Starving the beast: What Canadian Conservatives can teach Republicans

Stephen Gordon on the fiscal cliff and Harper’s quiet, and more successful, strategy

by Stephen Gordon

The “starve the beast” strategy works like this:

  1. Cut taxes.
  2. Wait until the resulting budgetary deficit becomes a problem important enough to solve.
  3. Cut spending in order to deal with the budget crisis.
  4. Go to 1.

The goal of this exercise is to steadily reduce the size of government.  The idea has its origins in the US conservative movement, but US conservatives haven’t had much success in implementing it. Steps 1 and 2 work as advertised, but politicians can never get the hang of the third part.

Here is a graph generated at the Federal Reserve Bank of St Louis’ FRED database. The red line is expenditures (net of interest payments on the debt), and the blue line is revenues; both series are expressed in terms of shares of GDP:

The Reagan cuts of the 1980s produced deficits, but these were eventually offset by the Clinton years’ tax increases, not by sustained reductions in government spending. (The decline in the red line in the 1990s was due more to strong GDP growth than spending restraint.)

The Bush tax cuts of the 2000s also produced deficits, but their long-term effects were mitigated by their temporary nature: this was the price of obtaining the necessary support of Democratic lawmakers. It was more or less an open secret that the goal was to make those cuts permanent eventually, but the necessary spending cuts never came.

The scale and suddenness of the scheduled tax increases (there are also associated spending cuts) is too large to simply let happen: the U.S. recovery is not yet strong enough to withstand the shock of a large fiscal contraction. But  a newly re-elected Barack Obama is unlikely to follow through on GW Bush’s original plan, and House Republicans seem resigned to the inevitability of tax increases.

Meanwhile, Stephen Harper is quietly implementing a Canadian “starve the beast” strategy, and not without success. Unlike the Republicans, the Conservatives have actually reached stage 3. Step 1 was the reduction to the GST, which created a structural deficit. After a certain period of denial, step 3 was reached in the austerity measures announced in the 2012 budget.

Federal revenues have been held below 15 per cent of GDP for four years in a row, well below the levels we’ve seen in the last fifty years. And the outlook is for more of the same.

Republicans are entering a rebuilding phase. I wouldn’t be surprised if some of them start paying close attention to how the Canadian Conservatives have managed to pull off the “starve the beast” trick that always seems to elude U.S. conservatives.




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Starving the beast: What Canadian Conservatives can teach Republicans

  1. Am I the only one who finds it funny that the drop in spending happened under Chrétien’s watch and that all the Conservatives managed to do was to reduce our capacity to pay down the debt (and reduce the interest charges that go with it) ?

    • The Chretien-Martin government was right-of-center, not centrist liberal. They basically fought against Brian Mulroney then carried his torch (neo-con light) when they were elected.

      The Conservatives didn’t lower interest rates. That was done by the Bank of Canada. When the economy is weak it cuts interest rates to spur a recovery. Of course, we aren’t seeing much of a recovery despite the historically-low interest rates. In the 1980s and 1990s an economic recovery meant GDP growth around 5%. Now we can’t even muster half of that.

      Thanks to about 30 years of “starving the beast” economic growth is anemic. The 2000s was the worst decade since the Great Depression. The recovery from the 2009 recession has been the weakest recovery. The 2010s will be even worse. (Unless we change tack from our present course of economic self-destruction…)

    • Who then proceeded to ramp it back up again…. If the Liberal’s had remained in power and continued on the path they were on, we’d easily be back at early 90′s levels of spending.

      • Hypothetical,and you’re conveniently forgetting we were in surplus then.

      • Absolutely no evidence to support this…

        • There never is.

          • Do you have any evidence to support that claim?

          • + 1 for sheer cheek.

        • No, there’s no evidence to support it because the Liberal’s have won an election in almost a decade…. which might have something to do with the fact that every platform they’ve run on has been based on increased spending and taxation.

      • And if the CPC remains in power, we’re going to be back at mid-80s levels of spending.

