Bud­get 2018

Policy - - In This Issue - From the Edi­tor / L. Ian Mac­Don­ald

Wel­come to our cover pack­age on Bud­get 2018. Fi­nance Min­is­ter Bill Morneau tabled the Lib­eral gov­ern­ment’s third bud­get in the House on Fe­bru­ary 27, be­fore set­ting off to sell it on tour dur­ing the two weeks of the par­lia­men­tary March break.

The bud­get has played to mixed re­views; as a po­lit­i­cally as­tute doc­u­ment build­ing Lib­eral sup­port among women and pro­gres­sive vot­ers on the one hand, but one that failed to move to­wards bud­getary bal­ance on the other. Af­ter cam­paign­ing in 2015 on a prom­ise of run­ning three years of $10 bil­lion stim­u­la­tive deficits, the Trudeau gov­ern­ment is ring­ing up $90 bil­lion of deficit spend­ing over five years, with bal­ance nowhere in sight. And this dur­ing good times, with strong eco­nomic and em­ploy­ment growth, when gov­ern­ments nor­mally move to­ward balanc­ing the books.

As Rachel Cur­ran notes in her ap­praisal of the bud­get, the Lib­er­als are ful­fill­ing po­lit­i­cal im­per­a­tives on a shaky fis­cal foun­da­tion. But as the for­mer se­nior pol­icy ad­viser to Prime Min­is­ter Stephen Harper also writes: “Bud­get 2018 con­tains a mix of good, in­dif­fer­ent, and ter­ri­ble pol­icy, but it ap­peals to the gov­ern­ment’s cur­rent and po­ten­tial sup­port­ers while avoid­ing any ob­vi­ous tar­gets of at­tack, and thus must be counted a po­lit­i­cal suc­cess.”

From BMO Fi­nan­cial Group, econ­o­mists Dou­glas Porter and Robert Kav­cic ob­serve that: “Against a back­drop of ag­gres­sive U.S. tax re­form and NAFTA un­cer­tainty, Morneau played it safe with a largely stand-pat fis­cal plan, al­low­ing re­cent eco­nomic strength, de­ferred in­fra­struc­ture spend­ing and some tax in­creases (yes, in­clud­ing a pot tax) to fund yet another spend­ing boost.”

For­mer Par­lia­men­tary Bud­get Of­fi­cer Kevin Page, now pres­i­dent of the In­sti­tute for Fis­cal Stud­ies and Democ­racy at Univer­sity of Ot­tawa, looks at spend­ing in a growth econ­omy ver­sus sus­tain­abil­ity in a down­turn.

Page’s IFSD col­league, chief econ­o­mist Ran­dall Bartlett, says the bud­get may look like a “noth­ing-burger” but not if you look closer. Also from the IFSD, in­fra­struc­ture ex­pert Az­far Ali Khan sees it as a Se­in­feld mo­ment: Ya­dayada-yada, all talk and no ac­tion, with none of the bud­geted in­fra­struc­ture funds hav­ing been rolled out yet.

Per­rin Beatty, pres­i­dent of the Cana­dian Cham­ber of Com­merce, won­ders how and when its pol­icy and po­lit­i­cal an­nounce­ments will be paid for. As he writes: “The fun­da­men­tal ques­tion about how we pay for them was left high up in the air. Bor­row­ing more and run­ning higher deficits just punts the prob­lem into the fu­ture.”

Econ­o­mist Jack Mintz writes that the bud­get fails to re­spond to the U.S. cor­po­rate tax cuts that threaten Canada’s com­pet­i­tive­ness.

Fi­nally, colum­nist Don New­man looks at the bud­get as “ba­si­cally NDP Light.” One of the tar­gets was the NDP and its new leader Jag­meet Singh, seek­ing to re­claim vot­ers on the left.

In Canada and the World, we be­gin with Robin Sears and his com­pelling ac­count of the NDP pol­icy con­ven­tion in Ot­tawa in Fe­bru­ary.

Our lead for­eign af­fairs writer, Jeremy Kins­man, fol­lows up on Don­ald Trump’s recog­ni­tion of Jerusalem as the cap­i­tal of Is­rael and does not see it as a pos­i­tive game changer. “The core is­sue of Jerusalem,” he con­cludes, “in­cites deeply emo­tional na­tion­al­ist and re­li­gious pas­sions.”

In his an­nual Let­ter from Davos, con­tribut­ing writer and BMO Vice Chair Kevin Lynch, writes that “Pres­i­dent Trump’s last-minute de­ci­sion to at­tend and speak added po­lit­i­cal drama, celebrity in­ter­est and a deep funk among ad­her­ents of a lib­eral, glob­al­ist trad­ing order.”

In her up­date on the NAFTA talks, Sarah Goldfeder of­fers an in­sight­ful anal­y­sis of where the talks stand and prospects for progress.

In a book ex­cerpt from Mas­ter of Per­sua­sion, Fen Osler Hampson re­counts Brian Mul­roney’s fight against apartheid and his role in lib­er­at­ing Nel­son Man­dela af­ter 27 years in a South African prison.

Fi­nally, we of­fer a spring list of book re­views.

Su­san Dela­court has a favourable take on Shawingan Fox, Bob Pla­m­on­don’s in­sider nar­ra­tive of Jean Chré­tien’s lead­er­ship of the Lib­eral Party and the set­tling of scores with the Paul Martin Lib­er­als.

James Baxter gives a thumbs-up to David Frum for his best­selling Trumpoc­racy: The Cor­rup­tion of the Amer­i­can Re­pub­lic.

Mike Coates con­sid­ers Could It Hap­pen Here? Canada in the Age of Trump and Brexit, by poll­ster Michael Adams. And for­mer For­eign Af­fairs Min­is­ter John Baird was im­pressed by Mas­ter of Per­sua­sion, Fen Osler Hampson’s au­thor­i­ta­tive ac­count of Brian Mul­roney’s for­eign pol­icy.

En­joy.

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