Friday, May 29, 2009

"Sucking And Blowing"

When the Liberals attack the government's fiscal mess, the common counter is that we are "sucking and blowing". It's a refrain the media is starting to ask as well, because on the surface there is an air of opportunism. How can Liberals stand up day after day demanding more money for stimulus, EI, etc, and then chastise the government for taking us into a massive deficit? If the government cowered to the opposition demands, the deficit would be bigger, so it's a confusing dual criticism.

Right now, everybody is primarily focused on the government, and their lack of competency. However, that temporary fact shouldn't allow a false sense of security, because the Liberals need to stay ahead of the data curve. It's a pretty simple argument, that Canadians will understand- you say we're spending too much, but you want us to spend more, huh? I think it's wise to counter this argument right now, rather than let others frame what it means.

Given the size of this deficit, beyond responsibility and competence, the question will turn to how we get out of this mess, who has the solutions. The Liberals do have an out, when it comes to the "sucking and blowing" counter. When we were demanding more stimulus money, more expenditures, it was with the understanding that the deficit was at a certain level. Now, with the ballooning debt, a prudent party must re access previous demands, because we were mislead on the deficit. In this way, the Liberals are pragmatic, without letting the government off the deficit hook.

Let's keep it real here, playing with GDP percentages aside, this deficit is HUGE and STRUCTURAL. The deficit will haunt government for years, the latest figures will obliterate any nonsense about temporary, any excuses, any general argument that all will be well in the end. The Liberals need to adapt to the new numbers, and I would argue we should abandon any talk of further stimulus, given the new updated figures and the prospects of worse numbers to come. Within that argument, we can abandon the idea of further stimulus, because the initial stimulus is still sitting in the bank waiting to be spent. Highlight the inability to deliver with a sense of fiscal restraint. Liberals will focus on getting this money out the door, not arguing for more, particularly within the new reality.

Liberals can be smug this week, as we watch Flaherty and Harper self implode. This deficit will HAUNT the government, their credibility is a very real issue, that will be a central theme for the Liberals. That said, the Liberals actually lessen the damage, when fair minded observers turn to their arguments and see competing and contradictory themes. In a sense, we let the government off the deficit hook, if we're seen as the party that wants more, if we don't understand the inherent duplicity.

The latest figures have given us a chance to do the "blank slate" routine. Whatever we've argued the past few weeks is largely irrelevant, if we use the new deficit projections as basis for a policy rethink. It's one thing to argue for further stimulus when we're at 34 billion, quite another when it's 50 billion PLUS. Within rapidly changing events, the Liberals need to be nimble and responsible. I've sensed two things this week, one the obvious lack of competence on the government's part and two, the alternative seems equally out to lunch in it's demands. If we really want the government to wear this circumstance, then it's imperative that we present a consistent message as an alternative. Otherwise, the Liberals own mixed messages effectively alleviate some of the real criticisms directed at the government. These new figures don't just provide an opportunity to hammer the government, they also allow the Liberals to drop some baggage and get ahead of the data, which in the end will win them favor.


burlivespipe said...

Bang on. The current gov't meme seems to be to turn the tables -- assault the Liberals' (and opposition) demands for more spending, quicker spending etc. They've even begun a campaign through the media to smack about the Liberal track record of battling deficits (using a similar carpet-bombing effect that they tried out on a worst canadian poll a few years ago, which resulted in Trudeau topping the poll!)... While the CONs can do little but throw mud and try to change the subject, Ignatieff needs to make the adjustment you've suggested. Focus on the slowness of the infrastructure spending and its targeting; demand the gov't tinker more with EI (by getting on the stories of unemployed who don't qualify for EI, growing welfare rates @ provincial levels, highest demands at foodbanks etc) and highlight the fact that like RB Bennett, the gov't denies that there's any problem. Demand they reach out by whatever means possible, even if it shifts some non-spent infrastructure $ to EI adjustments (to 480 hours at least)... Forget about demanding Flaherty's resignation - he's the opposition's best gift right now. Keep hammering but propose moderate ideas while seeding the ground for a fiscal monetary plan to be revealed in full in a campaign.

The Rational Number said...

Put simply: why is the deficit so large if not for infrastructure spending? It pre-existed the recession and is structural, as you indicate.

The Rational Number said...

Also, I like to point out that Mr. Harper sucks, and he blows, too. ;-)

WesternGrit said...

Great observation, and very good follow up post!

Dylan said...

I believe that such dual criticism does not have to be as confusing and spin-worthy as the LPC and MSM are making it out to be.

Ignatieff, from my perspective, wants a responsible deficit if we're going to have one at all. If anything, Canadians would want a sensible deficit that serves the purpose of creating jobs, protecting pensions and giving unemployed Canadians the EI they need to weather the storm.

The CPC deficit is irresponsible. We spent our way down to it and we're not getting all the facts from the Minister of Finance. How big is the deficit really going to be? How far down this tunnel are we going to go? Is there an end in sight? The Liberal plan has an end in sight. It has benchmarks. New permanent spending suggested by the Opposition does have a price tag but it has a purpose that, I believe, Canadians can respect.

