02.23.2016 09:15 AM

The agony of Bill Morneau

This morning, as I surveyed the headlines – particularly this one – I felt a twinge of sympathy for the Minister of Finance.  Nobody else did, apparently.

Called upon to defend a platform promise he almost certainly did not write. Excoriated by articulate strangers. Welcome to politics, Bay Street guy, etc. etc.

Anyway, it all raises a question: does it matter? Do Joe and Jane Frontporch – standing at a bus stop, hunched against the cold, contemplating how non-existent their RRSP contribution will be (again) this year, reflecting on that Florida March Break holiday that will never happen (again) – really care about a $50 billion deficit? Does it matter, to them?

I don’t know the answer, but that (naturally) doesn’t stop experts from expertly dissecting the issue.  To me, it comes down to this: will we be European about a massive deficit, and a ballooning debt? Or will we be Americans?

Quote:

“Concerns over the debt has become a troubling issue on both sides of the Atlantic. However, the politics surrounding it differs in the U.S. A median 81% of the publics in European countries regard the size of the national debt as a major threat to economic well-being; 71% of Americans share that view.

But the unease over the national debt is far more likely to be a partisan issue in the U.S. than it is in Europe. Europeans, whatever their political leanings, tend to see indebtedness the same way. The left-right divide in concern is five percentage points in Germany, four in France, and three in Britain. It is 20 points in the United States, with only 59% of liberals ranking debt as a major threat to the economy compared with 79% of conservatives.

While there is a clear and broad consensus in the U.S. about the importance of dealing with debt and deficit, that is where the clarity and consensus stops – undermined by the disconnect between the public’s stated desire for a smaller government delivering fewer services, and its resistance to spending cuts and, in other cases, tax increases.

By a margin of 52% to 39%, the largest in five years, Americans express a preference for smaller government as opposed to a larger government providing more services.”

So, where do you stand, Joe and Jane Frontporch?  Are you a crypto-American, and think the deficit/debt will sink Trudeau et al. in 2019?  Or are you a closeted European, and shrug?

 

35 Comments

  1. Matt says:

    Some of this is out of the Liberals control, and some of it they’ve done to themselves.

    The price of oil, the economic slowdown in China, the US economy seemingly taking two steps forward one step back and other global factors are things the Liberals have no control over. Same as Harper had no control over them though oddly, that didn’t stop the Liberals and their supporters from blaming him anyway.

    Other things like reversing the changes Harper made to civil service compensation added $1.4 Billion to the deficit. Their “miscalculation” (or outright lie depending on your political view) that the middle class tax cut will be revenue neutral when in reality they’re about $2 billion in the hole over it are a couple examples of them screwing themselves.

    This $18 billion deficit announced yesterday, which is really about $28 billion as none of the infrastructure and other spending promises are included is in reality already much higher because it’s based on $40 a barrel oil. It’s at about $31 a barrel now.

    • EB says:

      Why shouldn’t Mr. Harper be held accountable? Isn’t he the one that proclaimed that Canada was an “Emerging energy superpower”?

      How and why did he let this happen?

      Some superpower…

  2. Tired of it All says:

    Personally, I know you can’t have neat new stuff (Roads! Bridges! Public Transit!) without having to borrow the money and manage the debt down stream. I also know that debt is not nearly the four letter word a number of people think it is. To me, the issue is the sustainable management of debt as opposed to not having any of it at all.

    To me, the real question is do Europeans and Americans understand the role of debt the same way?

  3. doconnor says:

    “So, where do you stand, Joe and Jane Frontporch?”

    How should we know? We’re all political elites here.

    I suspect it will a be big deal if the media tells them a big deal. The media said it was a be deal in the 1980s and 1990s, but didn’t in the 2010s.

    Once difference between Europe and the US and Canada is they many European countries don’t control their own currency which makes debt a much bigger problem.

