Sunday, January 18, 2009

The "Wear It" Narrative

There is a real danger, that the Conservatives successfully use this economic crisis to cover their own fiscal mismanagement. Two themes provide cover for the government, and it is the job of the Liberals to make sure the Conservatives "wear" the deficit.

The idea of a imported recession, not of Canada's doing, is the primary way the government can deflect responsibility. Couple the economic origins with the argument of relative fiscal strength, any deficit we incur, much less than other jurisdictions, and it softens the impact of running in the red. We've already heard many government Minister's reference the American deficit, to show things could be much worse. It's a fairly persuasive argument, because economists and pundits will support the notion of relative fiscal health. Canadians see deficits everywhere, the global reality more cause than our government's actions, we're still relatively well off.

The other theme, potentially problematic for the Liberals, the Conservatives can argue that we too support a massive stimulus, which makes a large deficit inevitable. How can you blame the government, when your own party supports a massive injection into the economy? You argued for a stimulus, now you blame us for a deficit, which your policies demanded? That domestic fact, in concert with all other countries providing stimulus, allows the government to argue deficits are just the reality of the situation, not a reflection of competence or management.

It is imperative, that the Liberals argue forcefully, from all quarters, repeated ad nauseum, until it's imprinted in our brains, the following:
Next week (Prime Minister) Stephen Harper presents his financial budget after a decade of Liberal surpluses," he said. "Where are we? We are facing a deficit of $40 billion and this deficit is squarely Mr. Harper's responsibility. He spent us down to the red line in the good times and so we face the hard times as citizens of this great country with the cupboard bare."

Michael Ignatieff

This government spent wildly, in the lead up to this recession, further eroding our fiscal room. This government embarked on a series of tax cuts, universally rejected from the same economic people that are now supposed driving the budget thought process. This government abandoned the contingency fund, which was put in place for exactly these sort of extraordinary circumstances. This government claimed to have prepared us for the coming economic storm, and yet they rendered the government impotent, destroying any fiscal room to act, without plunging us into deficit. YOUR children are on the hook for the Conservatives fiscal mismanagement, and structural deficits have returned.

Whatever the size of the deficit, the Liberals need to argue that it didn't necessarily have to be this way. It is true, that we do need to go into deficit, during this economic downturn, but the SIZE is entirely a function of Conservative blunders. If the government moves on more tax cuts for the middle class, the Liberals have a counter- we simply can't afford it, given the way the government squandered our fiscal health. The "cupboard bare", that is the legacy and we will all pay a dear price in the future, for that reckless management.

There will be an epic battle of "frames" in the coming weeks and months. It is beyond crucial that the "wear it" narrative takes hold, otherwise, in many respects, this government receives a pass for their past actions. This tug of war is the first real test for the new era Liberal Party, can it be heard against the sharp messaging campaign of the government? The words of our leader today suggests we understand the importance...

32 comments:

Anonymous said...

U Librals R idiuts

ottlib said...

Wow, how are we liberals ever going to respond to that comment. It is just so breathtaking in its insightfulness and intelligence.

knb said...

Boy, I wonder how tough it was for anon to figure out where to find the R on the keyboard.

Patrick Ross said...

Unfortunately, this argument doesn't really stand up to the facts of the matter.

For example, Paul Martin's last offered budget -- the one on which he was defeated -- budgeted for a $7 billion surplus.

Considering the figures for the budget that is apparently about to be budgeted -- $30 to $40 billion -- this would still have left Canada with a budget deficit of $23 to $33 billion, even under a Liberal government.

In the rush of many partisans to try to make the government "wear" this deficit, they're overlooking a basic fact:

This deficit is not the result of fiscal mismanagement, it's the result of the economic crisis. The economic crisis is the result of economic mismanagement, but that economic mismanagement occurred south of the border, in the form of dubious business decisions by financial corporations coupled with woeful under-regulation of those corporations that allowed for this mismanagement in the first place.

