I think this is a fine picture for captions, so have at it if you feel inspired that way…
But what I really wanted to draw your attention to was this atrocious article asking the facile question “Has the GST cut helped or hindered our economy?” by a fellow named Andy Johnson, a reporter with CTV News. I haven’t seen a more mangled piece of grinding nonsense since… well, yesterday actually, with that deathless “Philosopher Kings” tripe Sibley penned for the Ottawa Citizen.
“Admittedly, hindsight is 20/20,” Johnson writes, “but according to one taxation watchdog the program has taken a whopping $12 billion out of federal coffers — funds he said would come in handy now as Ottawa faces a deficit for the first time in over a decade.” Gee, no kidding. But in the very next paragraph, the “taxation watchdog” points out that not only was the massive cost to the treasury clearly forecast in advance — effectively puncturing the “hindsight is 20/20” trope — but that by the government’s own estimates the cumulative total would be closer to $20 billion, not the $12 billion mentioned by Johnson (which is just the 2009-2010 portion, so it hasn’t actually been taken out of federal coffers… more like it just won’t be there to spend).
Further on, Johnson writes:
When the first cut was made to the GST in July 2006, the economy was strong and large surpluses were being banked by the feds. But Chapman said many analysts at the time suggested an income tax cut would be a more effective way of giving money back to taxpayers.
Huh? Many analysts? Try every economist worth their salt. All of them said quite unequivocally at the time that cutting the GST was an ill-advised move, favouring instead income tax reduction as the preferred means of “giving money back to taxpayers.” I’m certainly unaware of any who said otherwise, but perhaps you can find one that did… The suggested notion that there was any serious argument regarding this point at the time is a complete distortion.
And it gets worse:
The second cut — which completed Harper’s pledge to slash the GST to 5 per cent — made more sense, Chapman said.
“2008 was different, when it went from 6 to 5 per cent. I think they saw storm clouds on the horizon and wondered what the reaction of consumers was going to be, so maybe in that case you can say maybe a one point reduction makes sense.”
So maybe you can say maybe it made sense? Uh huh. Or maybe not. If the Harper government “saw storm clouds on the horizon” they were certainly being rather discrete about any such foreboding for the first ten months of last year. I realize that Harper and Flaherty now like to pretend in retrospect that they implemented the second cut as a preemptive stimulus to the economy, but there’s no evidence of this actually being the case and even less of it actually having had the desired effect they purport to have been deliberately intended at the time.
The following is a party political broadcast on behalf of… oh no, wait. It’s just more comments from this Chapman fellow:
He said much of the current economic trouble is beyond Canada’s control, noting that the Conservatives have “resisted the temptation to spend like drunken sailors” and have been responsible in their money management.
Chapman said the Tories have also kept strong banking regulations in place, which has protected the economy from a sub-prime mortgage or credit crisis, like that currently underway in the U.S.
That’s rich. I guess Chapman missed the fact that government spending under the “Conservatives” has been rising considerably, not to mention the billions of dollars of pork-barrel spending the Conservatives were shamelessly doling out from coast-to-coast-to-coast over the summer and in the run-up to the election to buy votes. As for keeping strong banking regulations in place, as one of the commenters to this story notes, to the contrary: “They invited foreign companies into the country to play with financial instruments and also introduced the 40-year, no down payment mortgage, but then reversed it after a couple years. For that brief time, this policy created its own problems.” Indeed.
But surely Johnston will draw on a contrasting viewpoint to provide some balance, right? Wrong. What we get instead is another right-wing spokesthingee in the form of Kevin Gaudet, acting federal director for the Canadian Taxpayers Federation who pops up at the end of the piece to make excuses and provide cover for the Harper government.
He said the GST cut can’t be blamed entirely for the impending deficit.
“To pretend that suddenly, magically, it is the sole factor for the declining government revenues, would be to ignore a swirling number of factors,” Gaudet said, adding that the larger culprit is the high rate of government spending in recent years
Again, as noted by “D Epp” in the comment to the story, nobody is blaming the GST cuts “entirely” for the impending deficits. They are saying that economists at the time (the good times) stated they were not the preferred method of cutting taxes. Certainly there are all kinds of other factors at play here: falling commodity prices, rising unemployment expenses, declining industrial activity, etc., but the fact remains that a $20 billion (or even $12 billion) drop in federal revenue represents a significant component of the impending deficits.
The Conservatives allowed government to continue expanding under their watch, failed to rein in spending and implemented tax cuts that were both reckless and ineffective. And that was during the “good times”… Now we’re supposed to trust the fiscal acumen of the Great Helmsman to steer the country through the turbulent waters of a severe recession that many predict is going to get a lot worse before it gets better? Sorry, but given their track record to date, I’m not exactly filled with confidence at the ability of Stephen Harper and Jim Flaherty to get things right.