The Economy - Political Opportunity and Minefield

Nick, first of all the liberals will play their green card with good economics and visible tactics. They will propose income tax cuts with GHG taxes paid through other means mostly by industry. The Tories have no green card to play

The fact remains that Harper and co have mismanaged the economy. Flaherty is trying very hard to get out of finance which is a telling signal. They will probably scarifice some old warhorse there who is not planning on being re elected.

The GST cuts are coming back to haunt us in a harmful economy because as spending dries up the benefits of a GST cut are much less visible.

The Liberals have a history of being good economic managers and they will play that song long and often in an election

[updated Mon May 26 07:51:56 EDT 2008]

Dion’s knack for bad political timing is astounding. In the midst of a global economic downturn he is poised to launch a campaign to raise taxes and in the process staking his political survival on its success. He has courage, I will give him that, as misguided as it is. Internally most liberals, aside from those most loyal to him, see this as a failed strategy but are happy to let it play out if it will help hasten his demise as leader.

His strategy of pedaling the tax increase as “cost neutral” will not fool Canadians and we are already seeing the cracks in his plan. Dion’s stated cost of $18 billion offset by tax cuts to business and taxpayers of only $14 billion already makes voters nervous. How will the other $4 billion be made up, through cuts to programs and services? Dion’s other stated goal for this revenue is to fund the implementation of the Kyoto Treaty which means big payouts to foreign governments in order to buy emission credits. Where will this money come from and how will it actually help the environment? If it is from the $18 billion then further cuts to programs will need to be made. If it is perceived as a waste of money it will further damage him politically.

The majority of Canadians already perceive him as a weak, one issue leader. If he sours their view of him on that one issue he is finished as leader. He must know that his enemies within the party are waiting in the wings with sharpened knives poised to strike at an opportune moment. Never the less he seems determined to provide that moment for them sooner rather than later?

[updated Mon May 26 08:26:21 EDT 2008]

Ther Conservatives have done little to earn any "good Stewardship" merit badges. I think the current economic concerns are justified, and may well be exacerbated by events over the next six months.

Dion's carbon tax, whether a good move or not environmentally, will be attacked visiously by the Conservatives, and probably successfully because it bears the name of a tax, and Canadians are not likely to believe the "Revenue Nuetral" spin that the LPC hope to use to sell it. They remember too well the revenue nuetral myth that the Mulroneyites attached to the GST.

The Conservatives may pick up a bit because of this, but the visceral distrust that many Canadians arttach to Stephen Harper is unlikely to be overcome by this. Certainly not enough to push the CPC into majority territory.

Soooooo........Same old same old.

[updated Mon May 26 09:59:13 EDT 2008]

It is unfortunate that shortsightedness by many people takes precedence over longterm views.
There is no doubt that the Liberals are qiute capable to play on the sentiments of Canadians, they have done it before qiute succesfully, and could do so again. However if it comes to longterm policies the Conservatives have the upperhand. we can only hope and wish that this fact is seen as beneficial for this Great Country.

[updated Mon May 26 11:31:07 EDT 2008]

Canadians have lived through 13 years of high taxes with the Liberals. They had a "big tax cut" over 4 years but any benefit was offset by increased premiums on CPP and EI premiums so very few people saw much in the way of a tax savings.

As well, cynically the Liberals, after 3 budgets in 2005 alone, reduced the lowest tax rate from 15 !/2% to 15% and were able to make it retroactive for 2005 because it did not need the approval of parliament because it was a tax decrease. Regardless Canada remained with the highest marginal personal tax rates among the G7. It should be said the Conservatives raised it back up because they had their own economic strategy. The rate was reduced back to 15% in the last budget.

It should also be said that the budget was balanced in 1995 and while the Liberals pretended to give tax reductions as outlined above Ralph Goodale in 2005 kept saying no tax reductions. That was until the Liberals were facing an imminent election in 2005.

So Canadians have had the experience of Liberal smoke and mirror tax cuts and the actual tax cuts introduced by the Harper government. Now the Liberal hacks will complain that the GST was not a real tax cut and will argue that the reduction in the lowest tax break was only restoring what the Liberals had granted in 2005. However, there have been other tax cuts that have taken place including the allowing of pension income splitting. The latter helped seniors particularly because of the decision to eliminate income trusts over the next four years.

Now we have Dion ruminating about a carbon tax despite his 2006 declaration:

2006 - Dion on carbon tax

"It is "bad policy," Mr. Dion noted in his environmental platform. It would do nothing to discourage consumption and would penalize all emission generators equally without taking into account the technological cost of fixing their problem. Besides, he concluded, given soaring energy prices, "anything but a prohibitively high tax (would be) a mere nuisance for large producers."

How has his statement changed from just over a year ago???

