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Harper makes a deal with democracy to stay in power

From Wednesday's Globe and Mail

Now that Stephen Harper has made his Hobson's choice, we can get down to figuring out for just what price he sold his soul to hang on to power.

Did he sacrifice all of his Conservative convictions just to stay on at 24 Sussex Dr., or wherever he ends up crashing while the Prime Minister's residence is – infrastructure spending oblige – being repaired? Or just some of them?

Mr. Harper may not be eligible for a rebate under the $2.5-billion home renovation tax credit included in Tuesday's big-spending budget. But it's clear he's counting on it and the other $38.4-billion in stimulus measures it contains to subsidize his own survival.

We know that Mr. Harper “chose” to plunge Ottawa $64-billion into the red over the next two years about as much as a spy with a gun to his head “chooses” to surrender classified information to an enemy power.

But, really, can there be any greater act of capitulation for a former head of the anti-government National Citizens' Coalition than actually increasing the size of government? It's a rate of evolution at which Darwin would marvel.

By the end of Mr. Harper's two-year stimulus plan, federal spending will have increased by almost 15 per cent. Federal program spending as a proportion of Canada's economy will grow to 14.7 per cent in 2009-2010 from 12.9 per cent in the fiscal year that ends on March 31. That is partly because the overall economy is shrinking, but it's mostly because Ottawa is growing.

This, of course, was Mr. Harper's Hobson's choice. Finance Minister Jim Flaherty provided the understatement of the year yesterday when he said he had found a “remarkable degree of consensus” among Canadians during his prebudget consultations.

If, by yesterday, any dissenting voices were still questioning the need or effectiveness of a stimulus package of this size, they were buried under the mountains of gravel that were metaphorically dumped across Canada as the Big Spend and Build of 2009 got under way.

Mr. Harper is not the first conservative to cave under the circumstances. Germany's Angela Merkel had stood out as a lone European leader resisting the rush to ramp up deficits. As late as last month, her Finance Minister, Peer Steinbruck, was denouncing the “bidding war where everyone in politics believes they have to top up every spending program.” That was before Ms. Merkel and Mr. Steinbruck this month announced their own €50-billion ($81-billion) package.

If anyone can find a thread of ideology in this budget – and New Democrats will try, seeking any pretext to trash it – it's not of the right-wing variety. The personal tax cuts it offers are tiny – representing a mere 15 per cent of the overall stimulus – and they are overwhelmingly targeted at low- and middle-income earners. And most of them would have eventually kicked in even if the government had done nothing, since tax brackets are indexed annually to inflation.

Compare that with the $275-billion in tax cuts over two years the new Democratic U.S. President is dangling to get Republicans in Congress to support his stimulus package, even though he doesn't need their votes to pass it. Barack Obama's tax cuts are expected to make up fully a third of his stimulus.

And the NDP still calls Mr. Harper a neo-con? No wonder The Daily Show's Jon Stewart fell down laughing when he found out that Canada even had a Conservative Party.

Still, Mr. Harper has not spent so much in this budget that he can't buy his Conservative soul back.

First of all, this is not a New Deal budget. It does not signal a return to activist government. It includes no reforms that would change the direction or role of the federal government. It promises that the size of government will begin to shrink again, and surpluses return, once the private sector recovers enough to pick up the slack (although one might be tempted to say “promises, promises”).

Other than a timid step toward the creation of a national securities regulator, there is no attempt to use an economic crisis as an excuse to undertake a jurisdictional power grab. The budget does not pick industrial winners or losers (the previously announced auto maker loans notwithstanding). There is no “bailout” for the forest industry.

The total lack of economic dirigisme might be denounced as a sign of intellectual laziness, in that the budget is sadly uninspiring when it comes to measures that will “ready the economy to create the jobs of tomorrow.” True, there is a short-term boost to the training budget, but a permanent boost would probably be better. The need for it won't end when the recession does.

But Mr. Harper no doubt hopes that, by then, he can be a true Conservative again.

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