Friday, May 30, 2008

If You Take Credit for the Economy Being Up Then You Should Wear It When It Tanks

after 21 months in office, our economy is strong
- Stephen Harper – November 7th, 2007

“our economy is on solid ground….Our economy has grown by six percent in the last two years and unemployment is at the lowest levels in the past ten years.” Hill said those numbers did not happen by accident but rather through strong leadership at the federal level.
- Jay Hill, MP, Prince George-Peace River, Secretary of State and Chief Government Whip – January 30th, 2008

“As we settle into 2008, Canada's economy is strong, thanks to good economic stewardship and strong leadership.”
- David Sweet, MP, Ancaster-Dundas-Flamborough-Westdale (ADFW) – February 22nd, 2008

There are surely many more examples one could find with a little more time, but if Conservatives credit Harper and Flaherty’s leadership as being responsible for a strong economy (even though that strong economy was in place when he took office from the Liberals), then surely Conservatives will be stepping forward to accept that that very same “strong leadership” is responsible for our economy now teetering towards recession.

Canada's economy contracted in the first quarter of the year, the first time in five years that the country's output shrank outright, raising the spectre of a recession. But Finance Minister Jim Flaherty quickly dismissed such fears.

Real gross domestic product declined a harsh 0.3 per cent at an annualized rate, Statistics Canada said Friday, exposing an economy far weaker than economists' projections of 0.5 per cent growth in the first three months of the year.

“This is a bitterly disappointing and surprising result,” Dale Orr, chief economist for forecasting firm Global Insight Canada, said in a note to clients.

Canada's contraction stands in stark contrast to the 0.9 per cent expansion registered for the first quarter in the United States, where recession fears weigh heavily.

Friday's Canadian numbers raise the possibility that Canada may be in a mild recession, while the United States may be able to avoid one.

Global Insight has been forecasting growth to weaken further in the second quarter in Canada - although firm numbers won't be published until next week. The popular definition of a recession is two straight quarters of decline in real GDP.

The Conservatives spent the cupboard bare and budgeted so close to the line that now there is an extreme risk of plunging our country back into deficit. What Flaherty’s forecasts say we won’t? Ok well Flaherty’s forecastssure didn’t say there would be negative growth in the last quarter either. He has absolutely failed as a finance minister putting our economy at tremendous risk with reckless spending and moronic cuts to the GST that no one has actually noticed in their day to day lives (because you guessed it so many retailers just increased their prices accordingly to compensate). As a result the Treasury has been drained at no benefit to the economy and we have Jim Flaherty and Stephen Harper to thank.

Come election time Conservatives will have to explain how we went from the best economy in 30 years with large surpluses to (actual or near) recession and close to being in deficit all the while cutting the sorts of taxes that have provided no benefit to the economy. Some strong leadership for the economy alright.

Canadians deserve better and will be better able to trust a Liberal government that fixed a Conservative mess and managed a strong economy for 13 years rather than a party that brought our economy down the tubes in the span of just 2 years. If Conservatives are going to run as strong economic managers or even fiscal Conservatives in the next election I say good luck to them.

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The Grumpy Voter said...

>>Canadians deserve better and will be better able to trust a Liberal government that fixed a Conservative mess and managed a strong economy for 13 years<<

See, now Danielle - when you write something like that it's blatantly partisan and, well, frankly, beneath you.

It can be argued that 13 years of Liberal government benefited from free trade (under Muldoon's watch) and further ratified by Chretien under NAFTA. Globalization, for all it's faults brought about an era of prosperity, but, alas - the good times can't last forever.

Now as I recall, being the grumpy old fart that I am, there was this guy named Trudeau who created the nanny state and very nearly bankrupted the country. Mulroney got in, inherited Trudeau's massive deficit spending and only made matters worse.

The Liberals with Paul Martin at the helm of finance GUTTED the public service, GUTTED social spending (I worked in the non-profit sector for years - the Liberals downloaded programs and service onto the charitable sector and yanked funding like it was going out of style) all in the name of getting a grip on the deficit.

As well, under Paul Martin's watch as finance minister, he created the EI Surplus (which successive auditor generals kept telling the government to stop over charging - which of course the Liberals refused). So it can be argued that the surplus is the direct result of a Liberal government cleaning up a Liberal mess and taxpayers footing the bill for it.

Not trying to be a prick here, but we grumpy voters are a skeptical lot. We're tired of government blaming the previous government for everything from a bad economy to a deficit. The fact is, and you should know, that whoever takes over at 24 Sussex inherits the bad policies of their predecessor - so blame is always shifted on the other guy.

Danielle, we're not that stupid. :)

jaybird said...

I have to agree with grumpy on this one. I would add that I agree that the Cons have an agenda to shrink government and its capacity to spend (should be no surprise to most folks) and that they have depleted the surplus. That is certainly an action that they should be held accountable for.

The overall economy, that is harder given that most voters will look south to the US economy (their debt/deficit, subprime, meltdown etc) and they will likely blame that more than any government.

To return to the shrinking surplus, if the LPC is so worried about the Con agenda to shrink government and its fiscal capacity to fund programming why oh why won't the LPC join the NDP and do their job and vote this government down?

