By Stephen Gordon - Wednesday, November 7, 2012 - 0 Comments
The “starve the beast” strategy works like this:
- Cut taxes.
- Wait until the resulting budgetary deficit becomes a problem important enough to solve.
- Cut spending in order to deal with the budget crisis.
- Go to 1.
The goal of this exercise is to steadily reduce the size of government. The idea has its origins in the US conservative movement, but US conservatives haven’t had much success in implementing it. Steps 1 and 2 work as advertised, but politicians can never get the hang of the third part.
By Aaron Wherry - Friday, February 3, 2012 at 11:13 AM - 0 Comments
March 2008. He also toured the Electro-Motive Diesel plant on Oxford Street where he met many of the firm’s 900 employees. Harper said his visit to the rail locomotive plant was intended to highlight tax measures from his government aimed at keeping manufacturers competitive.
Today. The company that owns the locked-out Electro-Motive plant in London, Ont. has decided to close the plant permanently. Progress Rail Services Corp., a subsidiary of U.S. construction conglomerate Caterpillar, announced “it is regrettable that it has become necessary to close production operations at the London facility,” in a release on Friday. The company locked out 450 workers from the facility on Jan. 1. Costs were the main factor in the dispute, with the company pushing employees to take a 50 per cent pay cut.
By John Geddes - Monday, August 15, 2011 at 4:53 PM - 40 Comments
With the United States and European Union staggering under debt burdens, Canada’s success in sorting out its fiscal problems a decade and a half ago is often held up as an example to emulate. But it’s a model I often don’t recognize, even though I covered the turnaround story back in the 1990s.
For instance, there’s this recent Washington Post piece, which touts the “Maple Leaf Miracle.” “Facing an unprecedented fiscal crisis, Canada got down to work,” it says. “The country passed a landmark budget in 1995. The plan tilted heavily towards cutting expenditures but also included some new revenue (the ratio was about $7 in cuts for every $1 of revenue). Canada cut the civil service by about 25 percent and overhauled its pension program. The plan worked.”
An American or, say, German fiscal hawk might well perk up at that prescription—cut public spending ruthlessly, laying off one in four government workers, while boosting the tax haul only very modestly by comparison. Sounds like a plan. Except it’s not the one that actually transpired in Canada.
By John Geddes - Monday, March 28, 2011 at 9:52 AM - 5 Comments
The rush to secure the middle class vote
Jack Layton wasted no time getting to the point. Striding into the foyer of the House to declare that his NDP MPs would be voting against last week’s federal budget—all but ensuring the Conservative minority would fall within days—Layton quickly accused Stephen Harper of failing the “middle class.” He proceeded to work into his denunciation of the budget a few more rapid-fire references to the most sought-after voter demographic group in the coming election. “Mr. Harper had an opportunity to address the needs of hard-working middle-class Canadians and families, and he missed that opportunity,” Layton said, adding seconds later that the budget didn’t “give middle-class families a break.”
Brace yourself to hear plenty about the hard-working, everyday, over-stressed Canadian middle class in the next few weeks. Layton is joining the Prime Minister and Liberal Leader Michael Ignatieff in trying to position himself as the champion of the most admirably unexceptional sort of family. The Harper government’s proudest boast, for instance, is that they’ve saved the average two-earner family $3,000 by cutting taxes. For his part, Ignatieff recently travelled the country on what he dubbed a “Working Families Tour.”
The tripartisan preoccupation with voting moms and dads nesting in nice suburbs might sound like politics as usual, but the uniform emphasis—almost to the point of obsession—is new. In the past, Harper’s strategists were often fixated on other sorts of demographic aims, like orchestrating a Quebec breakthrough. Under Paul Martin and Stéphane Dion, Liberals tried grand-vision platforms, like competing globally and taxing carbon, rather than targeted policies aimed explicitly at middle-class taxpayers. Taking over the NDP leadership eight years ago, after the party’s decline in the 1990s, Layton had to first rebuild its base—largely young and single, often less affluent—and has only recently made broadening into comfortable suburbs a prime electoral objective.
