Liberals spend like Liberals
No big surprise there
There are reasons to be concerned about the free-spending budget introduced by the Liberal government Tuesday, but Canadians can’t legitimately claim to be surprised.
The party of Prime Minister Justin Trudeau ran on a pledge to spend wild amounts of money. Trudeau made hundreds of promises, most of which required more spending. He claimed he could do so, keep borrowing to a minimum and still balance the budget in four years. It was never a credible promise and plenty of observers warned it wasn’t possible to layer the country with new spending and still keep to the budget numbers cited by Trudeau. People didn’t care, and voted Liberal anyway. It’s like warning them not to eat too much ice cream. They know it’s not necessarily good for them, but they can’t resist. On Tuesday, Finance Minister Bill Morneau offered them 29.4 billion delicious flavours. Yum!
As the Ottawa Citizen’s David Reevely noted, Trudeau is doing for Canada what the Ontario Liberals did for Ontario. Trudeau has become a big fan of Ontario Premier Kathleen Wynne. The pledges he’s making now sound very much like the ones her Ontario party has been making for years.
When they came to power in 2003, the Ontario Liberals pledged to balance the budget. They still promise to do so … in 2017, in time for the next election. Meanwhile they have added $ 177 billion to the provincial debt, which is now more than double what it was when they took office and will soon pass $300 billion. The delay resulted from the government’s conviction it needed to “invest” in important programs before it could balance the books. It has been “investing” ever since, and still has massive “investing” plans ahead.
According to t he Ontario theory — the same one Morneau propounded Tuesday — all that investment should have produced a strong and vibrant economy by now. Ontario should be the motor of Canada’s growth, a beacon of prosperity that shines as an example to the rest of the country. It isn’t quite that. Thanks to the weaker Canadian dollar and U. S. growth, it’s doing slight- ly better than a few years ago, but at a heavy cost. Just servicing the debt now sucks $1 billion a month out of public revenue, the third biggest expense after health and education.
That hasn’t disquieted Morneau. He insists Canada can do what Ontario hasn’t: borrow, spend and use the resulting revenue gains eventually to restore balance. “Eventually” is the key word here. As with the Ontario Liberals, that happy day will only come somewhere down the road, when enough “investing” has taken place to produce a strong and robust economy. Until then, the debt, and the cost of servicing it, will continue to grow.
Some financial gurus say this is no big deal. Interest rates are low, and Ottawa can afford it. Of course it can. Unless, like Ontario, it keeps piling up the debt without ever paying it down. Then the carrying costs become significant and start eating into its ability to continue funding its programs. Then, like Ontario, it has to cut costs, and gets into battles with public servants and interest groups that want the spending to keep growing. But that’s down the road … years away. Right now it’s all ice cream.
People don’t worry about public finances the way they worry about personal finances. They also aren’t upset that the Liberals have broken so many promises. The list was already lengthy when Morneau rose to deliver his budget speech, and by the time he took his seat again, several more pledges had been jettisoned. The $ 10- billion cap on deficits — broken. The balanced budget in f our years — broken. The pension promise to veterans — broken. The debt- to- GDP ratio — hanging by the skin of its teeth. But polls suggest the government is still extremely popular. Because people love ice cream.
Politics is about what sells. Just ask Donald Trump. When confronted about the vulgar quality of his presidential campaign — the untruths, the insults, the bigotry, the arrogance — he has a standard reply that goes like this: “I’m winning, right?” The game is about winning, and the Liberals are winning.
It’s pointless complaining. We elected these people and their plans were no secret. The cost will come later, as always.