Seamanship Quotation

“In political activity, then, men sail a boundless and bottomless sea; there is neither harbour for shelter nor floor for anchorage, neither starting-place nor appointed destination.”
— from Michael Oakeshott's
Political Education” (1951)

Thursday, July 28, 2011

Using Canadian Liberals to sell Republican austerity

It’s easy to be a true believer when most people aren’t listening and you have little chance to make a difference.

The easy times are over for austerity fanatics in Washington. Their numbers are now strong enough to defeat moderate fiscal measures to protect the United State’s credit rating and fragile economic recovery. Their mantra—spending is the only problem—could actually be implemented.

This must be a bit unnerving. Tea Party representatives were not recruited or elected to tamper with the material tenants of the American dream. Purging Washington of its wicked Keynesians is supposed to unleash prosperity not save souls. Without sold domestic evidence that a one-sided austerity program will work, and without a pristine no-tax domestic hero to assure them that federal governments can build things with a wrecking ball, Fred Barnes has nominated two Canadian Liberals—1993 Prime Minister Jean Chretien and his Finance Minister Paul Martin—as right-wing poster boys.

Twinning “Canada then, America now” is dangerous nonsense.

Washington radical conservatives have no right to feel comforted by Canada’s fiscal turn-around in the mid Nineties. Canada’s federal government—and majority Parliament—faced up to an untenable public debt problem with a balanced, multi-year, avowedly middle of the road approach that respected Keynesian fundamentals and preserved all the key elements of those Canadian social entitlements that American conservatives are so desperate to purge at home.

Barnes ridicules Obama’s Monday night statement “We don’t have to do anything radical to solve his problem. Contrary to what some folks say, we’re not Greece.” Obama could have fairly added that America’s debt situation is closer to what Canada’s was in the Nineties and that Canada solved its problem without repudiating its social values, its economic recovery, or its international obligations.

Canadians never stopped being moderates or voting for moderates in dangerous times.

Barnes crows about Chretien’s statement “Canadians have told us that they want the deficit brought down by reducing government spending, not by raising taxes, and we agree.” Barnes neglects to add that Chretien inherited a brand new comprehensive national sales tax (the 7% GST.) In fact, Chretien, not Obama, inherited a reformed and robust revenue base from a Conservative government.

There were good reasons substantial federal spending cuts could be introduced in Canada in the Nineties without harming economic growth. The US economy was surging; demand for Canadian products in the US was expanding to make up for restraint at home. The cost of federal borrowing had finally started to decline as inflation and global interest rates declined. Furthermore, multi-year cuts in social transfers to the provinces were largely ameliorated by manageable increases in provincial deficits. These countervailing factors are not available in the US today.

The Canadian record provides no basis to argue that Americans can balance the US budget overnight or that balancing the budget through austerity alone is all the US federal government has to do.

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