Simpson on the US Budget
Jeffrey Simpson has a good assessment in todayâ€™s Globe:
Mr. Obamaâ€™s budget – hugely consequential for the United States and of importance to Canada, too – represents a U-turn from the disastrous policies of the Bush administration and of the Republican political revolution that began decades ago.
Imagine a U.S. budget that simultaneously offends rich farmers, everyone making $250,000 a year, doctors, private medical insurers, bankers, coal polluters and the Wall Street Journal editorial board. If a leader is known by his enemies, then Mr. Obama is one admirable leader.
. . .
It proposes a cap-and-trade system for carbon emissions (wake up, Canada!), a form of carbon pricing/taxing. It reaches for universal health. It doubles foreign aid for a country with a stingy per capita public aid program, and drives up the State Department budget. It tries to reverse the growing inequality of income by raising revenues from the richest Americans – a contrast to the Republicansâ€™ failed trickle-down policies.
It tries to ease gridlock by investing in a new air traffic control system and high-speed rail corridors. It invests heavily in education, in a country whose students are falling behind in international tests. It invests in government regulation: The Environmental Protection Agency gets 35 per cent more, the Securities and Exchange Commission 13 per cent more. Itâ€™s a budget, in other words, that believes in government.
Indeed, Obamaâ€™s budget proposes to increase total federal-government outlays by 7% of GDP temporarily in 2009 and by 2% of GDP in the longer term. By comparison, Canadaâ€™s federal budget increases outlays by less than 2% of GDP temporarily in 2009 and by 0% of GDP in the longer term.
OECD figures indicate that, from 2005 through 2007, total government outlays were 2% higher in Canada than in the US (39% vs. 37% of GDP). Therefore, the latest budget numbers from Washington and Ottawa could eliminate this difference throughout the coming decade. In other words, we may be entering an era in which American government is the same relative size as Canadian government.
Finally, I note another shift in Simpsonâ€™s position on carbon pricing. Not long ago, he was commending the Liberals for proposing a carbon tax and condemningÂ the NDP for proposing cap-and-trade, which he characterized as a vastly inferior policy. Today, he defines cap-and-trade as “a form of carbon pricing/taxing” and describes Obamaâ€™s plan as “a carbon tax in the form of a cap-and-trade system.”
There is indeed much similarity between a carbon tax and a cap-and-trade system in which permits are auctioned (rather than handed out for free). The specific design of either regime would be more important than any inherent difference between the two. However, Simpson did not let these facts, which he now appears to acknowledge, get in the way of yet more columns bashing the NDP.