        Man, this baseless assertion game is fun isn’t it? So.. what’s the next topic you and your sockpuppets like usa1canuck are going to lie about?

        • What baseless assertion? You can see by looking at the chart that in the year 2000 government spending started accelerating until Harper won government. It’s right there in a red line. I don’t remember Paul Martin running on a platform of restraint. I certainly remember Dion’s Green Shift which was all about taxing and spending. I remember Iggy’s Liberal’s opposing any spending reductions and constantly demanding more money be spent on stimulus, all while opposing any tax cuts.

          What are you and your fellow sock-puppet trolls going to try deny in the face of all evidence next? Ya, you can make a baseless assertion that the current government will increase spending to mid-80′s levels, but again, if you look at the chart (and understand it), you’ll see that spending is trending DOWN. But I know that charts can be complicated.

  2. Exit and other polls already suggest when it comes to the economy, Americans trust Republicans more. Despite this, the Democrats won. What gives? What I think the Canadian conservatives can teach the American conservatives is how to tone down the rhetoric on social policy. Making it clear that things like abortion and gay rights will not be infringed upon may have helped make this election more to do with the economy than other issues. That’s something Harper has done well, IMO.

  3. A big part of how they’ve managed to do it is the secrecy of the cuts and the sudden-ness of monbius bills. For every little-known cut like “we’re the only country in the Northern Hempisphere that no longer monitors it’s ozone layer”, there’s probably dozens that will never be found even by Maclean’s “the quiet cuts” bit.

    Can this be mirrored in the U.S.?

    • Not to mention the PBO – an officer of parliament has to take them to court in order to free up info that the public has a right to see if it is to judge the cuts as being kosher.

    • No secrecy involved here. All those data are public, and in every budget, the govt provides an outlook that sets out exactly where they’re going.

      People just aren’t paying very close attention.

      • Tell that to the PBO Harper appointed…

        • As I said, those data are public. That’s why I was able to make that graph.

          • But you’re missing the point. The PBO is trying to find out if those cuts will translate into service cuts – something JF has denied. The PBO begs to differ on available evidence. Essentially the govt may well be trying to implement cuts to services and yet dodge the political flack – have it all ways. Or don’t you think we the public have a right to judge what level of cuts are permissable? It’s a matter of accountability – something you address nowhere in your post.

          • Except you’re not talking about the same data.
            Yes, we’ve got the general numbers from the government. No, we don’t have how that cutting is actually taking place in our government — what services are being reduced, etc.

            In the US, if a president tried to implement time allocation on budget approval, or to keep details on exactly what was going to be cut private or even non-existant until the budget was actually approved, there’d be holy hell raised.

            In this country, as we know from the last omnibus budget/ideologic targetting bill, even most of the MPs on the government side don’t actually know what’s going to be in the budget and what will be cut until it’s actually happening, certainly not before the time comes to approve the budget. And the reaction here? The Speaker claims his hands are tied, and so must remain with his thumb up his rear while it goes down.

          • It seems that Starve the Beast has been imported to Canada and rebranded as Streamline the Beast: No Service Cuts!

            It’s the same ratchet effect, applied by the same kind of people (who don’t care what kind of damage they do in the process). It’s just adapted to sell to Canadians who tend to accept that government can do some things well. The same Canadians who won’t know (until it’s too late) that they’ve been misled.

            It sickens me to look forward to a time when Harper’s flying monkeys are in opposition, screaming about spending increases when their successor tries to undo some of the damage.

          • I would have thought the specific example (no longer funding ozone monitoring) would have put context to the complaint. I guess people’s mileage varies. Easier to make a cut when you can hide the [details? context? at a loss here, "effect" seems too vague] from the public….

  4. Meanwhile, Stephen Harper is quietly implementing a Canadian ‘starve the beast’ strategy, and not without success.

    Starting when? During the unforeseen boom in commodities? Before the unforeseen recession?

  5. No.. no.. not quite.

    The goal of this is actually to steadily reduce the size of government without ever having a debate about whether this is the right thing to do.

