Friday, February 22

The wisdom in Dion's debt strategy

Hi Folks:
Due to the Provincial Election under way as you can imagine it is considered best that I minimize campaigning so as not to confuse the public and as you might guess I've been helping with the Provincial campaign. However, I could not help but be impressed by this article in the National Post that many consider a Conservative leaning paper. If you wish to read the full article please see the Nat. Post or email me and I will forward it to you. The article portrays Mr. Dion strongly Mr. Corcoran appears to endorse the wisdom of Mr. Dion's fiscal strategy. Otherwise, I keep busy, on Monday I met with Hon. John McKay in Calgary and on Thursday I attended the AGM and Conference of the Alberta Soft Wheat Growers Association. Read on...

National Post Wednesday, February 20, 2008 Page: FP15 Section: FP Comment
Byline: Terence Corcoran Column: Terence Corcoran Source: Financial Post

To hear the Conservatives tell the story, Liberal Leader Stephane Dion has announced new budget principles that would create a new round of federal deficit spending. The Tory Web site, full of their typical putdowns of Mr. Dion, includes a visual suggesting a Liberal budget would sink Canada into "$62.5-billion in new debt."

It's just partisan gamesmanship. The Tories took a list of Mr. Dion's latest pronouncements on spending and his earlier fiscal comments, added them all together, and came up with a big number. Mr. Dion, and his finance-minister-in-waiting, John McCallum, quickly branded the Tories as thieves and liars, or something like that. Actually, Mr. Dion – speaking yesterday in Montreal -- used the following phrases against the Tories: deliberate miscalculations, misrepresentations, misinformation, the epitome of desperation, and distortion of the facts.

I'd check the veracity of all this if I weren't already certain the Conservatives had done all of the above, and maybe more. What's really fascinating isn't the facts so much as the Dion speech last week in Ottawa that triggered the Tories' attack on Mr. Dion's debt strategy.

Because what Mr. Dion had to say about government spending and deficits and debt made a lot of sense. ...

Mr. Dion said he was proposing "nothing less than a new contract between a Liberal government and Canadians -- for the benefit of current and future generations." It is time, he said, to take these federal surpluses and do something else with them. "A lighter debt burden is good news -- it gives us the flexibility to address our most urgent priorities while also putting our children in a better position to pursue their own dreams."

In practical terms, Mr. Dion was saying that, unlike the Tories who will announce next week that they will take this year's surplus and pay down the debt by up to $10-billion, the Liberals would find some way to spend the money. Specifically, he said, the Liberals would spend the surplus on infrastructure. And in future years, a Liberal government would limit debt-reduction to $3-billion a year. Any money left over after that would go to infrastructure.


As a fiscal debt-management strategy, Mr. Dion's plan makes for good policy.
We don't need to reduce the debt any more than we have. By committing surpluses to infrastructure (however difficult that may prove to do in budget practice), Mr. Dion is helping to change the nature of the national budget debate over surpluses. It's not quite like saying debt and deficits are good. And it would be better if he could have offered tax cuts as the alternative to debt reduction. But Mr. Dion has served a strong counterpunch to conventional Tory budget wisdom, which may be why the Tories are reacting so strongly.

The Globe and Mail also describes the Tories as "shooting blanks" these days.

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