If Erin O’Toole proposed $100 billion in new tax cuts, the Trudeau Liberals would likely inquire as to how the Conservative leader intended to pay for his plan.
The Liberals would likely raise questions about whether we could afford such tax cuts given the size of the federal deficit and would no doubt raise concerns about how this might impact other federal departments.
These would all be valid concerns. And they are the same sort of valid concerns that should be raised about the Liberals’ apparent plan to announce $100 billion in new spending above and beyond all of the spending that’s been announced since March — spending that has now resulted in a deficit of over $300 billion.
We won’t know for sure until the throne speech just how ambitious the Liberals plan on being in delivering on plans to “Build Back Better,” and some of what’s been reported in various media outlets might simply be a series of trial balloons being floated by Liberal insiders.
However, the prime minister has openly talked about embarking “on an entirely different direction as a government” and has pushed senior bureaucrats to help devise a “bold and ambitious” new agenda for re-imagining Canada.
At the same time, though, Trudeau has insisted that there will be no tax increases to pay for all of this. Skeptical conservatives might beg to differ, but that misses the point. If the Liberals are serious about a major expansion of government or converting programs like CERB into a more permanent form of basic incomes, then there should be tax increases.
To put it another way, if it’s reasonable to add $100 billion in new spending, why not also include $100 billion in tax cuts? What’s the argument against that? If the answer is anything along the lines of, “we can’t afford it,” then that’s giving away the game.
It’s one thing to engage in massive spending and borrowing in response to a crisis. The world’s major economies and democracies — of all political stripes — have done so, and Canadians are largely supportive and understanding of these sorts of emergency economic measures.
It’s quite another thing, however, to argue that these should become permanent government programs.
Moreover, the Liberals seem quite indifferent — irresponsibly so — to the long-term costs and risks of all of this borrowing. Ultimately they seem to be gambling that this potential fiscal time bomb will detonate long after they’ve all left office.
That’s where there’s an opportunity for the Conservatives and new leader Erin O’Toole.
The Liberals are going to try and portray this as a battle between their vision for a re-imagined Canada and the “austerity” of the Conservatives, but the Conservatives should avoid that trap. It’s not the relevant question.
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While we certainly should need politicians who recognize the eventuality of us having to deal with all of this debt, the Conservatives don’t need to make balancing the budget their number one issue right now. The contrast here, at least from the Conservatives’ perspective, is between a party that’s oblivious to the consequences of borrowing and the need for economic growth and a party that understands the importance of both.
Reasonable people can disagree on the benefits of an expanded social safety net, but it’s hard to make a case that it’s going to lift the Canadian economy out of this pandemic-induced recession. The Conservatives would do well to be the party that is advocating a pro-growth agenda.
The Liberals are certainly taking a political gamble here. Their brand has long been wrapped up in the idea that they’re a cautious, moderate centre-left party. They made be overstating the appetite of Canadians’ for a more radical version of the Big Red Machine.
It’s a fantasy to think we can have it all and not have to worry about what it costs. We need a much more mature conversation about how to responsibly rebuild our economy and tackle this accumulation of debt.
If the Liberals don’t want to have that conversation, hopefully the Conservatives can fill that void.