In short, the deficit -- and the economic crisis that has brought it -- aren't nearly as attributable to partisan opponents as you'd insist.

Steve V said...

That's your base Harpo.

Steve V said...

Patrick

The surplus was still rising when Harper took the helm. You don't remember Flaherty's first projections, how far off they were?

The simple fact, this government left us with NO fiscal room, because of their policies, which means the deficit will be far larger than need be.

janfromthebruce said...

I suspect that one of the main reasons Harper wants the libs to support the conservative budget, is so that the coalition does not get "to see" the govt books, and thus "see" the "hidden structural deficit" he already created prior to the economy tanking.
I know that Layton both publicly and in his private meeting has repeatedly asked Harper to show him the "books" so that the NDP could make an informed decision about the budget direction. Harper declined. I think that Harper is hiding that from the public, as remember, he and his finance minister had repeatedly said all was fine on that front.
I was wondering, did Iggy ask for this information too, so the libs can make an "informed sound financial decision" rather than one based on "politics"?
This is a thoughtful question, as I hadn't read anywhere where Iggy had. But I could have easily missed it.

Steve V said...

Harper assured the Libs that they could see the books in late December, but truthfully, I've heard nothing more since.

Patrick Ross said...

I don't recall off hand any $40 billion surpluses in this country at any point over the last four years, or the 13 previous to that.

The numbers speak for themselves: deficits under Harper, deficits under the Liberals.

And keep in mind that while some people were predicting an economic downturn, even those individuals never predicted anything like this.

I'm sorry to have to tell you that the deficit simply is not evidence of fiscal mismanagement. The numbers bear this out.

Steve V said...

"The numbers speak for themselves"

Yes, yes they do. First, you LIED about the surplus you inherited (using Flaherty's own numbers), then you basically ignore how the government blew the surplus (despite it growing WELL beyond their own projections), and you want to talk numbers. Okay.

ottlib said...

Patrick, everything you say is irrelevent.

So far, the full psychological effects of this recession and the upcoming deficits have not sunk in with Canadians. How could it? Up until three months ago the chattering classes were all saying Canada would be fine.

Once the full effects are felt any arguments about what started this recession and why the government is in a deficit situation will be moot.

Canadians will not care. They will only care about what the government is doing to help them get through it. Since governments cannot really do anything to prevent or shorten recessions there will be nothing they will be able to do. Of course, ordinary Canadians will not really know the government is helpless and they will perceive the government's inability to have any effect on the bad economy as a failure by that government, leading to the perception of economic incompetence on the part of that government. When that happens that government is finished.

Recessions are government killers. They have contributed to the destruction of countless governments worldwide and this one will not be any different.

Barak Obama should be fine. The worst of this recession should be over when he next has to face the American electorate. Although, the mid-term elections should be interesting. Any other government that has to face the voters within the next two years are going to find it difficult. That is most of the western democracies including Canada.

Patrick Ross said...

Excuse me, Steve, lied? Hardly.

I didn't use Jim Flaherty's numbers, either. I used numbers reported by the New York Times.

Beyond that, Steve, this is simple math. If the government hadn't "blown" the surplus, if they had run the surplus that Paul Martin budgeted in 2005, what would our current deficit be considering the loss of revenue resulting from the economic crisis and the extra spending included in the stimulus package?

$23 to $33 billion dollars. That, with less money being left in the pockets of Canadian tax payers as a result of tax cuts.

Now, as for OttLib:

There's nothing irrelevent about the numbers. Facts are never irrelevent.

If you're purely an "ends justify the means" type of thinker, then maybe you don't care about these things, and only care about the end result.

Steve V said...

Patrick

That's what the Martin government projected, when the final tally came in, the Cons inherited a 13 billion dollar surplus. And, remember what Flaherty projected in his first budget, how the surplus far, far surpassed his estimates.