    The difference is subtle, but very important.

    • Coming from AB, I would have thought you’d claim the strategy was rather: Feed the unrefined Beast.

    • This “starve the beast” process is not only morally reprehensible it is killing the economy.

      The reason northern European economies are so strong is because they provide some level of equality of opportunity. This creates strong markets to buy products (creating jobs) and raises the level of human capital boosting productivity and innovation.

      America is caught in a downward spiral of rising debt and deteriorating living standards and economic performance. If we are smart will will stop following them down it…

      • Oh gosh, just a little bit of mellowdrama there no? Morally reprehensible my ass. Canada is doing better in economic recovery than most of Europe right now including those northern ones.

        1. Don’t spend more than you bring in.
        2. Save.
        3. Reduce wasteful spending.
        4. Eliminate government programs that needlessly interfere with individuals choices.
        5. Eliminate government regulation that interferes in market choices.

        This is what we should do.

        The article is just describing what works instead, because the only way to get to step 3 is to prove we don’t have the money for the things you eliminate in 4. and 5.

        Beyond that it is unlikely that the Republicans could pull of said plan, because their cumbersome system “checks and ballences” all the good ideas out with the bad ones. It becomes easy to spend and hard to tax, and hard to stop spending while easy to reduce taxes. Americans are a spoiled child and the Dems and GOP are the parents who need to stop being afraid to look like the bad guy.

        Sometime the answer has to be NO WE CAN’T AFFORD IT.

        • Only a con man would think it’s Ok to manufacture a budget crisis with reckless tax cuts. YES WE CAN AFFORD IT IF WE DON’T MANUFACTURE THE CRISIS IN THE FIRST PLACE.

          • Imagine how much social programming we can afford after we kill the credit card debt that is taking up ten percent of the federal operating budget.

    • Bingo!!!

    • If you agree that looking at spending in terms of real per capita is the appropriate standard (Coyne argues this point elsewhere, I believe, and I tend to agree with his approach over the pct GDP method preferred by SG and others) then they are just getting back to where they started from a few years ago (mind you with a shift in spending priorities).

      • Meh. Their incompetence is hardly news at this point. That it should also apply to their own intentions isn’t exactly surprising.

  6. Just one problem. All govt programs need a look-see every few years, and some of them need to be eliminated. But any govt that does that often gets creamed during elections. It’s not a popular thing to do.

    So…let the Cons do the hard work. The new govt can look good restoring things….but won’t have to restore everything.

    Americans are now saying taxes need to be raised….Canadians know that too. Cons assume everyone thinks like they do.

    • In Canada we have undergone about 25 years of continuous tax cuts that only the wealthy have gotten a net benefit from. It is obviously utter folly to bring in economic policies that benefit those who need it the least. In the post-war era, when we had progressive taxation, not only did governments pay their bills but we had much stronger economic performance.

      Macroeconomics is about allocating resources so they are used most effectively. Neo-con trickle-up economics (from the people to the rich) are not only absurd, they fail to get the job done.

      We need economic policies that work in the real world. And we need them now.

      • Please stop comparing ANYthing to the ‘post-war’ era….it was a one-off, and won’t happen again.

        I got top marks in macroeconomics….you?

        • Actually the success we had in the post-war era — founded on the use of centrist Keynesian mixed-market economics — is being replicated in northern Europe today. Considering the laws of economics are unchanging like the laws of physics (although we don’t understand them to a scientific certainty,) it’s absurd to suggest one era is different from another, especially predicated on an excuse to explain away evidence…

          The anti-Keynesian free-market reforms of the past 30 years have reversed this success and produced all the problems we are facing today. Free-market ideology certainly proved to be a “two-off” with history repeating itself: it collapsed in *two* global economic meltdowns…

          It’s time ditch this corrupt, self-serving ideology that brings disaster where ever it is implemented. Last time (in the 1930s) we relegated it to the lunatic fringe for 50 years. This time, let’s do it for good.

          • No Ron, it’s not.

