National Post (National Edition)
The Liberals can always find an excuse to spend, spend, spend.
Here’s a very sincere, nonrhetorical question: when would our federal Liberals think that it was a bad time to be ramping up government spending?
I ask only because I read right here in the National Post the other day that our worsening economic forecast might give Finance Minister Bill Morneau a chance to do exactly that. Reporter Jesse Snyder wrote, “Canada posted bleak economic numbers on March 1, with GDP growing just 0.4 per cent, the lowest in over two years. ... That has led analysts to begin lowering their economic forecasts ... (and) ... would cushion any desire on the part of the federal government to bulk up its budget in an election year, which often leads to higher spending geared toward potential voters.”
That last bit is key — it is indeed an election year, of course, and as you may have read, the Liberals have been struggling of late. There’s been this nagging little scandal they can’t quite seem to shake off, and they’ve taken a hit in the polls. A bit of an excuse to really open up the fiscal taps and throw some goodies around might be exactly what the Liberals are hoping for. A weak economy is a great opportunity to spend, apparently.
But then I realized, hey, wait a minute — according to these guys, isn’t a good economy also an opportunity to spend?
Turns out it is!
Just over a year ago, when the economy seemed much more robust, Morneau couldn’t have been happier about the chance to invest in Canadians. Check out this little slice of his 2018 budget speech: “The Canadian economy is doing well — remarkably well. Over the last two years, hard-working Canadians have created nearly 600,000 new jobs, most of them full time. Unemployment rates are near the lowest levels we’ve seen in over 40 years. ... Today, Canada leads all the other Group of Seven (G7) countries in economic growth ... That’s why we are able to invest in the things that matter to Canadians, while making steady improvements to our bottom line.” This “investment” included billions in borrowed money.
A year before that, it was much the same. Morneau said then, “In the last seven months, the Canadian economy has created a quarter million new jobs — the largest seven months of job gains Canada has seen in a decade. Unemployment has fallen in the time since we took office. ... That’s why we will continue to invest in our people, our communities, and our economy while maximizing every dollar and ensuring it is well spent.” These “investments” also included billions in borrowed money.
Now, in fairness, of course, all those speeches had the usual notes of caution and concern, too. But the overall message is clear: We’re doing well! We can afford to spend on the things we want!
Let’s rewind the clock a bit further, all the way back to the sunny ways days of 2015. Justin Trudeau was then the leader of the thirdplace party, and he was campaigning on deficits. Temporary deficits, you see, and just itty-bitty ones — $10 billion a year for three years, to stimulate the economy. The Conservatives and the NDP were promising balanced books, but the Liberals thought that more spending was needed. The economy had “faltered,” their platform said. Deficits were needed to “turn our economy around and get it growing again.” These deficits, the reader hardly needs to be reminded, proved neither modest nor temporary — the Finance Department projected three months ago that the budget wouldn’t be balanced until 2040, during which time Canada’s federal debt would grow by approximately $300 billion. Bit of a rounding error, that. Federal spending has grown from just under $300 billion annually in the last year of the Conservative government to almost $340 billion (projected) for the past year.
Hmmm. So ... when times are good, we should invest, even if we have to borrow, because we can afford it. And when times are bad, we should invest, even if we have to borrow, because we can’t afford not to.
This isn’t a new lament, I know. We’ve been here before. That’s why I know exactly how the Liberals will respond to the question I opened with. They’ll talk about infrastructure gaps and shortfalls (never mind the fact that their deficit-financed infrastructure plan became immediately bogged down in bureaucracy and failed to deliver anything close to the forecasted economic gains, according to the Parliamentary Budget Officer). The term “debt-to-gdp ratio” will be thrown around a lot. Stephen Harper’s name will be invoked — maybe even Mike Harris’s! Comparisons will be made to our economic peers, and Canada will be flattered by them.
And that’s fine. There’s nothing wrong with using debt to finance capital infrastructure development, especially when the project will provide economic and productivity benefits for generations. Debt-to-gdp is absolutely a useful metric for measuring an economy’s health. Our fiscal position is certainly better, relatively speaking, to many of our economic peers. I’m happy to grant all those points.
But none of them actually answers the question — when would the federal Liberals think it was a bad time to be throwing a lot of extra cash around? It’s not when times are bad, clearly, and it doesn’t seem to be when times are good, either. Perhaps there is some Goldilocks-esque formula for this that they could share with the voters? Because at a certain point, the constant focus on growing the government and increasing spending, even if we need to borrow, starts to seem less like a plan to cope with bad times, or an opportunity offered by good times. It starts to just seem like a political preference. Or maybe even a habit.
It’s a dangerous habit. The world has a bad way of springing nasty surprises on us. Our fiscal capacity to borrow is something to be protected during good times so that it’s there in the bad. It’s how we cushion the shock of economic crises, disasters and wars. We’re doing ourselves no favours if we spend as happily in good times, because we can, as we do in bad times, because we must.
DEFICITS PROVED NEITHER MODEST NOR TEMPORARY.