No pain, no gain -

No pain, no gain

Andrew Coyne on Jim Flaherty’s deficit elimination plan


gracefully descending bars.png I took a chance and wrote about Jim Flaherty’s deficit elimination plan for this week’s issue, in advance of actually seeing the document. Indeed, I did not then know when precisely it was to be released. Perhaps neither did he: today’s event was announced … today.

Anyway, here is what I wrote, in part (the whole thing will be posted with the usual several-day delay to infuriate you make you buy the mag):

If history is any guide, the “plan” will consist of a series of bars on a chart tracing the deficit’s graceful descent to zero by the year — well, we haven’t been told that yet, but let’s assume it will be some years after the government’s present forecast of fiscal 2014. Which, for those with long memories, is five years after the government insisted it would never run a deficit at all.

But as to just how the deficit will be coaxed into submission, we will be told very little, except to say that it will require no tax increases, nor any specific spending cuts — though there will be plenty of “rigorous spending discipline” and another round of “program review,” that exceptionally rigorous exercise that in several previous rounds has slashed spending to an all-time high.

Just about bang on, I’d say, having now had a look at it — minus even the pretense of rigour.

I had wondered, on hearing that the plan was to be unveiled today, whether the Tories had concocted some fiendish plot to do the right thing: a robust, no-apologies program to eliminate the deficit by way of serious cuts in spending, the better to a) rally their base, b) set themselves apart from their opponents, by going where the Liberals could not follow, c) buttress their attacks on Michael Ignatieff’s alleged tax-hiking proclivities by providing a credible, no-tax-hike alternative, and d) give the opposition no choice but to defeat the government, on an issue chosen to the Tories advantage, calculating that at least 40% of the population, in an election that became a referendum on “should we, like, get serious about the deficit, or what?” would side with them.

But no, it appears that none of this is the case. This will depress the base, erases any difference between them and the Liberals, and makes their no-tax-hike pledge about as believable as Flaherty’s deficit forecasts. The only good news is it confirms me in my belief that there will be no fall election. This is not a document you run on.

It’s difficult to do justice to how empty this thing is. My colleagues John GeddesKady O’Malley, and Aaron Wherry have all taken good whacks at it. But I think Flaherty himself put it best in his speech today. “If a politician tries to tell you that getting back to surplus will be pain-free,” he said, “they are simply not telling you the truth.” Fair enough. Because while Flaherty is indeed promising no pain of any kind — he’s also not promising to get back to surplus. It’s deficits as far as the eye can see: $56-billion this year, $45-billion the next (the numbers were $34-billion and $30-billion, respectively, in the January budget). In 2014, when we were originally promised the budget would be balanced, the deficit is now forecast to be $11-billion, and in 2015 — that’s seven straight deficits, if you’re scoring — it will still be $5-billion.

And the plan to get us even that far? No spending cuts of any kind. Not in transfers to provinces or persons: they go on growing just as rapidly as before. Not even to departmental budgets: though they are allegedly flatlined for five years, this is entirely due to special one-time spending items — you know, “stimulus” projects — dropping out of the budget totals as they are completed. Ordinary departmental spending is slated to go on growing at about 4% per year.

But back to my eerily prescient column:

And that’s the rosy scenario. That is, it assumes no double-dip recession, or spike in interest rates, to say nothing of war or natural disaster or the hundred other things that can turn those majestically declining bars upside down in a flash.

Indeed, the economist Dale Orr has projected — again, in advance of seeing Flaherty’s new non-plan — deficits would continue through 2017 under such a merry “grow-out” scenario. If “growing out of it” sounds familiar, it should: that was the prescription Jean Chretien and Paul Martin came to power promising in 1993: no spending cuts or tax increases were required; the deficit would just melt away on its own. It didn’t work out that way.

Still in weirdly self-contradictory mode, Flaherty was all about the”sustained discipline” and “growth restraint” his no-cuts, no-surpluses plan would entail. It’s going to take, he said, “a lot of saying ‘no’ to pet projects and special interests.” Uh-huh. Can he name one, perhaps?