            And no, the ‘laws’ of economics change with the system of economics. Because there are no ‘laws’.

            Capitalism was the system used during the Industrial Revolution….and Socialism was the reaction to Capitalism.

            Ron…we are no longer IN the Industrial Age….and none of it’s concepts apply to today’s society.

          • Actually the Keynesian mixed-market system was created when the free-market system collapsed in the first global economic meltdown (the Great Depression.) It is in the center of the economic spectrum (communism is 100% left; libertarian ideology is 100% right.)

            The “Industrial Age” is founded on technological evolution. We most certainly have not stopped advancing in that regard. Our economy has stopped progressing because we choose to go back to the failed ideology the collapsed the first time around.

            As for the laws of economics, the reality is the laws that govern quantum electrodynamics existed before we knew what an electron was. Being ignorant of them is not proof they don’t exist. (Of course, the Keynesian system is the most competent at explaining how the economic system works to the greatest degree by far. Both free-market ideology and communism colossally failed — although communism went out with a whimper, and free-market ideology with two big bangs… Let’s hope we prevent further wasted economic destruction by abandoning right-wing ideology for good…)

          • a) that wasn’t the first ‘global meltdown’

            b) there are more systems than that

            c) the Industrial Revolution came right after the Agricultural Age….it was an entirely new step, not a ‘technological evolution’

            d) ‘Quantum electrodynamics’….riiiight….do not even go there Ron.

            http://en.wikipedia.org/wiki/Quantum_electrodynamics

          • a) They don’t call it the “Great Depression” for nothing… (Fact is the Great Depression was a great barrier to Friedman resurrecting free-market ideology from the grave because that’s when the system collapsed. So he developed monetarism as an antidote: summed up in the “drop money from helicopters” metaphor…)

            b) Left-wing communism, right-wing free-market capitalism and the centrist Keynesian system are the major three economic systems. During the post-war era, even Republicans were Keynesians (Nixon said, “we are all Keynesians now”…)

            c) I said the “Industrial Age” is founded on technological evolution, certainly not “a technological evolution.” The point being, it doesn’t matter what the technological development is occurring, but that it has been continuously occurring since the Industrial Revolution. For some strange reason you say the process has stopped happening. The reality is that it’s occurring now more than ever.

            d) I used quantum electrodynamics as an example of of a system that existed regardless of whether we knew it existed or not. Apparently you didn’t comprehend the analogy…

          • a)I have been very gentle with you Ron, as you appear to be at least trying…… but enough is enough.

            b) Calling it the ‘Great Depression’ doesn’t make it the only one…it’s just media hype and a colourful name. You need a longer view of history. The ‘South Sea Bubble’ for one name among many.

            c) There are also many economic systems. Again you are working with just a few.

            d) You have no idea of the disconnect between the Agricultural Age and the Industrial Revolution…..or the entirely new era of the Knowledge Economy.

            e) ‘Quantum Electrodynamics’ has nothing to do with this

            Ron…you are stuck in a past era….many are stuck there with you…..but many are not. Make a choice.

          • If you want Keynesian economics to work…it’s simple!
            Destroy one of the biggest countries on Earth with tens of millions of deaths. Then destroy the industrial powerhouse of Europe. Then destroy the other industrial powerhouse of Europe. Then destroy the third one. Then nuke Japan. Then starve China and India.

            Ta da! Keynesian economics appears to work in America now!

          • I haven’t the slightest interest in Keynesian economics….it’s outdated along with all the rest of your nonsense..

          • So you somehow got an A in macroeconomics, while having no interest or knowledge of Keynesian economics, one of the largest schools and founding theories of macroeconomics?

            You do realize that an accredited course generally requires more than $49.95 and a postage stamp, right?

          • ‘Knowledge of’ does not equate to ‘approval of’.

            You do realize your sexist patronizing is showing again?

          • Illustrate where Thwim went all “sexist” in this argument. Patronising maybe, but why sexist?

          • No matter what men say on here….whether people agree or disagree with what is said…..no one ever questions their qualifications.