Simple math, nnd nobody really disputes what the Cons inherited, except for you it seems.

Patrick Ross said...

So then even under the most ideal circumstances, the Liberals would still be running a deficit of $27 to $17 billion.

Now, the question I would pose to you, Steve, is this (let's see if you can answer it without baselessly accusing someone of lying or without namecalling):

If the Liberal party were in office when this economic crisis hit, do you believe they would have to "wear" the $27 to $17 billion deficit?

Steve V said...

Patrick

As I've already said in this post, a deficit is inevitable, but the size is a matter of responsibility. No, I don't the Liberals would have to wear a temporary deficit, half the size of what will be required now. People accept a deficit, but the Cons have effectively set us up for structural deficits, so even when the stimulus stops, the government will still be in the red. Also, if they include middle class tax cuts, which generate about a 10% return into the economy, they will ensure future deficits, unless of course they have more wireless auctions and insane oil royalties to mask their mismanagement.

The Liberals can make a strong case, that the magnitude of the deficit is a reflection of bad management, as well as the economy. I've already stated the counters, so the Cons can make a case, but most economists agree that the government "blew" the surplus.

Make the point, then it becomes what ottlib is arguing, the Liberals just help along the narrative of incompetence.

Patrick Ross said...

"As I've already said in this post, a deficit is inevitable, but the size is a matter of responsibility."

I agree with you. The size of the deficit certainly is a matter that the Conservative party will have to answer for.

One has to keep in mind, however, that much of this portion of the deficit is a result of tax cuts. That's money left in the pockets of many Canadians to help them through these hard times.

"No, I don't the Liberals would have to wear a temporary deficit, half the size of what will be required now."

So then you seem to admitting that the Conservatives don't have to wear the entire deficit, just the portion of it that they would be argued to be responsible for, even if mostly because they decided to let Canadian citizens keep more of their own earnings.

"People accept a deficit, but the Cons have effectively set us up for structural deficits, so even when the stimulus stops, the government will still be in the red."

Now that is simply not true.

Keep in mind that the Conservatives had modest surpluses budgeted.

The deficit will persist until the economy recovers. Once again, when one traces the causes of the economic crisis, it's hard to blame the Conservatives for the overall deficit.

"Also, if they include middle class tax cuts, which generate about a 10% return into the economy, they will ensure future deficits, unless of course they have more wireless auctions and insane oil royalties to mask their mismanagement."

Michael Ignatieff was in favour of permanent tax cuts for the middle class as recently as January 9th of this year.

So that is simply reaching.

Luke said...

"Watchdog blames likely deficit on Tories GST cut, high spending could mean shortfalls as high as $13.8B, budget officer warns
David Akin, Canwest News Service
Published: Friday, November 21 2008
OTTAWA - Parliamentary budget officer Kevin Page told MPs Thursday that Canada's deficit next year could be as high as $13 billion(stimulus package not included) and that Conservative government decisions to cut the GST and raise government spending are to blame, not global economic events."

Monday, November 24, 2008
"Ted Menzies, parliamentary secretary to Finance Minister Jim Flaherty, replied that the Tories' cuts to the GST provided $37 billion back into Canadians' pockets so they could prepare themselves for the economic downturn." (How can Flaherty claim the GST cuts was done to stimulate the economic downturn when they now claim they didn't see the economic storm coming?)
The cuts to the GST amounted to $37billion of lost revenue for the government.
How will Mr. Harper balance the $30-40 billion budget deficit when he promised during the last election he would not raise taxes?

Jeff said...

The squandered surplus is important, but a tight "wear it" narrative should also include the incompetence shown by Harper when, during the election campaign, with the shit hitting the fan in the U.S., he laid his economic reputation on the line with the prediction that the worst was over: “My own belief is that if we were going to have some sort of big crash or recession, we probably would have had it by now."

The squandered surplus and the squandered credibility make up the 1-2 punch.

ottlib said...

