Monday, December 15, 2008

Smoking Out Deficit Jim

First we heard Ignatieff, now his surrogates meeting with Flaherty, the main thrust seems to be smoking out the government, disallowing rosy projections, based on sketchy math. Before the Liberals will put forth specific demands for the budget, they first want the Conservatives to "come clean" on our true fiscal state. Was there one person who wasn't surprised to hear the Conservatives would avoid a deficit in the coming fiscal year?

Instead of focusing on measures, it's a fairly shrewd tactic demanding to "see the books", ensure that we have an accurate picture of our fiscal house. In this way, discussions are contingent on the government essentially admitting that their surplus/deficit projections were an intentional ruse. Flaherty must be honest with Canadians, before the Liberals will consider negotiating (today's demand included full disclosure prior to Christmas). This move is about transparency, but really it's a political play, the Liberals don't want Flaherty to get away with a disingenious presentation to Canadians, particularly when those erroneous numbers can mask the magnitude of the problem through a probable next election.

The Liberals have a powerful argument, the government's own Budget Officer also smells a rat, as do most private forecasters, Flaherty stands alone with his projections. Forcing the government to come clean on our fiscal state will expose the Conservatives and it will challenge the notion of a "steady hand" at the tiller, because it erodes the trust factor. The Liberals can then take credit for providing Canadians with an accurate portrayal of real situation, while making the Conservatives wear their rightfully earned deficit.


CuzBen said...

"Flaherty stands alone with his projections"

Alone with the entire Ministry of Finance, that is. Jim didn't cook these books by himself. Although he's had lots of practice, and he's probably coniving enough, it wasn't a one man job and there won't be any secret documents that say otherwise.

In my opinion, he'll never admit to a thing and he'll have a stack of Ministry calculations to prove it. In that sense, openning up the books might not give Liberals the fodder you write about. Instead, he'll justify the upcoming about-face (in terms of projections)by professing his new desire for cooperation and opposition input, blah blah blah. He will probably even say, "you want a deficit? You got it," blame the shortfall on the opposition while taking credit for the stimulus results.

However, demanding information (even though an FOI would do) is a smart political move regardless beacuse you can spin the numbers your way and counter attack.

Watching Brison right now. He's got it right: demand the moon and watch them fail.

Kris said...

What if the government doesn't produce these numbers? What if they dig in their heels and deny the projections are wrong? Will the Liberals be forced to vote down the budget and go to an election?

Ignatieff seems to want to avoid an election and have some time to work on the party and his leadership. It seems like an awfully big climbdown for Flaherty to admit the books are cooked.

Steve V said...

I'm not sure how Flaherty will do it, but he must reconcile the discrepancy between what his figures and the budget officer. I mean, he can resist, but it's a political loser to say your independent officer is lying. Also, Flaherty's growth forecasts are almost a full percent higher than the private sector one's, which means again, if he resists, he is unlikely to find much backing for his position. If the Cons are prepared to let everything unravel, because they won't present honest accounting, they face a real uphill battle in the court of public opinion- it's not just the Libs, nobody believes them. Maybe, we'll see "revised" figures, arguing things have gotten worse in the last few weeks, just like they did after the election.

Kris said...

"Maybe, we'll see "revised" figures, arguing things have gotten worse in the last few weeks, just like they did after the election."

That seems like the most believable outcome. I agree that something's GOT to give, it's just hard imagining this group backing down from something so big without some explaination to remove the blame from their shoulders.

JimmE said...

Perhaps they can deliver the budget in an Auto Plant - er, no, sorry THEY WILL ALL BE CLOSED FOR THE MONTH OF JANUARY!

Susan said...

What don't they get that self-satisfied auditor general to do her job, or does she only do it when the Liberals are in power?

Kris said...

Liberals quote Flaherty: 'Projections too rosy'

The first step?

Steve V said...


I think that admission speaks to the "revised figure" argument I mentioned earlier. Too funny, when you think about it, just how long ago did he release this economic update with the surplus??

Anonymous said...

If I am Flaherty and Harper, there is still one move they can do to shove the budget up at Iggy, Brison, and Layton.

Use Harris-style massive tax cuts in the stimulus package. A large middle class tax cut similar to Stockwell Day's flat tax.

This may rally the hard right and the Fraser Institute people big time. I would start with presenting the flat tax in the offices of EnCana first.

Steve V said...


I've heard talk of eliminating the GST for six months, or eliminating it for certain big ticket items.

The only hesitation I have with more taxcuts, the government is staring a BIG deficit in the face, if they revise the books, do the bailouts, plus the stimulus. If Harper wants to argue against structural deficits, he may have a hard sell, if he further limits fiscal capacity. That said, I won't be surprised, and if that's the poison pill, so be it, it's not necessarily a bad idea at this point (better than a rebate, like the Americans, because you need to spend to get the benefit).

Jerry Prager said...

Flaherty is just one more of Harper's sock puppet ministers meant to look like there's someone else in the government besides Harper. Flaherty can't say or do anything unless Steven moves his lips for him.