          • You brought up the fact that, “I got top marks in macroeconomics….you?”

            I haven’t seen anybody in this discussion apart from the author rely on their qualifications to bolster their argument.

            You introduced the issue so questioning that statement in the light of your other statements is fair game, I never saw any reference to gender just a query about something you introduced of your own volition.

          • Yes, it was being questioned…..again. So if we’re going to debate on the basis of qualifications, I want to know his.

          • Oh that’s just flat out bullshit. Most people don’t bother trying to bring their qualfications in, because they realize that an argument from authority, especially on the internet where there’s no verification, is full of crap.

            And when they do, especially if they make such bizarre assertions as having no interest in the founding theories of the area, they get questioned on it.

          • Exactly….so stop doing it.

          • No.
            I won’t stop questioning a person if they bring in their qualifications as if they had any relevance to the argument — as you did — and then proceed to make an assertion that makes those qualifications questionable.

          • You are promoting a set ideology….I am not. And when I don’t, you get personal and hostile and start to misquote me etc….just as much as Cons do, even though you’re at the other end of the spectrum.

          • The hell? How is calling out hypocrisy sexist? Patronizing I’ll grant. Someone who claims a lack of interest in a founding theory of macroeconomics in the same thread where they’re using their claim of excelling in that very area as a means of granting weight to their argument (which, incidentally, it doesn’t) deserves to be patronized for such ludicrous assertions.

            Sexist would have been if I’d have refrained from doing so because of your sex.

          • How many times have I said on here that capitalism is as dead as communism?

            So I no longer have any interest in the conventional economic theories.

            You may not agree with me….but questioning my qualifications just because you disagree, when you don’t do that to men….is sexist.
            .

          • I questioned your qualifications because you made a statement that made them dubious. Just as I do for anybody else if they do the same after bringing up their qualifications. That you want to attribute that questioning to sexist behavior simply indicates, at best, a lack of awareness of my activities (completely reasonable), but at worst a closed and frightened mind on your part.

            On the particular assertion in question, you’ve actually answered well enough — there’s a difference between knowing and interested, and you’ve gone beyond the Keynesian theories at this point. That I could have accepted at face value. But when you bring in accusations of sexism to any challenge to the credentials that you put forward as justification for your arguments.. that’s simply a weak poisoning the well attack.

            You wanna rebut? Then rebut. HOW is Ron wrong? I’ve seen you do lots of this proselytizing of this whole “It’s a knowledge economy!” line, but never any explanation of what that actually means, or how it means other theories are wrong at all. Typically you just stick to hippy dippy “it’s a brand new world!” type of crap, and anybody who questions that you simply write off. Which is too bad, because I tend to think if you really have these insights, you’d be willing to share them in a way that us lesser mortals might be able to understand.

          • You questioned my qualifications because you didn’t agree with what I said…..period.

            If you don’t like being called sexist….don’t act it.

            The knowledge economy is easy enough to google….surely you don’t expect me to rewrite it all here?? People have been talking about it, and writing books on it for years. Toffler wrote ‘Future Shock’ in 1970, and I see it every day. But I’ve long since given up talking to brick walls. And your ‘hippy dippy’ comment indicates you are just that. So enamoured of a theory from the early part of the freakin’ last century that you refuse to believe anything has changed since then.

          • Again, bullshit. Look around a bit and you’ll see I question the people who say things that I tend to agree with as well. It has to do with if you’re presenting a coherent argument, not whether I agree with what you say.

            And yeah, it’s easy enough to google, but none of what I read says anything about how it connects with any macro economic theories.

            Incidentally, a theory being old doesn’t invalidate it for anybody but a moron. Theory of gravity’s been around for a long time, as has that of evolution. Are they also too old to believe in?

            And again, I’ll ask directly. How does the “knowledge economy” invalidate Keynes? You obviously know, educate us please? If you don’t have the time, at least cite a website we can teach ourselves from.

          • It has to do with your confusion about what era you live in. You are close to a century behind the times.

