion deficit into a balanced budget.
- Ontario Budget: All Quiet on the Revenue Front (May 6th, 2013)
- Absolving our Carbon Sins: the Case of the Pacific Carbon Trust (April 2nd, 2013)
- Austerity through infrastructure Cuts: Budget 2013 (March 22nd, 2013)
- Budget 2013: Time for a real action plan, not another ad campaign (March 19th, 2013)
- The Alternative Federal Budget 2013 – Doing Better, Together (March 13th, 2013)