Wednesday, October 31, 2007

Too Clever By Half

I think it’s an open question, whether or not the Conservatives have erred with this tax cut barrage. Obviously, the measures announced yesterday are good news for Conservative fortunes in one sense, but the timing might undermine the benefit. It would appear the Liberals have no intention of voting down the government, which effectively eliminates the prospects of an election this year. Given the fact that Flaherty has eaten up most of the surplus in the fall update, you have to wonder what the government can offer in the spring budget. Has the government mis-interpreted the terrain, delivering the goodies at the wrong time?

Flaherty didn’t have to commit yesterday, he could have spoken in broad terms, offered a few things and left the rest for the budget. Instead, the government put all its cards on the table, without the immediate return at the polls. I’m not arguing that the government doesn’t benefit from the announcements, more a question of maximization. Fast forward to the spring, Flaherty has left little room for himself, which means if we do have a non-confidence, the tax cuts are part of the equation, but they might not be the centerpiece of a campaign.

The Conservatives might be too clever by half here, over-estimated their chances to goad the Liberals, too anxious to embarrass, without looking at the longer term. I don’t think the government took full advantage here, benefit yes, optimal benefit no.

9 comments:

Christian Conservative said...

Did you ever think, just maybe, that this was about good policy, and not good electoral optics?

I, for one, am glad this is going through now... I could always use the money. There's no better time to do it than when you know the Opposition won't stop you.

Steve V said...

"Did you ever think, just maybe, that this was about good policy, and not good electoral optics?"

Well no I hadn't. Did you know the government spent your taxpayer money commissioning a study to see what is more popular, a GST cut or income tax cuts? The results showed people favored a GST cut, which explains why the government went ahead, despite the fact EVERY SINGLE ECONOMIST IN THE COUNTRY argued against a further reduction. Good policy or good optics?

Just to add, if it wasn't about optics, why then did Flaherty not wait a day or two, and go through the usual channels, instead of the stunt yesterday? This government is OBSESSED with electoral prospects, so no I don't take anything at face value, but then again I don't drink the koolaid by the crate, like yourself.

burlivespipe said...

Oh yeh Christien CON of fathomless faith -- yeh, its just good policy. Never mind nearly everyone with a REAL economics degree saying the GST cuts are negligible if not negative drag on the overall economy.
Of course, CC was saying the same thing in late 2005 when Martin and Goodale made their fall economic statement, dropping income tax level to oh, say this 15% level? How did that get back here?

It seems that Harper was playing a few angles on this one, including priming the pump ONE last time before goading the opposition into an election. There's a little quick distraction for people marking the first anniversary of the Income Trust spookery and Fraser's report, that they needed to give province's 60 days notice for the gst drop (and Jan. 1st is more memorable, tho many retailers will be mumbling - we were dropping our prices then anyways!), and the economy.
There's all these signposts signalling 'Turn back!' 'I wouldn't go there if I was you' and deep rumblings south of the border. US softwood dealers are now DUMPING their wood on our side, the manufacturing plants are slowing down, inflation is now a secondary big worry for Americans, and China's retaliation, if any, will be a kick in the gonads that we don't need. They are already stuck with so much US debt, and Americans will be begging for someone to invest in their stumbling economy.
It adds up to an economic quagmire overall, so Harper thought he'd make a little hay. The optics are good, if you subtract that neither Harper nor Flaherty can be trusted with promises or math...


www.canadianrosebud.blogspot.com

Anonymous said...

"EVERY SINGLE ECONOMIST IN THE COUNTRY" is a MORON?

NO.

Liberal 'economists' in Canada who studied Keynes and believe it is their solemn duty to put all the money in the government's hands, usually through Liberal governments, are morons. But they're the only ones that get the media's ear.

Surely there are rational economists in Canada, they don't tell the media the sky will fall from tax cuts though - very uninteresting to the lamestream media.

Steve V said...

"Of course, CC was saying the same thing in late 2005 when Martin and Goodale made their fall economic statement"

Actually CC was saying this, I love the last part about buying votes ;)


"Good'ol Goodale Goodies

The election is off and running... Ralph Goodale just announced the what is likely the biggest series of tax cuts in Liberal, if not Canadian, history. It will work out to somewhere between $200-$400 per year for my wife and I.

You know what? I'd gladly give that up for a change in Government. Why? Because the Conservatives understand financial issues better than the Liberals... just look at Garth Turner or Monte Solberg's websites. I'm voting Garth for Finance Minister!

Why? Because under a Conservative government, the economic wheels of this country will really start to turn, providing more opportunity for all, (middle class and poor) and more opportunity for my wife and I to increase our income via higher earnings, rather than by cutting taxes yet stalling economic growth."

The Liberals need to be toppled THIS WEEK. Because every day they are in office allows them to spend our money trying to buy our votes.

Not this time. Not this time."

Steve V said...

"Liberal 'economists' in Canada"

Like the Fraser Institute moron?

richard said...

actually the timing is brilliant.
we don't get an election before Christmas, because Dion's 100 Canadians don't want one.
Jan/Feb - the GST just starting to kick in.
March/April - we're figuring out what our income tax rebate is.

Mike said...

"Just to add, if it wasn't about optics, why then did Flaherty not wait a day or two, and go through the usual channels, instead of the stunt yesterday?"

Oh oh I know! To crowd Shelia Fraser's latest AG report of the front page, because it would embarrassing to the 2-year-old-government?

Personally I think deeper income cuts and no GST drop would have been better...

Steve V said...

"Personally I think deeper income cuts and no GST drop would have been better..."

Agreed, after two budgets and this statement, we are basically back to where we were in 2005 on income tax. Hardly a triumph, given the gold rush.