            No, the knowledge economy has zik-all to do with macroeconomic theories….WHICH IS WHY I NO LONGER BOTHER WITH THEM.

            However, I can see by your last few remarks that you haven’t comprehended the statement….’capitalism is as dead as socialism’. As dead as Keynes in fact….so it’s irrelevant

            Old theories? You can’t tell the difference between basic science like gravity and evolution …..and using scientific knowledge in a new economy?

            Economics is not a science…it’s a system we made up, as a tool, a mechanism….so we could make change for a goat.

            It is now as useful as astrology.

            You have now wasted a goodly chunk of this site attacking me, rather than discussing the issue.

          • Again Thwim never made any sexist remarks, Thwim just appeared to question you’re high mark in macro economics that you introduced as a basis for crediting your statements.

            Go back and look.

            Not one remark that introduces the fact that you are female (if you are) and no statement that say because you are female your opinion is BS.

            Your response is a classic case of trying to halt the discussion by calling your opponent something that is generally regarded as reprehensible much akin to a Godwin. Rather than actually relying on good argumentation. Yet another tactic of yours.

            Thwim never “acted sexist” but your introduction of a supposed expertise in what you are talking about backfired and my guess is you regret introducing it.

          • This discussion has nothing to do with you, much less the topic. You can’t argue for toffee, so MYOB

          • No argument, so it’s time to pick up the ball and storm off home hey?
            Love the “little Lord Fauntleroy” critique of my points tough

          • Nope….when you want to discuss the actual topic, or even the knowledge economy…..let me know. But if you’re just going to natter about me…. ciao.

          • The Keynesian system was developed in the 20th century. Free-market ideology was developed in the 18th and 19th centuries. I think most people would rather go back to the time when living standards were on the rise than when we were exploited, oppressed and poor.

            Clearly the goal of free-market ideologues is to take us back to the 19th century. There is absolutely no reason why people should live in misery while the rich hold all the wealth and power. In a functioning economy, all segments of society benefit from wealth creation and productivity growth. The only economic system that has been successful in that regard is the Keynesian mixed-market system, which is still producing the best results today.

          • Ron
            I’d stop there. Deliberately misreading what you have said is one of Emily’s “debating” tactics. She will only answer the points she wishes you had made.

          • I don’t use any ‘tactics’….but I also don’t agree with other theories or posters……that doesn’t mean that I suddenly become the topic.

          • “A rational and fruitful discussion is impossible unless the participants share a common framework of basic assumptions or, at least, unless they have agreed on such a framework for the purpose of the discussion.”
            –Popper

  7. Is it any wonder that while North American neo-cons try to destroy centrist government and wind back the clock to the 19th century they are destroying the economy and living standards in the process?

    The fact is centrist Keynesian policies created modern living standards in the post-war era. They brought about an economic tide that raised all boats, strong GDP growth, economic stability and allowed governments to pay down most of their debts. (Canada paid down its debt from 100% debt/GDP to 17%; it’s now back up to 85%.)

    Over the past three decades of free-market reforms based on “starving the beast” we had an economic tide that only raised the yachts, living standards continuously downsized for everyone else, massive recessions, skyrocketing debt and inequality, and another global economic meltdown (in 2008; the first was in 1929.)

    Free-market ideology is not only self-serving to corrupt businessmen and destructive to the economy, it is founded on re-establishing a plutocratic tyranny. In a democracy, we not only have the right, but the duty to put a stop to this depravity and preserve the world we inherited for our children.

    • I don’t understand. Was the entire post-war era one endless recession? Is that why Keynesian policies were used?

      Why would anyone look upon a decades-long recession as a golden era?

      • A recession is defined as two or more consecutive quarters of negative GDP growth. That most certainly does not describe the post-war Keynesian era (1945-1973.) Then we had much stronger GDP growth than we’ve had over the past 30-year “age of greed” and much milder recessions.