Patrick, don't be so naive. In politics perception is way more important that the facts. That is an axiom in politics.

In about six months the only facts Canadians will care about is the climbing unemployment rate and their fear for their jobs, pensions and livelihoods. They will look to the government for answers but the government will not be able to provide them because governments are virtually helpless in the face of recessions.

At that point the perception will be the government does not know what it is doing. It is incompetent in economic matters and voters will begin to turn on that government in droves.

That perception will not be true of course because the fact is governments cannot prevent or shorten recessions. However, that fact will be buried by the perception I described above and the government of the day will be finished.

So argue all you want about what caused the upcoming deficit. Whatever gets you through the night.

Steve V said...

"Keep in mind that the Conservatives had modest surpluses budgeted."

I can't take your seriously, if you've actually bought into the Flaherty numbers. Why do you think the government is trying to clip the wings of the Budget Officer? Only when the government was trying to save it's ass did Flaherty admit "rosy" numbers.

JimmE said...

How much have these mugs overpaid for their ARMY-MAN TOYS so they could look macho?
How much have these ARMY-MAN TOYS contributed to what will be any deficit?
FCUK all the ARMY-MAN TOYS!
I'm sick that as a country we put our fiscal house in order & killed lots of social justice programmes in the process all to arrive here, fighting a war, in deficit & with almost no social justice programmes, & a global warming denyer as our PM.
Let's Kill all the ARMY-MAN TOYS in the pipeline (& sadly the CAF will tell you we can't fight in a war past 2010; boo F'n hoo).
Build affordable housing & the nation benefits, but buy an ARMY-MAN TOY, and it sits in a warehouse, or folks die.
When did Canadians get to be so Effing stoop'd?
Think I might just stay in the USA this spring.

Patrick Ross said...

Steve,

I can't take you seriously if you actually think the Liberals are more entitled to credit for surpluses that exceed their budget than the Conservatives are.

You insist that the excess surplus that the Conservatives achieved were the result of "insane oil royalties".

But things such as oil royalties were a big part of the Liberals' excess surplus as well.

It's a simple matter -- you can't have this both ways. If the Liberals deserve credit for excess surplus -- credit you've given them -- then the Conservatives deserve the same credit.

If the Conservatives don't deserve the credit, then neither do the Liberals.

Not that I expect this to stop you from trying to have it both ways.

Now, back to OttLib,

If I had to choose between being naive and being cynical, I'll choose naive any day of the week.

Maybe if the ends solely justify the means, then only the ends matter. But to suggest that the truth doesn't matter is nothing but cynical.

You also keep overlooking one thing: the Conservatives have given Canadians tax cuts and tax credits that they can feel good about.

Even if they have to face the electorate before the economy recovers, the Conservatives are going to be able to tell them "well, OK. There's a deficit. But you also have more money in your own pockets to see you through these tough times."

That will matter, whether you like it or not.

burlivespipe said...

Patrick Ross, the first gst cut was countered by Harper's raise in personal income taxes. Despite having gone to some economic school or something, he went against what nearly all economists suggested was a wise return of Canadian taxpayers' monies.
You're right, a deficit either by a CON or Liberal gov't is the same, and has implications for whoever authored it. Putting my agreement with Steve aside - that Flaherty and Harper haven't been telling the truth - I'd dare say the hits that have come via such policies as Income trust change, the 40-year, 0-down mortgages they pushed for, and that they spent and continue to spend recklessly (how's that most bloated cabinet in Canadian history doing us? And if you add in all the focus grouping, 10-percenters etc we've paid for, along with the time wasted by Harper on ignoring his job and using his position as a place to act like a thug on his democratically elected opponents) i'd say you've got enough evidence of fiscal incompetence to put Harper in gitmo).
But I hear they serve mighty convincing koolaid, so sip it up. Your fiscal enui is showing...

Joseph said...