Just like the Cons can't claim the economy in good times and deny responsibility in bad, the LPC can't claim to be fighting the Con agenda when they either vote to prop up this government or abdicate their responsibility as 'official' opposition.

Danielle Takacs said...

Grumpy I think you missed the point of this post and the title. The Conservatives tried to claim credit for a strong economy saying it was due to THEIR strong leadership. So too then they must accept that it is THEIR strong leadership that is leading us to recession. You can't have it both ways.

Though with respect to your other points the facts are what they are the Mulroney Conservatives left behind a massive deficit and debt. Whether it was due to Trudeau is beside the point Mulroney/Campbell didn't make the hard choices necessary to deal with the situation under his watch. As the PCs were leaving office there was even talk of calling in the IMF at the time and the Wall Street Journal musing about Canada becoming a third world country. The Liberals eliminated the deficit and dramtically paid down the debt and in the end we had the best financial situation in the G-7/G-8. Now I think there remains legitimate debate about whether the cuts needed to be as deep as they were, but I think everyone agrees that difficult decisions were necessary to bring things under control. Even the NDP officially agrees with that and believes it was important to eliminate the deficit. In the end the Liberals restored most of the social spending cuts they made by the end of their tenure (they also cut taxes but it can said those helped the economy and at least they cut the right taxes unlike the Conservatives now).

Of course though its crazy to say its all thanks to the Liberals that the economy did well under their tenure. Outside forces always play a role. What I can say is that they were sound economic managers who made tough decisions to get our fiscal house in order.

This government was handed the best fiscal situation ever handed to an incoming government. I and I think people like Jaybird agree that they have been reckless with the Treasury - last years budget (that the Liberals voted against remember) was the biggest spending in history and was so focus group driven it accomplished very little for our economy.

This year's budget cotained some worthy initiatives but it went WAY too close to the line for a time when economic forecasts are uncertain.

If we go into deficit then it will be clear who to blame. In the end Flaherty's forecasts were wrong and the Canadian economy is not doing at all as well as he was confident it would be.

As for Jaybird's point that the Liberals should bring down the Conservatives because they disagree with their policies have you never heard of short-term pain for long-term gain? If the Liberals went now and lost we would get the opposite: short-term gain (Harper's current policies on the order paper stopped) for long-term pain.

We get one chance within the next year to ensure Harper doesn't get a renewed mandate it is being willfully blind to pretend otherwise. Don't you think a renewed Harper government would be even worse Jaybird?

My view is we go at the best time to win (to be clear though I did support going in June), but if we had gone earlier there would have been no RCMP raid for In and Out, no Bernier affair scandal breaking out in worldwide media and there are surely more to come and many other issues still lingering like the NAFTA leak, Cadman (that the NDP are strangely opposed to looking at) and others. What's important is that come election time Canadians are convinced that this government needs to be thrown out of office.

I would say though that if we wait until October 2009 I will be quite disappointed. I am hoping for a solid summer selling the carbon shift and an election in the fall. We will see. I actually wouldn't mind if as many Harper policies were left on the order paper as possible when Parliament rises for the summer though. Then he likely won't porogue or else he'd kill his agenda.

Jaybird let me ask one question, do you not think the priorities the NDP deems important would be better addressed under a Dion government than under a Harper one? Just compare even the Martin government to the Harper one and you should have your answer. Therefore it would be better if the NDP didn't keep regurgitating Conservative talking points and focus on getting a government that will address the priorities that both the NDP and Liberals deem important.

Finally...Grumpy you said the post is partisan, well I write here expressing my opinions. Are my opinions biased by my political preferences? Yes as is the case for most bloggers out there (including Kinsella during the provincial election). It doesn't make what I or what anyone else writes not a legitimate point of view (and I wouldn't say its not their actual opinion either). I say its up to others to argue on the merits why I'm (or any other blogger for that matter) wrong and I'm happy to debate with them.

I do however push the Liberal party to adopt policies or strategies they aren't currently doing. So when the Liberals do things I like I applaud them, when they aren't doing something I think they should be I say so. When the Conservatives do something I think is terrible I also say so, but at the same time I have applauded them on some occasions for doing the right things sometimes to.

The Grumpy Voter said...

>>Whether it was due to Trudeau is beside the point Mulroney/Campbell didn't make the hard choices necessary to deal with the situation under his watch.<<

I didn't say the post was partisan, just that one statement I initially commented on. That said, whether it was Trudeau or Mulroney's fault is very much the point - it was collective fault Danielle.

When Trudeau became Prime Minister in 1968, our national debt was $18 billion - by the time he left office in 1983, it had ballooned to $200 billion or 46% of GDP. Mulroney only added to the deficit spending madness that was indicative of the Trudeau era to the point where our deficit ballooned to a further 57% of GDP.

Also Campbell couldn't make any hard choices, she had her ass handed to her in the election. Am I saying that fiscal restraint brought in under Martin's time as Finance Minister weren't necessary, absolutely not. Every province in Canada during the 1990's basically ripped a page out of Martin's playbook and gutted their own public service as well as downloaded social services onto the charitable sector to slay their own deficits.

