Federal budget is smart politics
The Conservative government released its new budget yesterday. On the whole, it isn’t exactly an ambitious document — some spending freezes, a few cuts here and there, the lifting of some tariffs and not much else.
It’s gotten flack from the Liberals and the NDP for not putting enough into social programs. But the right is also unhappy with it. Yesterday, the head of the Canadian Taxpayers Federation told CBC that the cuts aren’t real cuts. Rather, he said, they’re cuts to spending increases, the budget is still growing – just not as fast.
According to Andrew Coyne of Maclean’s, there is $4.5 billion in spending increases this year.
Essentially, the economy is expected to grow, and the increased tax revenue and savings that come with that growth will put the government back in the black.
But analysts point out that this has never really happened before, and for the government to grow its way out of the deficit everything has to go right.
The problem is that Finance Minister Jim Flaherty doesn’t exactly have a reputation for predicting these sorts of things.
According to Canadian political commentator Paul Wells, Flahrety's budget predictions in the past have been off by a total of around $76.8 billion.
But what the budget is, is smart politics.
For ordinary Canadians a timid budget will probably seem prudent in a period of economic uncertainty.
Freezing wages for members of Parliament and a spending freeze for the public service (at 2009 – 2010 levels), which will have minimal impact on the bottom line, are actions the general public can relate to; it seems like the government is doing something (and sharing their pain), when they’re actually doing very little.
Fiscal conservatives may not like the budget, but they really have nowhere else to go — especially with the Liberals calling for increased spending on social programs.
Speaking of the Liberals, the party's plan to vote against the budget, but for most of them to not show up (so as to not trigger an election) looks weak, despite what its leader Michael Ignatieff may say.
But where the budget really shines is the long game.
Of course, if everything goes according to plan, the Conservatives look brilliant. But that’s pretty unlikely; odds are that cuts will have to be made in order to balance the budget.
By pushing these cuts back, the Conservatives are set up nicely for a couple situations.
There is some speculation that the government wants another election within a year, but regardless, they’ve set themselves up pretty nicely no matter what the outcome.
Let’s say there is an election and the Liberals get a minority. It seems counter-intuitive, but a Liberal minority would play well for the Conservatives. But once in power the Liberals will either have to cut spending, or increase the deficit. Judging by Ignatieff’s current rhetoric, they will probably campaign on increasing services (meaning increased spending), which will result in higher and higher deficits. The Conservatives will capitalize on this and, since by that point Canadians will be sick of elections and worried about the growing national debt, the Conservatives can waltz back in to a majority
But say the Liberals don’t increase spending, instead pulling a Paul Martin and cut back. Canadians who voted for the Liberal promises will feel betrayed. Some of those voters will jump to the NDP while the Conservatives portray Ignatieff as a waffler and a promise-breaker, and bam — Conservative majority.
Of course, there’s an easier way. Let’s say we do have an election and the Conservatives manage to blame it on the Liberals (a pretty likely outcome). Int his scenario, the Conservatives can campaign on its record of handling the economic crisis, how the party has a long-term plan for fixing the budget shortfall and that Ignatieff is weak. Canadians are sick of elections and the Conservatives have been pretty centrist, so the Conservatives get their majority. Then they have four years to balance the budget, or at least to work on it and then say they need more time.
And what if this election returns a Conservative minority? No harm, no foul, and things carry on as before as if there was no election. Either way, when budget time rolls around next year, the Conservatives will have been right, forestalling another election for the foreseeable future or they admit their predictions were off saying, "Canada’s economy is not as hot as we hoped it would be." This opens the door to either staying the course (the recovery is not as fast as we thought it would be, our plan is still sound it just needs more time), major cuts (the deficit is a huge problem, we need to cut, sell-off and privatize to fix it) or even increased spending (the economy needs more stimulus).
Stephen Harper may not be a great Prime Minister, but he’s a brilliant tactician. And with a do-nothing budget, he sticks to the middle of the road and pretty much ensures a future majority or a minority that can behave like one. Oh and by the way, he now has control of the Senate.