Aimlessly going into deficit and expecting the public to blindly follow along is Harper's game plan which Ignatieff opposes. This opposition might seem two-faced: berating a growing deficit and at the same time demanding more spending. What Iggy is really asking for is a responsible Ministry of Finance which Flaherty and the PMO has not been able to deliver since 2006.

Steve V said...

I guess the point, let's not just rely on the government losing credibility, let's be proactive and set ourselves up as the party that will get Canada out of this mess. There's a danger in looking every bit as out to lunch as the government, if were criticizing while demanding more. We can get into the details, but when you think in soundbite term, I'd caution there's potential problems with that approach.

Anonymous said...

Very good post, Steve, and good comments as well.

I do think the Liberals need to do more to point out that this exploding deficit actually has very little to do with the stimulus spending or any EI standard rules (which by one estimate I heard this week would increase the current $50B debt by 1/50th - that's not a typo). It would be a drop in the bucket compared to the auto bailout.

So to allow the conservatives to try to frame this as "Liberals crying for a larger deficit" would be unforgivable.

The emphasis needs to be that the Conservative deficit numbers are 1) hidden and 2) structural. The lack of foresight and lack of transparency are what make the current situation unacceptable.

As was discussed at Liberal Arts And Minds this week, the Liberals do need to lay out in basic terms what they will do to ensure that a reasonable recovery plan is put forth to correct the situation that Harper and Flaherty have either intended or bumbled their way into.

A return to sensible government is a message I believe would resonate across Canada. Harper doesn't even seem capable of providing the steady hand he likes to imagine. It is just not in his DNA. Slash and burn politics are his forte and, indeed, his only game.

Anonymous said...

This is a great opportunity for the party to take up socially liberal positions in its platform.

Because we DO NOT have the money to spend big on social programs, the way we are going to wedge the Conservatives this time around is by adopting a relatively more-than-usual socially liberal platform.

Marijuana legalization.. any one?

Miles Lunn said...

I agree with the large deficit, arguing for more spending would be tough now. We can also argue that the Liberals cleaned up the last large Conservative deficit in the 90s which when taken inflation into account is close to the same size as the current one. It is one thing to be off on projections as no one can know for sure how well the economy will perform, but a good finance minister would be conservative (in terms of accounting principles, not ideology) rather than underestimate the deficit. In fact had the cushion we left not been tinkered with we would have a cyclical deficit now rather than a structural one.

As much as we probably hate to do this, I think both tax hikes and spending cuts may be necessary. I would argue hiking the GST, not income or corporate taxes is the best solution. As for spending cuts, I would do a full program review and try to cut the waste and excess in government, not vital programs that Canadians depend on. And if we must cut vital programs, we should have a plan to restore their funding once the deficit is eliminated and the same goes for any hike in corporate or income taxes. That being said, I worry about our ability to clean up the mess if we form government since at least in the 90s we had a majority government, it would be lot harder to do the same thing with a minority government as the Tories will oppose us on any tax hikes and for not cutting spending enough while the Bloc Quebecois and NDP will oppose any spending cuts.

The Rational Number said...

Miles Lunn: Good point about Liberals cleaning up the last deficit left by Mulroney. Now that's a simple message that many people can understand.

Steve V said...

If there is one legacy of past Liberal governments, completely accurate or not, it's the sense that they were good economic managers that brought prosperity. This allows us to make a convincing argument, if were mature and honest in our position, that the Liberals can and will get us out of this mess.

I think these new numbers are sobering, and I sense moving forward, that people will have little tolerance for pipe dream scenarios, policies that simply argue it will all disappear naturally. It's the most risky of scenarios, because history tells us it's a losing argument, but it might be time to look the adult in the room and admit a GST hike will be needed. On the plus side, there will be little criticism coming from economists, people might find this type of an admission a breathe of fresh air, and look at Harper's refusals as nonsensical, given the circumstance. It's a tough call, but I woundn't assume blowback, because these are extraordinary times and serious problems demand serious responses.

Big Winnie said...

The Liberals need to show Canadians that they will be an |open and accountable government. This has been lacking with the CONs in power.

The Liberals also need to refute the claims made by the CONs (I noticed their attack ad has changed) before people start to believe them. As an example, for the proposal for the changing of EI, the CONs say that 360 hours works out to 45 days, well 420 hours (which is the min) works out to an additional 10 days (approx, based on an 8 hour work day) and these people qualify for a "years worth of EI"?

The CON record of mismanagement nedes to be front and centre over the next month so that Canadians will know how their curent government has been "spending the money" ( is good but how many people check it constantly).

Having watched QP for the last 6 months (when it was on), its become apparent the CONs are desparate and have no answers to questions posed to them and that's why they are attacking the Libs/NDP/Bloc.

They do not have a plan to get Canada out of recession. I think they realize this and want to drive us deeper into debt so that the Libs will have a harder time getting us out of deficit...then the CONs will tell Candians about the "Tax and Spend" Liberals.