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Adrien Pouliot

Budget 2012: not good enough

The recent Federal budget was a resounding success… from a public relations standpoint.  After having stirred up the pot and whipped the left-leaning CBC/Radio-Canada  commentators into a frenzy, the whole budgetary balloon deflated itself with but a slight hiss and the commentators quickly turned to a real fight, something to sink their teeth into – to wit, the humiliating defeat of Conservative Patrick Brazeau to the punches of brash and progressive Justin Trudeau.The budget has a little of everything in it. For many fiscal conservatives, Mr. Flaherty missed an opportunity to capitalize on the well-orchestrated message of austerity that he had bandied about during the weeks leading up to his speech.  With only a $5.2-billion “reduction” in spending, or 35% less than the maximum $8-billion previously trotted out, many disappointed Conservatives complained to their MPs about the lack of courage exhibited by the party’s leadership -  even though the Conservative caucus itself had supported the original $8-billion target.  It is only once sent to Mr. Harper’s office that the axe was swiftly taken away from the executioner.  It seems the PMO has fallen prey to the mistaken notion that if you reduce spending too fast, you will crimp your economy.  And yet, to mention just one example from a large body of research, in 2009 leading fiscal policy expert and Harvard University professor Alberto Alesina and his colleague Silvia Ardagna reviewed stimulus initiatives undertaken in Canada and 20 other industrialized countries from 1970 to 2007 and found that the most unsuccessful attempts to stimulate economies were the ones based on increased government spending.[1]In any event, the $5.2-billion reduction is also somewhat misleading.  It does not represent a real “cut” but rather, in most cases, only a reduction in the planned increase in the existing spending of government departments.  So while departmental… Read More