The (Very) Political Economy of the Budget
Here is the CLC Budget Analysis
At this point the economics of the budget are so overwhelmed by the uncertain political calculations that one hesitates to add to the discussion.
There are a few modest half good things here in response to demands from labour and the left. $300 Million earmarked for the poorest of poor seniors is not to be sneered at, nor some very modest measures to support unemployed workers and to promote green jobs.
Â But the major if somewhat concealed focus of the Budget is clearly spending cuts to pay for future tax cuts, since they are not needed to shrinkÂ an already low and falling deficit. The $4 Billion of annual spending cuts to be undertaken over the next year and moving forward greatly outweigh the mostly temporary new spending measures, yet we have details of the latter – like bulbs shining on an electoral Christmas tree – but not of the former.
Departments that have already given up 5% of their direct federal program spending Budgets will now have to give up another 5% in just one year, and we have no idea where the axe will fall. The victims are largely ignorant of their future fate, and will remain so through any immediate election.
I’d say this is a politically astute Budget. It concedes momentary ground to the left, while clearly sticking to the underlying agenda of a shrunken public sector and tax cuts.
Whether the opposition parties have responded in as astute a fashion is open to question, one likely to be answered in a vote in early May.