The Liberals believe that campaigning on raising taxes is a good strategy. Most Canadians are in favour of helping the environment as long as it does not affect their own pocket books. However, the carbon tax will affect everybody and increase their cost of living substantially. Once they learn the real impact of those taxes they will abandon the weak Liberal leader and his party in droves.

Dion has also talked about spending "priorities", according to the Conservatives, of $62 billion. How will Dion meet those committments, fix the environment, give offsetting tax reductions to middle class Canadians, help the poor, the working poor and seniors as well as pay for the huge bureaucracy needed to monitor carbon tax or manage the cap and trade system that probably will accompany his announcement.

Faced with higher gas and energy costs Dion's plan will go over like a lead balloon.

So the public will be able to decide who is best to handle the economy. A prime minister with a PHD in economics or a professor who has taught political science at a university.

Liberals love those high taxes and big surpluses, which are really over taxation, so they can implement there own wasteful spending priorities. Given a choice between the current government who has walked the talk of tax reductions and an opposition campaigning on raising taxes I think Canadians are smart enough to pick the right party. Tax shifting, tax neutrality are all Liberal buzz words which mean that the ordinary Canadian will get it in the ear when the smoke clears.

[updated Mon May 26 13:24:46 EDT 2008]

I live in Calgary, anyone who has been here for awhile knows that recession in USA = recession in Canada. After the US election it will become very apparent just how bad the economy is there. Already there are tons of vagrants in the large US cities, Vegas can't keep up with the trash on their main streets. The US is bankrupt. Canada has a corrupt banking system and a country run by corrupt corporations, just like the USA. Why should we expect a better prognosis? What is coming is going to be the worst recession/depression ever. Harper is all for letting the corporations rape us. Dion is dumb, we are screwed.

[updated Mon May 26 15:43:13 EDT 2008]

Here we go with political roulette and "where it stops, nobody knows". To dwell on past sins too much is a weak arguement BUT, I think we have a pretty good idea when we look at the players at the table. There are only two important players----one called "Harper management/leadership" and the other called "Liberal brand". Both have baggage and both will do their very best to get the electorate to "forget" and to focus on new issues of their choosing and to their advantage. There will be lots of yelling, lots of half truths and lots of the usual campaign BS.

The "Harper management/leadership" will downplay the undelivered hospital wait times and the mess that is the Afghanistan War while emphasizing their tax cuts, law and order and being no push over if the Americans want to open NAFTA and jeopardize their single major "foreign" supplier of petroleum products. Americans are mighty touchy about domestic fuel costs now and I doubt Obama or Clinton, when elected, would play with fire on this issue. The American economy is in a downturn---or their dollar has dropped---and this is bound to affect Canada and particularly the Canadian manufacturing heartland-------I think we will look to a good manager to get us through.

The "Harper management/leadership" still have Senate reform to address and downsizing government is not on the table as yet-----both need a majority and both likely enjoy wide support. The threatened Quebec court action opposing Senate reform may strenghten the "management and vision" attributes for Harper particularly in the West who have been short changed for a long time.

The "Liberal brand" will put forward the environment for one plank and who knows what the other planks may be. The "environment" would be accompanied with a green-tax, a new tax which will not fly well with an already over taxed electorate. The "Liberal brand" has watched the BC sliding scale enviro-fuel tax being imposed as of this summer and, not hearing the screams yet, think Canadians will be accepting---bad decision. I assume the Liberal heirarchy will remain moribund to election day.

Are we overlooking Quebec? Now I am a little distant but I suspect what I have said for the increasing large "swing voter group"---neither Liberal nor Conservative but supporter of effective modern government, is increasing true for the Quebec federalists. I suspect a federalist is a federalist first who is looking for good government whether that be Liberal or Conservative and that federalist seems to be drifting to the Conservatives. The "ovature" as the "Quebecois as a nation" was not lost. The Liberal leadership seems to have seriously lost its attraction in Quebec.

The way things look now, given no major upsets or scandals, I would say there will be on October 20, 2009, a Conservative government with a small majority and an announcement of a Liberal leadership race coming up.

[updated Mon May 26 17:01:24 EDT 2008]

I really don't understand how the Cons can be seen as good stewards of the economy after purposefully blowing a fourteen billion dollar surplus .
They have spent more money than any previous government . Ever .
The fundementals that are in place were all Liberal inititiatives .Not Con .
Once Canadains see how inept and disasterous their strategem has been Canadians will return to the Liberals in droves .

[updated Mon May 26 18:00:16 EDT 2008]

could someone please tell me when we started calling them the tax and spend liberals? was it after the conservatives brought in federal income tax?maybe after the conservatives brought in the provincial sales tax?or maybe it was after the conservatives brought in the g.s.t? could it possibly be because the liberals never got rid of any of those lovely taxes that were brought in by conservatives? the economy is controlled by the power brokers, not governments.when the average person starts to actually get their heads above water,the economy is slowed down to regain control of the masses who actually believe there is a recession coming and stop spending thereby actually causing a recession.the more things change the more they remain the same.there is no difference between conservabrels or libersatives.