By macleans.ca - Friday, January 28, 2011 at 10:44 AM - 45 Comments
By Jason Kirby - Monday, January 10, 2011 at 9:40 AM - 6 Comments
US vs. UK: Stimulus spending vs. hard-nosed austerity
In late November crowds took to the streets in cities across the United States and Britain. As mobs rampaged and destroyed property, fights broke out and a number of victims were sent to hospital. By the time the ordeal was over, police had been called in to bring the unruly hordes under control, and two stunned nations were left to wonder how it had come to this. Mind you, those who rioted in the United Kingdom were students protesting deep government cuts to education spending. In America they were just Black Friday shoppers trampling each other to get to the discount bin at Toys “R” Us.
Since the Great Recession morphed into the Grudging Recovery last year, the U.S. and U.K. have taken radically different paths with their economic policies. In October, the coalition government of Tory Prime Minister David Cameron waged war on the country’s fiscal deficits with a vow to slash spending by $131 billion and raise taxes over the next four years. Meanwhile, across the pond, the Obama administration shook hands with Republicans last month to launch yet another round of stimulus in the form of temporary tax cuts and help for those out of work that will add US$892 billion to that country’s deficits over the next five years. While the British struggle to tighten their belts, American policy makers are doing everything they can to loosen theirs.
By Jason Kirby - Thursday, December 23, 2010 at 12:40 PM - 32 Comments
Signs point to a resurgent U.S. economy. And that’s good news for Canadians.
With the flood of facts and figures that rush by every day, it’s easy to lose sight of the bigger picture when it comes to the American economic machine. For every batch of positive news confirming a recovery, it takes just one bad jobs report or trigger-happy dictator in North Korea to plunge us back into doom and gloom. But Lakshman Achuthan, managing director of the Economic Cycle Research Institute, and someone who studied recessions and recoveries for two decades, has a message for anyone with an interest in seeing the U.S. economy get back on its feet. “The revival is right in front of us,” he says. “Overall economic growth is about to accelerate.”
Signs of America’s resurgence abound. Shoppers surprised analysts during the Thanksgiving weekend—they helped drive retailers to their best sales gains in four years. They’ve also begun to indulge again, driving strong revenues at companies like Starbucks and cosmetics giant Estée Lauder. At the same time, manufacturers have enjoyed a resurgence of late. Sales and exports are both up. It’s all helped boost America’s top line. In November, third-quarter GDP was revised up to 2.5 per cent from two per cent—the fastest growth rate the U.S. has seen since the end of 2006.
By Andrew Coyne - Monday, December 20, 2010 at 6:00 AM - 24 Comments
Everyone agrees that the deficit has to be cut sometime
Announcing he had reached a deal with the Republicans to extend the tax cuts enacted under his predecessor, President Barack Obama extolled the virtues of compromise.
Yes, he had agreed to hold taxes at current levels, not only for those earning less than $200,000 ($250,000 for couples), as he had previously vowed, but for everyone, as the Republicans had insisted. But in return, he had obtained GOP agreement to extend eligibility for unemployment insurance for another 13 months to those whose benefits would otherwise have run out.
Or in other words, the two sides agreed that, in exchange for taking in less revenue, they would spend more of it. The cost of the agreement: an estimated $900 billion over two years, “to be financed,” as the New York Times reported, “entirely by adding to the national debt.” Amazing what can be done by people of goodwill, provided you leave the people who will actually pay for it all out of the negotiations.
By Paul Wells - Friday, October 8, 2010 at 9:00 AM - 0 Comments
WELLS: The Liberals find a hope of beating Harper. But will it work?
“Have you seen our home care package? It’s being unveiled as we speak,” a Liberal party guy told me outside a Starbucks in downtown Ottawa. He showed me his BlackBerry, which was displaying something official-looking. “Focus groups are jumping up and down over this.”