  4. jay says:

    I don’t pretend to know the answer to your question, Warren, because like you I have no idea. Serial deficits didn’t defeat Stephen Harper, however, even at the end–and the promise of more to come didn’t defeat Justin. Funny thing, though–a promise to balance the budget did help to defeat Thomas Mulcair. That’s all I know.

  5. Darren H says:

    Running deficits probably would not sink them. Only if we are still going into debt and cutting services at the same time. Where the danger lies is trying to fudge the numbers to try to make the outgoing govt look worse than they were. It makes them look like a bunch of amateurs when they screech about what Harper did, and reminds the electorate that there is a viable alternative that might have had a better bead on the economics of this country.
    As a Conservative I understand the need to run deficits in bad times, however I expect honesty and if the PBO releases information that doesn’t jibe with the LPC numbers released, this govt WILL be in trouble.

  6. This Joe Frontporch (I never actually get to sit at my frontporch — *that* bugs me) does worry (about RRSPs, March break vacations, and other 1st World economic woes). And I’ve been complaining about Justin Trudeau’s spend-till-it-hurts-the-next-generation plans since he first started spouting them. I don’t claim to know the economics, though, and so I bite my nails up to my elbows while hoping with vain optimism that, collectively, the people who manage our economy can make it somehow all work, even though, individually, they seem no smarter than anyone else on those frontporch benches.

  7. As for Americans and Europeans, the last time I checked, several European nations (why do we lump them all under one head? Unlike North America, most continents have more than two nations and deserve more differentiation. Anyway…) are substantially more in debt than the US. Their debt to outside sources is much greater on a per capita level, and their dept to GPD ratio is poorer (though the US’s didn’t look so hot either). It is understandable they would worry more. They have more people, older infrastructure, fewer resources, closer proximity to warzones… by comparison, Canada and the US still have awesome opportunities, if we would learn how to manage them well. (Don’t look at me. I can barely manage my own home and life. I’m not judging; just commenting.)

    • Matt says:

      Not sure about Euro countries but the USA’s debt to GDP is about 103%.

      Japan’s is over 200%.

      Canada right now is around 32%.

      • Vancouverois says:

        And that too is far too much. And provincial debts are higher.

        Every dollar of debt adds to the money wasted on paying the interest. And that’s in the billions.

        Debt may be acceptable during a war or other huge national crisis, when the very survival of the country requires it. But to run up a huge tab during peacetime, during a mere economic slowdown, is unnecessary and foolish.

        • Matt says:

          I think the total debt to GDP ratio for all the provinces combined is 85%.

          • Vancouverois says:

            And it amazes me that some people have the gall to shrug off such levels of debt as unimportant, on the obviously ridiculous grounds that other countries have even more. Total insanity.

    • davie says:

      It’s the difference between someone who follows the NHL, and someone who follows CONCACAF.

  8. Eric Weiss says:

    I just find it funny that the libs that evicerated Harper for deficit spending during a recession are now bending over backwards to justify it when their team is in power, and that cons are trashing Trudeau for doing the same thing Harper did.

  9. P. Brenn says:

    I care – debt needs to be managed – for instance Ontario debt is out of control relative to its size and core services are suffering as a result re taxes that pay interest instead of for core services like healthcare – many families with sick and ageing relatives who are seeing first hand the cut backs in healthcare

    federally we could end up in same place as it seems we are trying to be everything to everyone…I dont think majority care though – until they get hit with lack of service or tax hikes personally

    lastly – while trying not to be the sky is falling guy – I think the entire world is in for a financial day of reckoning – too much debt , too many unemployed , too much greed – when that happens I think Canada’s debt/deficit will not be top of mind of most frontporchers

  10. Alf Chaiton says:

    Notes on the projected deficit: most of yesterday’s numbers are lower revenues (which will one day, hopefully sooner than later as the economy grows), a $6b contingency (Harper had a $1b contingency) and reversing the phantom savings on public service sick leave; while the new “promised” spending is for infrastructure, which are one-time expenditures. Even some of the promises are one-time, such as most of the First Nations proposals.