        In the 1960s GDP growth was above 6% during recoveries. In the 1980s and 1990s it was around 5%. In the 2000s it was around 3%. Now Mark Carney says 2.5% signifies an economy at full recovery.

        Slow GDP growth is bad for jobs (“jobless recoveries”) and bad for managing government debt (measured in debt/GDP.)

        The real question is why we would want to go back to the towering levels of inequality and miserable living conditions of the pre-war free-market era, along with the chaotic boom-to-bust business cycles?

        Canadians expect “jobs, growth and prosperity” but really we are being sold a bill of goods that delivers the opposite.

  8. Mr. Gordon is putting numbers and charts and colours ( as is his wont ) to a
    process that anyone who follows politics is .. or should be .. aware of. That’s
    a good thing.
    Maybe our vaunted political media should follow politics.
    Oh, we get some muttering and huff/puff over the style of gummint but we have
    to look long and hard for anything on the substance of what’s happening. Maybe
    I’ll have to look harder. Or … or maybe silence indicates agreement.
    Damn librul media.

  9. Q: Why is this appropriate: “The red line is expenditures (net of interest payments on the debt)” or does that comment only apply to the US series?

    Won’t debt interest payments figure prominently in the story once interest rates are raised and the new debt accumulated over the past number of years are refinanced?

  10. Off subject or is it ? How is the Gross Domestic Damage calculated to human mental, physical, spiritual, environmental and economic well being. Hurricane Sandy for example. Sleepless nights, worry, agony, economic loss, trauma, hunger, cold. loss. Dread of future storms, winter.

    • I thumbed up, but want to thumb up again.

  11. Something is wonky in this post. Basically i think it is a circular argument or at least based on a assumption that is fallacious – namely the premise isn’t correct. Who says govt needs to be smaller? Smaller than what? Isn’t the relationship between GDP and GoC spending already at an historic low? That’s before you get to Harper’s purely ideological starve the beast bs.
    Sorry,but i also have difficulty with a number of your blythe characterizations of the Reagan/Bush era spending debacles. They didn’t have a plan. [none that made sense anyway] They both cut taxes and ludicrously ramped up military spending.
    [ pehaps somewhat excusable in Ronnie's case]
    The principle objection i have is that SG doesn’t address the fact that downsizing of this degree requires open and public debate and consultation – the situation is nowhere as dire as the 90s liberal cutbacks, even then it is debatable whether they crossed the line also. Harper has no mandate to “make govt smaller”.secretly or otherwise.

    • 1) Harper has never, ever, been shy about what he thinks the proper size of government should be. Paul Wells’ “Right Side Up” – written in 2006 – goes into it in great detail. As I said: it’s no secret; people just haven’t been paying attention.

      2) There isn’t any relationship between govt size and economic growth, so long as the tax system is ‘smart’: light on income (especially income on capital), heavy on consumption (GST/HST).

      • 1] That still doesn’t address the fact that Harper has never [to my knowledge] explictly run on a platform of smaller govt, spelling out just how he would go about it and why. Or explain the current game of blind man’s bluff he is playing with our Parliament. [ haven't read PWs book...[yet,l promise one day Paul] The fact that you and Wells knew about it hardly constitutes public knowledge and open agendas in such a transformative policy area.
        2] I’m a rank economics layman. i think i understand your point bu twill have to think about that one and hope someone else picks it up first or clues me in.
        .

      • I read Wells’ book, and I don’t recall any sit down interviews with Harper where he spells everything in black and white. It seems to me, tho that some of Harper’s handlers may have provided a narrative that Wells has picked up on there, and in numerous subsequent columns where he sits in his office trying to figure out what Harper is doing, has done, in retrospect. The China oilsands post trip column was memorable in that respect.

        Looks like you are doing the same thing here. I personally took the GST cut to be a pander to get more votes, as were other targeted tax credits, not as some grand overall economic scheme.

  12. Prof Gordon Have you heard of the Laffer curve? Instead of using your feverish imagination about how Tories are starving the beast, maybe Cons think they should reduce taxes to create more wealth for government to steal. Public employees, university profs for instance, are expensive because they don’t create wealth of their own but demand a great deal of my wealth. Private companies across Canada can only wish they were being ‘starved’ like Fed government supposedly is.

