There are plenty of reasons to pillory Finance Minister Jim Flaherty, but the Liberals are being a little too opportunistic with the call for his dismissal.
Flaherty certainly should go, but it’s a little disingenuous to call for more stimulus spending then complain about a larger-than-expected deficit.
All along, the opposition parties have been calling for more spending, saying the government hasn’t been doing enough to help Canadians cope with the recession. While one can argue Flaherty’s measures have been ineffective – stimulus funds have been flowing like molasses – increased spending of the type we’ve seen can only lead to larger deficits.
Forecasting a deficit of about $34 billion only a few months ago, Flaherty this week said that number could hit $50 billion. He blamed the increase on falling tax revenues, higher employment insurance claims and an auto industry bailout that has soared beyond initial estimates.
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The growing deficit is alarming but not really surprising under the circumstances. In reality, it’s much smaller proportionally than the deficits in other industrialized countries, at about 3.2 per cent of Canada’s gross domestic product. That compares favourably to the 14 per cent in the U.S. and 10 per cent in the likes of Japan and the U.K. While numerically higher than previous deficits, $50 billion is smaller as a percentage of the overall economy, which has grown considerably since the record deficits of the 1980s and early ’90s.
Harkening back to those days, however, would give the opposition plenty of fodder to lambaste Flaherty and the man who pulls his strings, Prime Minister Stephen Harper.
The last time Canadians saw record deficits was under a Conservative government, one that advanced trickle-down economics, cutting taxes to the wealthiest while boosting spending, often on pet projects and measures designed for political gain rather than the common good. Sound familiar? It’s precisely what has happened under Harper. This despite the fact that he’s championed the opposite course.
Such ill-advised moves as cutting the GST by two percentage points – the economic impact was negligible – and ramping up spending in an attempt to buy a majority left the economy in poor position to deal with the downturn. The Liberals can certainly make hay of that. The same goes for Harper’s don’t-worry-be-happy approach to the economy last fall even as everyone else was bracing for a recession – both he and Flaherty claimed there would be no deficit under their watch.
Clearly this government has no real handle on the situation. Yes, the recession goes well beyond any one country’s control, but that doesn’t excuse the fact Harper and company appear to be lurching from surprise to surprise, seemingly caught unawares at every turn.
Canadians recalling the fiasco that was the last Conservative government will note that it took the policies of then- finance minister Paul Martin to set things straight. Years of surplus followed. With the election of Harper’s Tories, it didn’t take long to flush away the surpluses on the way to another record deficit. We can see a pattern developing here.
Flaherty’s stock is tumbling faster than GM’s, but if sacked he would simply be replaced by another mouthpiece for Harper’s policies – his departure would not change the government’s direction.
Instead of simply calling for Flaherty’s head over the surging deficit, the Liberals need to position themselves as the party capable of correcting Conservative mismanagement.