Friday, September 30, 2005

Playing Politics

The National Post seems to have beat all the other dailies on an internal Liberal strategy for once - which is likely more strange than the story itself.

Nevertheless, the hot rumour they splashed across their front page today is that the Liberals will be introducing "balanced budget" legislation that will force governments forever and ever to maintain a contingency fund.

Now, I understand why the Liberals are doing this after complaints the NDP has forced them into reckless spending commitments. But balanced budget laws are ridiculous. You're tying the hands of a future government when the economic conditions could be very different than they are today. We've just seen two hurricanes slam into the US and you never know when natural disasters or terrorist attacks could force Canada into a temporary deficit situation. Yes, I'm sure they will build in exceptions to the law, but an economic downturn might force a temporary deficit to stimulate the economy. And remember, historians have been rather unkind of RB Bennett and WLMK for their unwillingness to deficit spend during the depression.

Governments know that running deficits in the current economic climate is unwise and unpopular. So why make a law for it? Why not legislate into law that a certain percentage of the GDP must be spent on the arts every year? Why not mandate the total paperclip budget for the House of Commons into law?

There's no need to tie the hands of future governments. The only reason for a law like this is to score a few cheap points with the electorate.

17 Comments:

  • QuebecHarpermaniac says:

    Exactly, CG. (Are you really a Liberal? Impossible.)

    I mean, this is the stupidest suggestion I have ever heard.

    The fact that Martin would propose this idea shows what a pack of lies his term as MofFinance was.

    Without Chretien's firm control of Martin, we would have bigger deficits, not zero deficits.

    To go further on your point, even if there was no calamity that called for extra spending a future government should have the right, after it wins a mandate from the electorate, to do what it wants.

    If it wants to go into deficit to host an Olympics. Do it. That will be the electorates choice. So, to top it all off, he's making the country less democratic at the same time.


    Unbelievable.

    By Anonymous Anonymous, at 5:01 PM  

  • What a DUMB idea, man I long for the days of John Manley as Finance Minister (maybe Prime Minister if we could ever be so lucky). CG you hit the nail on the head, don't really have much to add. Thank god future governments can scrap this legislation, oh wait, it pretty much f%$^s them because of the political egg they will have on their heads.

    Debt to GDP level, what the hell does this legislation do to that, here is an idea Ralph, grow the goddamn national economy, that will help your debt to GDP ratio. What a stupid idea.

    DUMB, DUMB, DUMB

    By Blogger iloveLaP, at 5:07 PM  

  • These kinds of laws are really pretty meaningless. They do not bind the hands of any future government; they can be repealed or amended just like any other law. it may be politically difficult, but no doubt a government that wanted to run a deficit for reasons of some national emergency or other pressing need could survive that.

    It's really just a way of looking fiscally conservative when you are in a period of huge surpluses. This government would rather do something showy like this than actually demonstrate some real fiscal prudence by controlling growth in spending (or even, heaven forbid, reducing it).

    By Anonymous Peter, at 6:41 PM  

  • Not only ridiculous, but meaningless. Any government that wants to change the legislation will do so. If they have a majority, there will be nothing to stop them.

    By Blogger James Bow, at 10:20 PM  

  • Well... yes and no. If it also allows for temporary deficit-spending in a national emergency as authorized by, say, a two-thirds vote of MPs, it could have a large moral impact on future conduct -- much in the same way that the Democrats were able to face down the GOP senators over eliminating the judicial filibuster in the Senate earlier this year.

    I am second to none in Liberal-hatred, but I can see the value of something like that...

    By Blogger The Tiger, at 12:37 PM  

  • "The only reason for a law like this is to score a few cheap points with the electorate."

    Yes CG - this is the Liberal Party you are talking about.

    What's so cute is that you seem to assume there would EVER be another reason for the Libs to enact public policy.

    There isn't.

    By Anonymous Anonymous, at 1:59 PM  

  • Balanced budget legislation is a gimmick, nothing more. Just ask Dalton McGuinty about binding these and other taxpayer protection measures are.

    By Blogger Toll Booth, at 3:08 PM  

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  • Klein did it 10 years ago in Alta and it worked.

    Getting elected is all that matters.

    By Anonymous Anonymous, at 5:50 PM  

  • The Balanced Budget legislation in Manitoba has been successful in some ways, although it allows too many outs. Last year, Gary Doer ran a $600 million deficit by keeping Manitoba Hydro's huge new debt issue off the books. The Auditor General rapped his knuckles and now he says he won't do it anymore. Other than that, the legislation has worked reasonably well.

    On the other hand, Ernie Eaves made a complete laughing stock of himself when he cancelled his own "Taxpayer Protection Act." So really, this type of legislation is probably more symbolic than anything else. So Martin will probably do it.

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