[updated Mon May 26 18:59:45 EDT 2008]

There are a lot of undecided voters out there, and I think the "personality" contest between Mssrs. Harper and Dion will be the true test. Right now, Mr. Harper wins, based on false "leadership" criteria. Mr. Dion has been hammered by the Tories' viscious attack ads for 1.5 years, and the MSM and Canadian voters have largely bought the bull.

How do you compare a PM with all the trappings of power with a Leader of the Opposition?
Start with policies and the Libs have it all over the Cons when it comes to issues such as war and peace, the environment, the economy, help for the disadvantaged and on and on.

Consider the leader in terms of judgment, integrity and competence. Think about his team, and his willingness to delegate and support them. A leader can't do it all.

Once again, Mr. Dion wins. Mr. Harper supported Bush's war against Iraq, for Pete's sake. He scuttled Kelowna, Kyoto, comprehensive child care and a host of programs for the disadvantaged he considered "enemies." His "administration" has been rocked by scandal after scandal. Just when, exactly, has he shown competence?

And who would a thinking person choose? Dion, Rae, Ignatieff, Hall-Findlay, Kennedy, Goodale, etc? Or Harper, Baird, Van Loan and the other Tory pitbulls and poodles.

One team is empowered and supported. The other is muzzled and marginalized, in favour of the Big Poobah, who insists on grabbing every headline.

Take your pick, Canada. A fair and decent man who understands the future we and our children face. Or a mean-spirited control freak bent on taking us back to a dark past of failed neocon policies. If you believe war is peace, business is good and government is bad, the poor deserve their fate, etc. Mr. Harper is your man.

If you think that maybe we can do better, Mr. Dion has countless ideas how.

[updated Mon May 26 22:12:44 EDT 2008]

While porky and the cons play with biker chicks, the economy burns. If it wasn't so sad, it would be very funny. This government has burned through a surplus, has wasted ++ cash playing rambo and now this. Harper should do the right thing and had over the reigns to someone competent.

[updated Mon May 26 22:36:24 EDT 2008]

"There is likely an opportunity to engage voters in a dialogue on the future of the Canadian economy, how jobs can be created and how our economy can be stronger."

I agree, but only when the economy has slowed somewhat more than it has to date. A bouyant commodity trade is shoring up an otherwise weak economy. If that weakens we'll see the real state of the rest of the economy. When a new administration comes to power in the US the real state of the US economy may be revealed. The effects of dealing with that willl have a negative effect on us.

Most Canadians are relatively comfortable today and until many more feel the effects of a recession there will be no big discussion and no serious engagement with voters.

Yes, because the two big parties show very little to encourage support, there will be an inclination to consider other parties. This may not be because of attraction to those parties but a revulsion of the other two.

I think the election is too far into the future to predict what the best platforms or strategies wmight work best for either party. Too many things can change in the interval.

"Looking at the traditional brand strength of the various parties, Canadians generally believe that the Conservatives are good economic stewards."
I can't believe any policically serious thinking Canadian would believe this. I guess most Canadians don't give serious thought to politics or the economy. It takes a little effort to see what's really happpening with the economy, and the Conservative party's affect on it.

Dion will have to be more specific with his environment plan. He'll have a difficult time selling what he seems to be proposing.

Layton is more of a burden to his party. It's time for them to chose a new more dynamic spokesman and sell it's party policies more effectively.

Looks like May will still get my vote.

[updated Tue May 27 09:08:59 EDT 2008]

Here's an interesting comment from an ottawa newspaper:
http://www.canada.com/ottawacitizen/news/editorials/story.html?id=9104411f-f51b-4782-8ba3-c93f89ad17ff

"There are around the world plenty of conservative intellectuals, including Canada's own David Frum, who see possible advantages in a carbon tax. It's basic economics: Price influences behaviour. You want people to stop polluting, put a price on pollution. Right now Mr. Dion, for his part, should make sure his carbon tax is the best it can be, to give Canadians a real choice. It has to be significant enough to matter. Ideally, it should apply to more than just fossil fuels; why punish the drivers of SUVs but ignore methane-producing cattle? Right now the atmosphere is a giant dumping ground with no tipping fees."

other comments:
"Most important, Mr. Dion must make absolutely sure that his plan would not increase Canadians' tax burden by so much as a penny. A family that found itself paying more for gas should simultaneously find itself paying less in income tax. True tax-shifting would then give that family the power to lower its own taxes, by changing its behaviour. The same would apply to business. If a Canadian government ever makes a transition to green taxes, it should try to make that transition seamless."

Therefore if the Dion plan can achieve some or most of those points, and it will, the economy will shift into high gear for promoting a green economy. Great ideas and great minds at work as opposed to the Harper bunch who simply bully the environment.

[updated Tue May 27 11:14:59 EDT 2008]