That wasn’t hard to believe. That morning in Gatineau, Michael Ignatieff had announced a $1-billion program to help people care for aging relatives at home. More and more of us have aging relatives, so the Liberal plan addresses a real concern. The Liberal plan would use Employment Insurance to give caregivers half a year off work with modest pay. That’s the way parental leave benefits already work. Another element in the program would pay a tax benefit of up to $1,350 a year to people providing home care. That’s how the Canada Child Tax Benefit works.
So: a program designed to address a perceptible need in an aging society. Proven delivery mechanisms. Modest cost. (No, really: on $280 billion in program spending, $1 billion is modest. It cost a lot more than that to hold a summit meeting in Toronto this summer.)
By Philippe Gohier - Thursday, January 15, 2009 at 12:35 PM - 17 Comments
Today’s edition of Le Devoir has what it bills as an “exclusive interview” with…
Today’s edition of Le Devoir has what it bills as an “exclusive interview” with Michael Ignatieff in which the Liberal leader waxes politic about everything from the coalition to the upcoming budget. It’s hard to conceive of a situation in which he’d follow through on his threat to bring down the government, but Ignatieff certainly seems to have gotten the requisite pre-budget posturing routine down pat anyway.
Here’s what he had to say:
-On the budget: “Mr. Harper is talking about broad-based tax cuts for the middle class, while I’m talking about targetting tax cuts for the less-fortunate… If I see in the budget a permanent reduction in the government’s fiscal capacity to create conditions of equality for everyone, I will vote against it… I’m afraid that broad-based tax cuts might put us in a deficit situation from which we wouldn’t be able to emerge.”
-On going into an election: “I could lead the Liberal party in an election campaign at the end of January. The problem isn’t the Liberal party’s capacity to run a campaign. Our problems aren’t as big as people think.”
-On the coalition: “No one wants an election. That’s why we have agreed to a coalition that provides a credible and viable alternative.”
-On the Bloc: “I am a federalist, a proud Canadian, and I will never compromise the unity of my country. But I want to add that Bloc MPs are colleagues. They have been duly elected by the voters of Quebec. They are not traitors; they are not enemies of Canada. I profoundly disagree with their [goal of an independent Quebec] and always will. But to say, like Mr. Harper did, that you can’t negotiate make deals with them, that’s hypocritical, because he himself has often negotiated made deals with the Bloc. That made me really angry.”
By Andrew Coyne - Thursday, October 23, 2008 at 4:41 PM - 706 Comments
The instant, universal wisdom after the election — the more instant, the more universal, as always — was that the Green Shift was second only to Stephane Dion as a Liberal vote-killer.
Dion’s failings as leader are not in dispute here. And the Green Shift, as written, plainly failed to catch fire. You can’t argue with a popular vote of 26%.
But if the argument is that any plan that involves shifting the burden of taxation from income taxes to carbon taxes is unsaleable, that has not been established.
Why didn’t this Green Shift work, this time? A number of factors came into play:
2) Timing. The policy was put forward at a time of skyrocketing oil prices. That doesn’t negate its usefulness as policy, as I’ve explained elsewhere, but it did make it a harder sell with the public.
The credit crisis, erupting in the middle of the election campaign, made matters worse, adding seeming weight to the Conservatives’ message that now was not the time for “risky” experiments. Again, there wasn’t much substantive validity to this — not least since the Conservatives’ own cap-and-trade plan is just as costly, and twice as risky — but it sounded persuasive.
3) The NDP. Had the Tories been the only one demagoguing the issue, pretending that a carbon tax would be added to consumer prices but the costs of complying with cap-and-trade would not, the Liberals might have been able to make their case. But with the NDP as the Conservatives’ wingmen, it was no contest.
4) Most important, they botched the specifics. They lost their nerve; they tried to make the plan do too much at one go; they listened to the old pros who told them to use the money to pay off traditional Liberal constituencies, rather than just cut taxes. In sum, it wasn’t a tax shift, or not enough of one. Continue…