Gee, actually I have to say I'm glad I missed this round. But if people are working so hard to convince that Harper has just been dandy through the whole economic meltdown, they must be pretty worried.

So I'll be about as blunt as I get:

It doesn't take a freakin' genius to see that Harper waltzed into office with budget surpluses and declining debt, spent like a drunken sailor (more than any previous government liberal or conservative), ignored every economist's advice on how to smartly provide tax relief, continued spending like a drunken sailor, told everyone Canada wouldn't suffer a recession during an election of his own timing (as the economy weakened), told everyone we'd have surpluses for the foreseeable future, then after having the fear of God put him that he might actually lose his motorcade, suddenly decided to plunge the country into a substantially larger deficit than he chastised the rest of Parliament for just weeks prior.

I'm certainly inspired by his economic "prowess." I have no doubt others will be as well.

Stephen Harper is simply not trustworthy on the economy. Period. Good luck with that, "Liberals would have done the same exact thing" argument. A good starting point in any political debate is to proclaim you made bad decisions, but your opponent probably would have as well. The crowds just swoon over rhetoric like that.

Anonymous said...

"U Librals R idiuts"

That was a joke and you retards fell for it hook line and sinker.

HAHAHAHAHAHAHAHA!!!!!!!!!

Gayle said...

Sorry Anon - most liberal supporters have a sense of humour, which means they cannot recognize the conservative version of a joke.

Wilson - do you know what Harper is doing with EI revenues? I assume they are now all in the "EI Bank" (I really do not know as I have not followed the story beyond actually reading the SCC decision). I am also curious about whether he has made a decision to retroactively confirm the rates set by Chretien's cabinet or give the money back.

Gayle said...

Actually Wilson, I take that back.

The Harper government is collecting EI revenue in the same way the Chretien government did. In fact, Harper's government sent their lawyers in to argue the legality of Chretien's measures before the SCC.

Here is an excerpt from the case:

"A second branch of the appeals concerns a set of issues related to the financing of the employment insurance system and the allocation of the surpluses accumulated since 1996 through the collection of premiums from employers and employees. According to the appellants, the statutory provisions applied since 1996 to set premium rates exceed the federal unemployment insurance power, as Parliament’s authority to require the payment of premiums is limited to the amounts needed for the system to function properly and for reasonable reserves to be accumulated. In their view, the provisions in question — ss. 66, 66.1 and 66.3 — contravene this fundamental principle. Moreover, the appellants contend that the premium‑setting mechanisms no longer have any connection with the regulatory framework of the employment insurance system and that they represent an unlawful exercise of the federal taxing power because the procedure followed is not consistent with the principle of parliamentary control over taxation provided for in s. 53 of the Constitution Act, 1867. Finally, the appellants argue that the accumulation of surpluses and the allocation of those surpluses to overall federal expenditures, including public debt reduction, are contrary to the principles that determine the constitutional framework for collecting and using employment insurance premiums.


According to the respondent [that would be the Government of Canada], the setting and use of premiums have remained consistent with constitutional requirements. First, the statutory provisions in question are consistent with the principle that there must be a sufficient connection with the regulatory scheme for employment insurance. If not, the federal taxation power was validly exercised pursuant to a clear and sufficiently complete delegation of authority by Parliament. Finally, the respondent contends that the premiums were used and accounted for in accordance with the rules governing the Consolidated Revenue Fund and that the rights of contributors were not violated."

Joyce said...

Another narrative they need to wear: failure to govern.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090116.wbpanew16/BNStory/National/

Joyce said...

http://www.theglobeandmail.com/servlet/story/RTGAM.20090116.wbpanew16/BNStory/National/

Steve V said...

wilson=trash can

Steve V said...

Anon can stay, the irony is noteworthy.

Patrick Ross said...

So here's something interesting:

Harper's and Flaherty's numbers as compared to Martin's and Goodale's.

They're the same.

Looks like the difference between the two deficits is even smaller than I thought.

Care to comment on that?