    Andrew Coyne ~ “Back in 2001, when Paul Martin was still finance minister and federal spending was a mere $130-billion a year, the idea of spending reduction was seen as just not feasible …. This year federal spending is expected to top $270-billion on its way to $300-billion by 2015, an increase of 160%. So we have gone in a little more than a decade from a place where Paul Martin could find nothing to cut from $130-billion to a place where nothing can be cut from $300-billion.”

    • You can look at the charts on this very article to see we’re not on the side of the Laffer curve that you think we are. The feds cut the GST, and revenue went down, not up. It’s pretty straightforward.

        • You are terrible at reading charts. GST revenue is down $5B over that period. If the GST was on the right of the Laffer curve, then GST revenue should have increased when the rates were reduced. Instead, revenue shrunk.

          • Not really, Laffer talks about total government revenue from the total tax burden, so you can’t just look at the GST revenues.

            You can get a better sense of the numbers at this site:
            http://www.fin.gc.ca/purl/afr-eng.asp

            If you look at the 2005-2006 revenue, you see they were 222.2 billion.
            Look at the most current, and you see it’s 245.2 billion. So he actually understated it by a billion dollars. Revenues actually increased by 23 billion dollars since the GST cut.

            Could Tony be right? Heh.. try the veal folks, I’ll be here all night.

            Seriously though, that’s 23 billion dollars unadjusted for inflation.
            When you go here: http://www.bankofcanada.ca/rates/related/inflation-calculator/ and figure out inflation on 222.2 billion from 2006 to now, you see that the equivalent is 248.25.

            Our revenues are the equivalent of 3 billion dollars lower than they were back in 2006. Thanks, Mr. Harper!

            Although, if I’m being completely honest, we can’t really say for sure that Tony’s wrong, because people often forget that Mr. Harper, in conjunction with lowering the GST, increased the EI rates as well.

            You want to see what Harper really has in mind, though? Look at that. Who pays GST? Everybody. Whether you’re working hand-to-mouth or living off of interest from your savings, we all pay GST.

            Now who pays EI? Hint: The “I” doesn’t stand for “interest”

          • Great response! Somehow I doubt @Tony_Adams:disqus has put quite as much thought into it.

          • He said Revenue, not GST revenue.

    • It’s not hard to follow.

      Back when we raised what we spent we broke even.
      When we stopped raising what we spent we got into debt.

      Harper then decided to raise even less to cover our costs so this exponentially rocketed up our debt.
      Combine this with the fact that prices for stuff very rarely go down and given the increase in fuel costs and involvement in wars overseas (never a cheap enterprise), the expenditure increases even more so.
      Harper is the worst of all welfare recipients, he wants stuff but doesn’t want to pay for them. He gives our money and resources to large foreign companies and governments and won’t ask the country to pay for the debt this largesse costs us. Oh and he has lied at every turn on economic policy beginning with income trusts.
      If I ran my life like Harper runs our country, I’d be in jail by now.

  13. The GST was cut when we had a surplus….if it had not been cut we would all be a little poorer and the tax money would have been consumed by a larger government and the deficit would be the same. When you want to make a point it easy but why is being balanced so difficult.

    • The GST was cut when we had a surplus, yes. And that surplus should have been put down on the debt or into a contingency/rainy day fund….because there is always a rainy day.

      When it began to pour in 08….we had no surplus left….no fund to dip into…..so now we are back to a deficit….only this time it’s the biggest deficit in our history, plus it’s structural.

    • Alberta and the Heritage fund refutes you.

  14. And then there is the liberal (Obama) strategy…

    1. Massively increase spending.
    2. Wait until the resulting budgetary deficit becomes a problem important enough to solve.
    3. Raise taxes to deal with the budgetary crisis.
    4. Go to 1.

    Personally, I like the tax cut route better.

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