Into the void

Hey Harper, when your former boss said “the west wants in,” I think he was talking about the prairie populists, not the west coast hippies.

The Harper government’s latest budget (labelled the NDP budget by some commentators) projects an $85 billion deficit over the next five years and represents one of the largest annual spending increases in Canadian history. This flies in the face of fiscal conservative values, which advocate smaller government, meaning less taxes and less spending. Despite the fact that the government was leaking details of the budget for some time before it was released, the full extent of the economic stimulus measures caught many Tory supporters off-guard. A budget like this would be expected from the Bob Rae’s and Jack Layton’s of Canadian politics, but not from Stephen Harper.

Reaction to last Tuesday’s budget from conservative pundits, bloggers, and economists was swift (see here, here, here, and here). Now, the media is asking the question: is the Canadian conservative movement dead? And while there are competing views on this, it seems clear that Harper has managed to alienate his base in order to appease the Liberals.

One thing is certain. After this budget, there is a gaping hole on the right side of the Canadian political spectrum. With the Conservatives loving embrace of Keynesian economic policies, there are no longer any parties in the House of Commons advocating for fiscal restraint. In a recent blog post, Andrew Coyne highlighted this very point:

The government will be everywhere, and everything. And why not? When there is no longer any budget constraint, when deficits are not evidence of incontinence, but “stimulus,” why should any project, any sector, any region be denied? More to the point, when there is no political constraint—when no party is pulling to the right, while four pull left—spending can only go in one direction. And for the foreseeable future, that’s where the action is going to be: sucking money from the gushing spigot of the state. Starting a business? Only a chump would spend his time worrying about pleasing the consumer. It’s the politicians you want to keep happy, mate.

The policy vacuum on the right not only has potential consequences for Canada’s financial future, but for its political future as well. I seem to remember another era in which small-c conservatives were disenfranchised with the Conservative Party.

Mulroney’s government was also criticized for its lack of fiscal responsibility, huge deficits, and its failure to reform democratic institutions such as the Senate. The breakup of Mulroney’s “grand coalition” saw the emergence of new political parties, including the Reform Party, which split the Canadian right and led to over a decade of Liberal majorities. While Harper was able to “unite the right” and bring the Conservative Party back into government, he was unable to escape the political paradox whereby Liberal governments have been able to slash program spending and balance the budget, while Conservative governments have increased government spending, often due to a public perception that they are secretly out to destroy the welfare state. I just hope the conservative movement is strong enough that it doesn’t fracture this time around.

The sad part of all this is that the economic stimulus measures introduced in the budget won’t work and Harper knows it. Increases in government spending during the Hoover and Roosevelt administrations did not pull the United States out of the great depression. Neither did it work for Japan in the 1990s. So who are we going to get to clean up this mess? When the business cycle drives the economy back up, as it inevitably will, and the country’s left with a large deficit and an ever increasing debt, who’s going to come in and make the necessary cuts to balance the books? For this, I don’t have an answer. Does anyone know what Ralph Klein is up to these days?