Debt and deficits: a Trudeau family tradition

Pierre Trudeau

 

As Justin Trudeau and Finance Minister Morneau plunge the nation into a deficit hole with no bottom in sight, they doubtless hope residual goodwill from the Chretien-Martin era will temper public revulsion.  The previous Liberal government, after all, overcame initial shakiness to produce nine balanced budgets between 1997 and 2006, presiding over a rate of economic growth that (for a couple years at least) topped 5% — a figure we have not seen since.

But these accomplishments did not occur in a vacuum.  The fiscal responsibility that animated Paul Martin’s finance department from ’97 on — including aggressive cuts to programs his party was otherwise inclined towards, like health transfers and unemployment insurance — was motivated in part by the growing threat of the Reform Party, which arose in response to the disappointment of the Mulroney administration, which was elected in the greatest landslide in Canadian history following the unmitigated financial disaster that was the 15-year reign of Pierre Elliot Trudeau.

The elder Trudeau, who had been educated in socialist theory at the London School of Economics, believed governments were obligated to increase spending in good times and bad, and he did so with reckless glee.  His activist appetites consistently exceeded the inflow of revenue, and by his final year in office he had borrowed the nation into a pit of debt ten times deeper than the one he inherited.  It would take nearly two decades for successive governments to scrape up the over trillion dollars necessary to get a handle on the interest payments Trudeau bequeathed them.

Like his father, the new Prime Minister Trudeau is an untempered ideologue, but unlike the old man, the son’s philosophy is less social democracy than social justice warrior.  Its consequences for the nation’s finances could prove no less destructive.

Justin won the leadership of the Liberal Party on a slogan of “hope and hard work,” but modern progressivism’s obsession with guarding any self-identified victim group — no matter how dubious — from the sting of discomfort — no matter how slight — is antithetical to the discipline and sacrifice the hard work of sane budgeting demands.

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This has been most manifest in the Trudeau Government’s loudly-stated intentions to overturn various Harper-era reforms designed to weed out waste, redundancy, and abuse from federal programs.  Because liberals like Trudeau cannot fathom the notion that Conservative decisions could be motivated by anything beyond utter contempt for those affected, his government has committed itself to a series of of deeply backwards, yet superficially compassionate acts, such as reopening Veterans Affairs bureaus in communities where numbers do not justify their presence, abolishing sunshine laws designed to subject the budgets of Indian reservations to public scrutiny, and overturning common sense limitations governing the taking of sick and personal days in the federal bureaucracy.

Such feel-good regressions reflect a fawning eagerness to mitigate the suffering of those who really shouldn’t be eliciting much sympathy in the first place, like corrupt chiefs and lazy civil servants, and the costs will be piled atop other spending that appears motivated by little beyond our needy prime minister’s desire to be loved.  Among other things, this includes a mindlessly generous Syrian refugee intake with an uncertain price tag already in the billions, hikes to foreign aid (as Postmedia’s David Akin noted, “of the $5.3 billion in spending commitments announced by the Trudeau government in its first 100 days, just $997 million was for projects inside the country”), and a yet-to-be-unveiled stimulus plan that will doubtless consist primarily of handouts to industries and businesses the Liberal Party would like to see succeed for its own ideological reasons, regardless of whether they’re competitive or necessary.

At some point amid all this, economic growth is supposed to magically erupt and, as the Prime Minister memorably quipped, “the budget will balance itself.”  But even the significant economic growth of the 1970s could not save the first Trudeau administration, who simply burned through taxes generated by income and sales faster than Canadians could earn or buy.

The standard excuse for the economic chaos of Pierre’s reign was that our visionary PM was just too preoccupied with other projects to give the nation’s balance books the attention they deserved.  And whatever we think of these projects in retrospect, the elder Trudeau did complete many: official bilingualism, the pacification of Quebec nationalism, the adoption of a sovereign Constitution and a new Bill of Rights.

The current Trudeau, alas, has no excuse.  The economic mess his government sits poised to make will be the consequence of nothing beyond bringing the ethos of modern progressivism to Ottawa.

Photo credit: Winnipeg Free Press

Follow J.J. on twitter: @JJ_McCullough

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4 Responses to “Debt and deficits: a Trudeau family tradition”

  1. Larry Kazdan

    The rationale for deficit spending is not rocket science. The
    household sector is over-leveraged and must save
    more than it spends in order to reduce debt. This
    means less money circulates in the economy. Also,
    the price of oil has dropped and Canada has a larger
    trade deficit. Again more money is leaving the
    economy to purchase foreign goods than foreigners
    are buying here. When demand at home drops, domestic
    businesses are understandingly reluctant to invest
    in new productive capacity, and will also cut back
    on their own expenditures.

    So if decisions of the private and external sector result
    in a stagnating economy, only one remaining sector
    can prevent a downward spiral, and that is
    government which must compensate by stimulus
    spending. Sadly, Conservatives do not
    understand counter-cyclical fiscal policy, and
    steadfastly cling to their vanishing hope that a
    laissez-faire economy will miraculously balance
    itself.

    Almost Everyone’s Guide to Economics

    John Kenneth Galbraith, Nicole Salinger

    Bantam Books 1978 Page 92

    “If there is idle capacity and
    unemployment, the government must spend more that it
    receives in taxes………there is no merit at all in
    a policy that just balances income and outgo, none
    whatever.”

    __________________________________________

    Modern Monetary Theory in Canada

    Reply

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