EVERY OTHER day I open the newspaper and read some new speculation about another federal election.
Will we, won’t we, and what story will we tell ourselves this campaign is about?
Given the crisis we are still in the middle of, the story should probably be an economic one.
Prime minister Stephen Harper seems to be anticipating this because he keeps goading the leader of the opposition into saying how he would deal with the new fiscal deficit.
Harper inherited a fiscal surplus and proceeded to eliminate it by cutting taxes and increasing spending. Now he is trying to scare the electorate into believing his opponent would raise taxes, whereas Harper would not.
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Liberal party leader Michael Ignatieff is then put in the fantastic position of declaring that he would not raise taxes because a growing economy would automatically raise government income.
Can we please start speaking honestly to each other?
The fiscal deficit has been created in three ways. First, the federal sales tax was cut from seven percent to six percent and then to five percent by the Conservatives.
Secondly, the economy has gone into recession because of the fallout from the collapse of the housing bubble in the United States.
Thirdly, government spending has increased to stimulate the economy and all the parties agreed to this.
I am confident that things will turn around. However, when they do, our increased income won’t pay off the deficit all by itself.
We will also have to reduce our discretionary spending so we can get back to reducing our debt, which is now much bigger than when all this started. Societies always have a debt because we are constantly investing in the future, but that’s another story.
There are only two ways we can do that. Either we can raise taxes or we can cancel or reduce services.
The Liberals like to trumpet their achievement of slaying the deficit dragon in the mid-1990s. How did they do that?
Well, first of all they refused to reduce or eliminate the seven percent GST introduced by Brian Mulroney’s government, thereby increasing revenue.
Then they reduced funding to the provinces to pay for health, education and welfare, thereby cutting expenses.
Those provincial funding cuts caused provinces to cut back welfare rates, introduce or increase health-care premiums and reduce funding to school boards.
So, the deficit was paid in part by the poor, the sick and the young.
Here’s a news flash: I want taxes to be raised and I want a debate about whether that should be through increasing the GST (a one percent increase generates about $11 billion per year) or increasing income taxes.
I worry about Harper’s plan because I am afraid he will ask the weakest members of society to pay for it. I worry about Ignatieff’s plan because this is exactly what the Liberals did last time.
From my point of view, we should all pay for this together because we’re all in this together. Is that so hard to talk about?
Joseph Heath tells a funny story that relates to this. He is in an auto repair shop when the customer ahead of him starts criticizing her bill.
“How much of this is taxes?” she asks, “I just want to know how much those bastards are taking from me!”
After further conversation the woman announced she had to leave because she was late for her shift as a nurse.
“Wait a minute,” says Heath. “You’re a nurse at a public hospital? That means you work for the government. Those ‘bastards’ are using this money to pay your salary. That’s like Tom Cruise complaining about the price of movie tickets.”
Heath’s point is that the right wing has convinced the population that the government is a consumer of wealth whereas the private sector is a producer of wealth.
But the public sector actually contributes to the economy just as robustly as any other sector. One of the attitudes I commonly heard expressed in Saskatchewan was that the government is the biggest co-op going – healthy attitude, that.
Christopher Lind has published widely in the area of ethics and economics. He is a Senior Fellow at Massey College, University of Toronto.