Has Harper squandered the surplus? Well the surplus was, in large part, generated through the creation of the MASSIVE EI surplus, so it can be argued that with GST cuts, perhaps Harper is giving back some of our money. That said, I would prefer that he didn't eliminate the GST and that he should have reverted back to the old Unemployment Insurance program that we had before Martin used it as his personal compound interest earning account for successive Liberal budgets.

So, to be clear - I didn't say your post was partisan - just that one statement. Also, both Trudeau AND Muldoon sucked ass because they created the massive debt and deficit spending, therefore BOTH share the blame. I'm sure you'd agree with that point - can't argue with the stats Danielle, they point to a generation and a half of deficit spending that started with Trudeau and ended with Chretien as the PM.

The key to remember about what Harper is doing is that he's trying to hamstring future governments by eliminating any budgetary surplus so they can't buy elections like they used to. Harper is an ass, but on this point, I agree with him. It's our money, not a bank account for Tories or Liberals to buy elections in vote rich Ontario and Quebec.

One thing you should consider: Harper, as big of an ass that he is, could conceivably win a majority in the next election by promoting income splitting between married couples. (Something I highly support for a whack of reasons I won't get into).

I would even predict that this policy could be the centerpiece of a Tory campaign and your guy's Carbon Tax would be battling against it.

Which one do you think the middle class would support most: a carbon tax or income splitting?

jaybird said...

Danielle: I think that the LPC is all talk and little to no walk. I lived through the Harris years in Ontario brought to you by the Paul Martin cuts and downloading.

I worked on the equal marriage campaign and watched 30 odd MPs from the 'Party of the Charter' say that LGBT Canadians did not deserve equal rights under the law.

These are two examples of what I believe is the true LPC nature. Progressive voters keep voting for a party that betrays their values. I think that is sad for them and profoundly frustrating for progressives that want real change.

If the LPC had acted on Kyoto (instead of just talking about it) we would be in a far better place now in terms of the environment and the economy.

If the LPC had delivered on the many promises for national child care things would have been a lot easier for my sister and her family.

If the LPC had used even some of the EI surplus for workers instead of tax cuts for corporations, corporations that were never required to keep jobs in Canada, the auto sector and other manufacturing sectors would be better off today.

I have no issues with John Manley and Paul Martin liberals when they don't pretend they are progressives. My frustration is with progressive voters who vote liberal who keep doing so with the expectation that things will be different. They won't because progressives will only ever be a rump in the LPC. Progressive activists helped get Dion elected and he is surrounded by the old boys and girls of the party and they continue the Liberal tradition of setting aside any and all principle in favour of pure politics.

Sometimes change involves risk. You know the saying - with risk comes reward...I am prepared to risk.

South of us, Democrats had a choice to go with more of the same and (thank god IMO) they didn't. That was a risk for them and I believe that we will all see the reward for their courage.

If any reader identifies with what I have written they should visit and find out which party is truly fighting the Harper Conservative Agenda.

Danielle Takacs said...

It's been a long week, but I thought I would finally get back to the latest comments.

Grumpy: We've debated to death the merits of the carbon shift - I've made my points and won the debate I would think :).

Though income splitting vs. a carbon shift is an interesting scenario. Though last I heard income splitting would cost $5 billion a year. Putting that up against a revenue neutral carbon shift when we are so perilously close to deficit seems like surrendering fiscal responsibility entirely to the Liberals.

If the Tories really wanted to do income splitting they shouldn't have cut the last percent off the GST, with that they sealed off room for any further tax cuts within the current economic climate without equivalent rises in revenue elsewhere (or massive spending cuts which certainly never get put forward in an election campaign). So I would be very surprised to see them move with that in the next campaign as it wouldn't be seen as affordable never mind the merits of it (which is a COMPLETELY seperate debate).

Jaybird: You continue to refuse to answer my question.

Do you not think the priorities the NDP deems important would be better addressed under a Dion government than under a Harper one?
Did they not receive more attention under the last Liberal government than under this one?

You can talk about the past but the Liberal Party has become more progressive over time and continues to. Even Jack Layton said Stephane Dion is a man of "principle and conviction" who would be much more trustworthy than any other Liberal leader. He basically admitted at your own convention that Dion would be a progressive Prime Minister but yet seem convinced the Liberals would never elect. Well we did and I'm confident Dion would chart a progressive course while also being fiscally responsible and the actual priorities the NDP says are important would be addressed.

You can say Liberals are surrendering principle for politics with abstaining all you want but you refuse to admit the reality - we get ONE chance to ensure Harper doesn't get a renewed mandate so it is short-term pain for long-term gain. I'd rather that then short-term gain (a few Harper policies stopped) for long term pain (another Harper mandate).

The NDP don't seem to care though if Harper wins again so they are actually the ones playing politics here with their posturing.

In reality it is laughable to claim the NDP priorities would EVER get addressed with a Harper government (name me ONE NDP priority Harper has taken on, just ONE), so unless you want them to NEVER be addressed then we need a Liberal government. Dion would be a Prime Minister all progressives would be proud of, while also providing the sound economic policies we need to get the economy moving again.