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Hill Dispatches

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Karl Nerenberg has been reporting on federal politics from Parliament Hill for rabble.ca since September, 2011. In his long career, he has won numerous awards as a broadcaster and documentary filmmaker.

The story of Tuesday's budget will be about much more than the size of the deficit

| March 21, 2016
The story of Tuesday's budget will be about much more than the size of the deficit

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On Tuesday, the new Trudeau government will bring down its first budget, and it has been working hard, in advance, to manage expectations.

The prime minister let the cat out of the bag on Old Age Security (OAS) when he told a New York audience his government would cancel the Conservative plan to advance the age of eligibility from 65 to 67.

Justin Trudeau followed his predecessor's example in choosing a foreign venue for that announcement.

Stephen Harper was in Europe when he announced his plan to hike the OAS age requirement.

Trudeau also used the occasion of Earth Hour to foreshadow that the budget will have money for projects that foster environmental sustainability.

Finance Minister Bill Morneau earlier told Canadians the government would come nowhere near its promised deficit of $10 billion. He forecast that federal deficit, without additional spending, would be no less than $18 billion.

Knowledgeable observers are now speculating that the actual deficit figure on Tuesday will be at least $30 billion, triple the amount the Liberals said a few short months ago.

Getting that number out there well in advance of the budget is a classic managing expectations tactic.

Liberals have become masters at avoiding budget surprises

When he was finance minister, Liberal Paul Martin did the same in advance of his 1995 budget, which famously (or notoriously) included deep cuts to health and social transfers to the provinces.

Martin got the ball rolling with his economic update of November 1994, when he promised the Liberal government would balance the budget "come hell or high water."

His minions then leaked most of the 1995 budget to The Globe and Mail and the CBC, who happily played along, thinking they had a scoop.

By the time Martin's draconian measures were formally announced in the actual budget the media had been well prepared and reaction was muted.

The danger for today's Liberals, who are trying to soften public opinion to accept larger than anticipated deficits rather than deep cuts, is that, for the media and opposition politicians, deficits are easy to understand and describe. Long term and sustainable growth policies are much more complex.

We can count on the Conservatives and many in the media to jump on the deficit figures and make a huge fuss over them.

The NDP will likely be more discreet, even though the party, incongruously, championed balanced budgets during the last election campaign.

The third party in the current Parliament has now re-branded itself as Canada's progressive opposition and will likely focus more on matters related to economic inequality, fairness and the environment than on the size of the deficit.

The Liberals will prove slippery target for those firing from the left, however.

They have already moved on such important files as missing and murdered Indigenous women and girls and climate change. On economic policy, the differences between the Liberals and their critics to the left are likely to be more a matter of nuance than fundamental principle.

Progressives who, at this early stage, still have a right to feel hopeful about this new government might, nonetheless, want to drill deeper to see what it is at its core.

So far, Trudeau has done nothing to offend Big Business

First, it is worth noting that the Trudeau government is all about the middle class.

It hardly ever talks about the poor, and virtually never talks about working people, let alone the working class.

Hugging the ephemeral middle class has been the U.S. Democratic Party's strategy since Bill Clinton's era in the 1990s. That is when the Democrats decided they had become too much the party of racial minorities and social activists and had ceased to appeal to lunch bucket voters.

The Republicans used to get many of those (white) lunch bucket folks to vote against their own economic interests by appealing to their attachment to -- in Barack Obama's famous phrase -- "God and guns."

Bill Clinton won many of those working people back, in part, by promising to "end welfare as we know it" with a "hand up, not a hand out" approach.

Clinton also made a point of saying he was pro death penalty. His predecessor, Michael Dukakis, committed political suicide during a televised debate when he openly admitted he opposed the death penalty.

Canada's Liberals have carefully studied the Democrats' strategy.

Trudeau's party has scrupulously avoided doing or saying anything to overtly offend Big Business.

Nor has it made an issue out of the growing gulf, in Canada as elsewhere, between the richest one per cent and the rest of us, especially the poorest 25 per cent.

The Liberals' signature tax cut measure completely leaves out the millions of Canadians with taxable income below $45,000 per year. And while it admirably hikes the taxes of those with taxable incomesof $200,000 and above, it too generously rewards the relatively comfortable cohort with taxable incomes between $90,000 and $200,000.

That is not a way to promote greater economic equality; but, at this stage, few seem to have noticed.

The middle class tax cut is now law, but it will be worth looking hard at what else the Liberal government does on taxes in Tuesday's budget, and asking who are the real winners.

What about corporate taxes or EI?

We can be almost certain that there will be no change to the current low corporate tax rate.

Even the Conservatives complained that large and well-financed corporations were sitting on piles of dead cash and not investing it in jobs.

It will also be interesting to see what the budget says about employment insurance (EI). Will it lift any of the restrictions the Harper government introduced, which mean that only four in 10 unemployed Canadians have access to EI?

The Liberals also made major spending promises for First Nations education and other services to Indigenous people, the CBC and other cultural agencies, foreign aid, fiscal transfers to the provinces for health care, and, of course, infrastructure.

The budget is where the rubber hits the road on all of those commitments.

It will be important, on Tuesday, to read its fine print carefully.

There should be a lot more to talk about in the Trudeau government's first major piece of legislation than the deficit number. 

Photo: flickr/ UN Women



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