Like Dorothy and her companions, Stephen Harper's Conservatives and Dalton McGuinty's Liberals are skipping down that yellow brick road, hoping that the Wizard of Austerity will take them back to the good old days. The Canadian Press reports this morning that Jim Flaherty will take $7 billion dollars out of this year's government spending:
Conservative sources say months of poring through the $80-billion discretionary spending envelope with a fine-tooth comb has led to about 8.5 per cent in savings worth around $7 billion. Discretionary spending is all of the money the government spends apart from transfers to the provinces and individuals for programs such as health care.
Flaherty will not detail how the cuts will be implemented in the budget, but the sources say most of the reductions will be front-loaded to realize the biggest savings.
It's not surprising that Flaherty will not provide details. The Conservatives never do -- on prisons, on fighter jets, on job cuts. But the job cuts will be significant:
Some have estimated the cuts could result in upwards of 60,000 public service jobs being eliminated, although government ministers say most of the losses will be through attrition.
Don't believe it. Back when Flaherty was Ontario's finance minister, he claimed that government spending reductions would be revenue neutral. That was code for downloading expenses to other levels of government. It is the same strategy being used in the omnibus crime bill.
And Ontario, knowing that it is under the gun, has vowed to take $17.7 billion out of government spending over the next three years. McGuinty plans to generate these savings primarily by freezing public sector wages, not cutting jobs.
The problem with both plans is that they assume that austerity will generate economic growth. That's precisely the same plan the Europeans have implemented. The Greeks, the Irish and the British will tell you how well things are going.
Paul Krugman has argued for years that you can't cut your way to prosperity. Herbert Hoover has risen from his grave and lives in Canada. The March of Folly continues.