    Yes, this does increase the public debt but that’s why the language is about “investments” and not “spending/expenditures”, low interest rates and debt/GDP ratio.

    Media as usual has done a shoddy job of analysis and explanation.

    • Matt says:

      1) The numbers released yesterday DO NOT include the Liberals spending promises including the $10 billion infrastructure spending. The only promises included in yesterdays figures was the cost of the “middle class tax cuts” and the money spent/to be spent on their Syrian refugee plan.

      2) The promised infrastructure spending is not a one time cost. It’s $10 billion/year for three years. And is likely going to take much longer as there aren’t too many “shovel ready” projects across the country right now.

      • EB says:

        So. If the numbers released yesterday do not include Liberal spending promises, are the numbers actually the legacy bequeathed to us from the Harper Government? They were pretty darn lucky to get out before the shit hit the fan. Right?

  11. Aongasha says:

    Liberals, Conservatives, NDP whatever, the majority of them always lie to us and we are stupid enough to believe them and their gofers. I’ve known some of these people over the years, from a very young age and cannot believe how politics changed them from decent human beings, to folks willing to lie, cheat, obfuscate and cut any kind of a dirty deal possible, in order to get elected and/or to stay in office. I don’t believe any of them have my best interests at heart, or Canada’s. And they call themselves the honourable this and that? Trust me, there is no honour amongst thieves.
    The same holds true for most of those who work for them, they strike me more as pigs lining up at the trough, than as defenders of the public good, that many of them purport to be. Pigs and libstick folks, pigs and lipstick and we are the stupid ones who actually believe and trust these charlatans.

    • nobonus4nonis says:

      relax Aon
      Bold prediction coming up.

      the internet killed the music business
      it then killed the book business
      it’s currently killing the hotel business, the taxi business and the newspaper business.

      next in line… political parties. once we can vote online we can also vote on expenditures. it’ll be a war but it’s coming
      in 2017 we celebrate 100 years of a temporary fed tax.
      finally if these bozos ever tell you there into politics to serve tell em fine here’s a dollar now go serve but no control over the dough. fat chance.

  12. davie says:

    More often than not, I would like any government that tells me we are in debt to tell me who we owe the money to. Seems to me that when you owe someone else a lot of money it affects the kind of impact they have on what you do or don’t do.
    (We have a ‘sort of’ front porch.)

  13. Mike says:

    If you take a step back and look at it, at this moment in time, whether you think deficits are good or bad seems to depend where on the political spectrum you fall.

    So far no one has talked about raising taxes to pay for the deficit so no one really cares too much.

    Cutting the GST from 7% to 5% was a really bad move economically, but it was political gold. And we have become so indoctrinated that raising taxes is bad that to raise it back to 7% would be political suicide, even if it would be good economic policy and probably pay for a lot of the needed infrastructure.

  14. R News says:

    The Frontporch’s don’t understand that the national and provincial debt doesn’t go away when they die like their personal debt does. It gets handed to little grandchild Frontporch to deal with and unfortunately when they grow up they will get “Greece’d”

  15. Ronald O'Dowd says:

    Warren,

    In political terms, deficits and surpluses don’t matter. What counts is a leader’s level of political confidence. Do Canadians have faith in him or her and has that leader been smart enough not to poison-the-well?

    Take Barack Obama. The U.S. is at full employment (4.9%) and Obama couldn’t get elected dogcatcher. Look at Kathleen Wynne. Wynne won and then her government took the wind out of her own sails.

    The day they sour on this Prime Minister is the day they are finished politically.

  16. Kelly says:

    If people ignore the know-nothing columnists in most of the daily,newspapers they won’t care about a deficit for now. Most of the media in this country has only two jobs: 1. Stir shit up to sell newspapers, clicks, ears and eyeballs; 2. Shift opinion toward tax cuts for the rich. As a result we get lots of braying around budget time, or when the NDP wins elections, even when Conservatives actually have a terrible economic record.

