Stephen Harper insists he is all about strengthening the economy. Not so, writes Tom Walkom. He is abandoning it:
The reasons are political. Prime Minister Stephen Harper and his finance minister, Jim Flaherty, now have only one goal in mind — the 2015 federal election.
And they are determined to slash government spending in order to balance Ottawa’s books before then.
They calculate that a fiscal surplus in 2015 will allow their party to offer voters a platter of tasty tax cuts that will win it four more years in power.
As a political strategy, it has worked before. It's been all about buying votes with tax cuts. But as an economic strategy, it's madness:
In Canada, the official unemployment rate still hovers near 7 per cent. The Canadian Labour Congress calculates that when those who have given up looking for work plus involuntary part-time employees are added in, the real jobless rate reaches about 17 per cent.
The country remains divided. Canadians able to take advantage of the oil boom are doing all right. But those connected to manufacturing, particularly in Ontario, are not.
The rich make good money. Census figures show that those in the top one per cent of income earners average $381,300 a year — about 10 times the national average.
Yet those at the bottom find they need two or three minimum-wage jobs just to stay alive. Debt-burdened students graduate from university and college only to find that full-time jobs simply don’t exist.
Mr. Harper owes his political existence to the wealthy. And he's quite willing to strangle everyone else to stay were he is:
All of this is having a direct effect on jobs. The Parliamentary Budget Office says Ottawa’s spending cuts cost the economy 12,000 jobs last year. It estimates that this figure will rise to about 80,000 by 2016.
Up to now, Harper and Flaherty were careful to leave their options open. Both routinely warned that the fragility of the world economy might interfere with their budget-balancing plans. In 2009, the Harper government willingly incurred billions in debt to get the shell-shocked Canadian economy moving again.
Stimulus kept the Harperites in power. Now they calculate that austerity will do the same. But, Walkom warns:
In such a world, fixating on deficits is madness. Nonetheless, Flaherty and Harper are rolling the dice. The stakes are dangerously high.
The situation is grave when Insanity drives the bus.