Out of ideas

The fiscal policy pursued by Canada's Federal Tory government is an unholy amalgam of ideology and cynicism.  The ideological part is that the government has committed itself to eliminating the budget deficit by 2015, despite the lack of sustainable growth in the economy. The cynicism lies in the fact that once the budget is balanced, the government intends to hand out a yummy platter of tax cuts to middle class voters, in the hope (and expectation) of winning the election that's due in the fall of 2015.

What's remarkable is the extent to which this mean-spirited approach, which has seen long-established social programs eviscerated for the sole purpose of building up the war-chest needed to fund the tax cuts, has now become the default setting for public debate.  No Canadian politician, at any level of government, can hope to get elected without promising to keep taxes down.  That's how Rob Ford got elected Mayor of Toronto four years ago, though it's unlikely that he'll be able to pull off the same trick in a couple of months time, because just about all of his serious rivals are chanting the same mantra.

Even respectable think-tanks are resigned to singing the Tory tune.  A new report from the CD Howe Institute suggests, in effect, that the government should resign itself to the fact that it can't get the economy to grow any faster, and look for palliative measures to help those most affected.  Remarkably, the left-leaning Toronto Star, in an op-ed piece today,  almost seems to endorse this counsel of despair.

The specific suggestions from the CD Howe study are very thin gruel: more attention to skills training, more help for the long-term unemployed (through repayable loans!) and removal of inter-provincial trade barriers.  These are not bad ideas, but they're not particularly new.  More important, they're startlingly unambitious, and depressingly acquiescent in the notion that the big policy levers, especially fiscal policy, have almost no role to play in current circumstances.  If this is to be the tone of the economic policy debate when the election rolls around next year, it's going to be a truly depressing spectacle.

The redoubtable CD Howe was a dominant figure in Canadian federal politics during and after World War 2. He mobilized the private sector to support the war effort and drove the transformation of the Canadian economy from one based almost solely on resources to the more mixed and stable structure which  flourished in the post war years (and which has been enthusiastically dismantled by the current Tory government). It's unthinkable that he would endorse the supine policy approach now being promoted by the Institute that bears his name.