National Post (National Edition)
THE LIBERALS BATTLE FOR THE CENTRE-RIGHT
One look at the glum faces on the Conservative benches this week tells the tale: they’d been had, and they know it. Were the PMO’s word warriors not so caught up trying to discredit Justin Trudeau’s three-years-inthe-making plan to take back the middle class (formerly known as people who “work hard and play by the rules”), they might be tempted to admire it. Save for the niggling detail of a tax hike for the top one per cent of earners, it’s not unlike what the Tories themselves might have conceived, under a former finance minister named Flaherty. And it marks, among its other curious and interesting aspects, the Liberal party’s final concession in the long-running ideological battle of big government versus small.
Small is beautiful, the Grits may as well have said: We give. We’ll do it your way. Now let’s see who wins.
The details of Trudeau’s plan, dubbed “Fairness for the Middle Class,” have been widely disseminated, thanks to a brief, easily digestible package of information, complete with individual case nuggets of the kind pioneered by the Harper Conservatives a decade ago.
Let’s recap: those earning between $44,700 and $89,401, will see their marginal income tax rate drop to 20.5 per cent, from 22 per cent. Anyone earning more than $200,000 will see his or her marginal rate climb to 33 per cent, from 29. Fiscally this is intended as an even swap; $3 billion in at the upper end, $3 billion out in the middle.
Then there’s the proposed rolling of three Conservative family income supplements — the National Child Benefit Supplement, the Canada Child Tax Benefit and the Universal Child Care Benefit — into a single new package, the Canada Child Benefit, that is $4 billion more generous in total than the existing three supplements combined, (which now cost the Treasury $18 billion a year) and means-tested, in other words geared to income in its entirety.
Because of that sliding scale, the Liberals calculate, 90 per cent of Canadian families — all those with household incomes below $150,000 – would see their total benefit increase over what they’d receive under the recent Conservative budget.
This can all be done within a balanced budget, the Liberals say: it is to be paid for by rolling back income splitting for couples with children, expected to cost about $2 billion a year; by ending government advertising and by nixing the near-doubling of the maximum contribution to a tax-free savings account to $10,000 from the current $5,500. This, plus the Conservatives’ projected surplus of $1.7 billion for fiscal 2016/17, gets their plan to balance in its first year, the Liberals say.
Here’s what it amounts to, in a nutshell: a straight play for the sym- pathies of the vast majority, at the expense of the small minority of upper-income earners who will receive less and pay more. Nineteenth-century political economist John Stuart Mill posited “the greatest good for the greatest number.” The Liberals have tweaked that slightly, to “the biggest cheque for the greatest number — and tax-free.”
Set in the context of even recent history, this is an enormous philosophical shift. In 2005, Paul Martin adviser Scott Reid, now a political analyst, caused a furor when he said, in criticizing Conservative plans to establish the Universal Child Care Benefit, “don’t give people 25 bucks a week to blow on beer and popcorn.” Reid quickly apologized, but too late; the remark became emblematic of the Liberal tendency to create a bureaucracy to meet every social need, whereas the down-to-earth Tories put their faith in parents.
The talking point survives to this day, in regular references to the unerring judgment of “mom and dad,” versus the silo-building, aloof wastefulness of sad-sack bureaucrats, abetted by their statist, taxand-spend Liberal muses.
But with this plan, that dialectic is turned on its head. The Liberals, if their costing withstands independent scrutiny, are the ones offering the most hard cash to the most ordinary folk. Conservatives and New Democrat critics have found it difficult to lay an effective glove on this, in the early going, for the simple reason that it’s tough to criticize giving families back their own money — particularly so when all three major parties have spent the past two years pledging their troth to the middle class.
Can it founder? Certainly. The full costing must be independently scrutinized. It remains to be seen whether $3 billion annually can be scraped together from higher taxes on top earners, who can afford lawyers to help them evade and avoid. A recession could torpedo the looming surpluses on which the plan partly depends. And most importantly, Trudeau has to sell it. One more big gaffe may be all it takes for Canadians to decide to take a pass, and wait for someone else to come along, from whichever party, to run with this idea or one similar.
But the proposal itself, and its framing, are clever indeed. For months, Trudeau has been in a slump, leading some to wonder whether he’s lost his moment. With this, he’s back in the game.
Trudeau’s economic policies are not unlike
what the Tories themselves might have conceived under a former finance minister named
Flaherty