    Most people don’t know anything about economics. They don’t know anything about counter cyclical spending, they think that the government is somehow separate from the economy, when in fact its the single biggest agent. Government spending is exactly the same as private spending — people sit down and decide what they want to buy. Some people want to buy Victoria Beckham fragrances and Big Green Egg BBQs other people decide to buy a bridge, or a university research lab or a water treatment plant. In both cases money was spent. Canadian dollars, created exactly the same way.

    Ultimately, however, in a country the size and make up of Canada, some entity — public or private sector — has to extract, grow and harvest something and either export it or sell it domestically to someone who in turn will turn it into something else to sell, domestically or globally. We can’t all get rich cutting each other’s hair and shampooing each other’s carpets.

  17. Vancouverois says:

    It certainly isn’t a good thing for the Liberals.

    The average person may not know much about economics; but they do know that too much public debt is bad. And they do know enough math to realize it when the deficit is twice what Trudeau promised it would be.

  18. Jack D says:

    On a political note, I’d like to give praise to Bill Morneau.

    Heres a Bay Street guy who’s a complete neophyte to Ottawa and the partisanship of the House. At first, it was touch and go when he was being grilled by the opposition and the responses were flaccid at best. Since the House initially sat in late 2015 to now, Bill Morneau has shown huge improvement in sparring on his feet. His ability to speak French has bettered ten fold in the time he’s been an MP and he seems to be confidently taking on his new role as Finance Minister.

    In truth, Morneau has somewhat gone through a baptism of fire since the election. I had some reservations at the beginning of this parliamentary session but its clear that Morneau is adapting very well.

    • Matt says:

      Yeah, it’s only taken him 4 months to gain the Liberal arrogance of PET.

      “Given the economic situation in which we find ourselves today, Canadians made the right choice” by voting Liberal, Morneau said.

      http://www.edmontonsun.com/2016/02/22/deficit-projected-at-184b-likely-to-exceed-20b-come-budget-time

      • Jack D says:

        Ahh, couldn’t spare an opportunity to take a cheap, partisan shot, could you?

        Pettiness is trait you seem to be very comfortable with, Matt.

        I have profound respect for PET and also recognize Jim Flaherty as a highly astute Minister of Finance.

        See, not that hard to not be a dick and still pay due respect to a politician from a non-partisan POV.

        But, go on, tell me more about “Liberal arrogance” as you post comments on a blog hosted by a former Liberal staffer.

        • Matt says:

          Actualky Warren has talked about the arogance emitted from his Liberal party many, many times over the years.

          You know, arrogance like the whole self labelled Natural Governing Party type thing.

  19. billg says:

    I honestly don’t think the average person cares.
    The debt will never be paid back so why worry about borrowing.
    We only ever pay the interest on what we borrow anyways.
    I made a comment last week that when President Obama leaves office he will have borrowed more money in 8 years as President then all the other Presidents before him combined, and, no one really cares.
    So, I’m with Justin Trudeau on this one, its becoming obvious that at some point debt and interest payments will be wiped clean, not all of it but a high percentage, so, ya, get that credit limit yanked to its highest and lets invest in roads, bridges, high speed trains, solar energy and what ever else we want.
    Been to Greece lately? Restaurants, cafe’s are all full at 11pm every night, business as usual.

  20. Ronald O'Dowd says:

    Warren,

    Not related but given your Tweet: here’s hoping Senator Patrick Brazeau can find the strength to achieve inner peace and a new perspective on life. It is possible.

  21. Maps Onburt says:

    We’ve seen this movie before with PET. Ontario and Quebec show that the majority of Canadians don’t give a shit. We’ll have a $1T debt by the time he’s done and nothing to show for it. We already spend more servicing our debt than we do on health, or education or old age security or even defence but hey, what’s another $30B?

  22. dean sherratt says:

    Well, so far there is absolutely no evidence in public opinion polls that suggest anything other than continuing adoration of the Prime Minister. So by that logic, Joe six-pack and Sally housecoat (Montgomery Burns version of your image) have gone back to sleep for quite a while and will allow Justin an extended honeymoon.

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