The Politics of Budget-making

It always puzzles me when economists speculate about federal government budgets.

I mean, why do they bother?

After all, these budgets are typically not so much about economics as they are about politics.

And the Conservative government’s budget, scheduled to be delivered on March 29, will be no exception.

In fact, I am certain that while putting it together, the Conservatives studied polling data a lot more than they did economic models.

I am also certain the Conservatives found the politics of budget-making this year to be much more difficult than in previous years.

It’s easy to see why.

In past years the Conservative budget formula went something like this: Spend, spend and then spend some more.

About the only tough decision the Conservatives had to make was figuring out how many billboards bragging about their “Economic Action Plan” they needed to erect.

And yes, while all this spending may have ballooned the federal deficit, it also more or less defanged the Opposition.

The only line of attack it left open for the Liberals and NDP was to criticize the Tories for not expanding the deficit fast enough.

Hardly a rallying cry.

This year’s it’s going to be different. This year the government has promised to rein in its spending.

But by how much?

And this is where the difficult politics comes into play.

The fact is a large segment of the Conservative Party’s political base wants the government to go after spending with an axe or better yet a chainsaw.

I am talking about "economic conservatives," those individuals who support lower taxes, smaller government, less regulation and prudent fiscal policies.

More generally, they just want government to live within its means.

Of course, these economic conservative have not been too happy with the Conservative government’s spend-happy fiscal record.

Yet, in days gone by there were willing to cut the Tories some slack because the government was in a minority situation.

But no more. The Tories now have a majority and the economic conservatives are expecting a truly “conservative” budget.

That means slashing spending, that means reducing the size of government, that means privatizing crown corporations, that means balancing the books.

And while, philosophically-speaking, the Tories might wish to oblige such demands they probably worry that a truly “conservative” budget might trigger a public backlash.

Or at least it would mobilize well-funded and strident special interest groups which would rush to the barricades if they saw their entitlements threatened.

Governments which cutback tend to make enemies.

Consequently, if the Tories cut spending their party might (horror of horrors) suffer a drop in the polls.

So politically speaking the government finds itself between a partisan rock and a public relations hard place. If they don’t cut spending significantly they risk alienating their base, but if they do cut spending they risk suffering serious political damage.

So what will they do?

Well, I suspect the budget will be crafted as much as possible to please both sides of the fence.

To keep the economic conservatives happy the budget will contain lots of fiery Margaret Thatcher-style rhetoric about the importance of balancing the budget, it will also likely include some politically-strategic spending cuts to things like the CBC and to MP pensions. In other words, they will pursue cuts sure to please their conservative constituency.

Yet, the budget will not deliver any dramatic government spending cutbacks that could actually cause real pain to the public. More likely, the Tories will simply cut back on the rate of spending increases.

Such a budget might not make economic sense, but it sure will make political sense.

(This article originally appeared in the Hill Times.)

Harper and Judicial Activism

Happy Constitution Day!!

In case you didn't know, the Canadian Constitution Foundation is trying to sell the idea of making March 29th "Constitution Day", a day in which we are supposed to deepen our understanding of our constitutional traditions.

So with that in mind, I have decided to reproduce a column Prime Minister Stephen Harper wrote 12 years ago, when he was head of the National Citizens Coalition.(That was back when the NCC actually did stuff that mattered.)

Anyway, in the column, which appeared on June 13, 2000, Harper describes why he thinks it's important to use the Charter of Rights and Freedoms to defend individual rights, or more specifically the right to free political expression.

See below:

Chretien Gagging Canadians
by Stephen Harper --

Last week, I launched a personal legal action in the Alberta Court of Queen's Bench against the federal government's election gag law, Bill C-2. This law is the latest attempt by the federal government to restrict independent political advertising during elections.

So why is someone on the political "right" trying to have a law passed by Parliament overturned by the courts? Aren't all these "right-wingers" opposed to "judicial activism" and supporters of good, old "parliamentary supremacy"?

The answer, of course, is "no." Yes, I share many of the concerns of my colleagues and allies about biased "judicial activism" and its extremes. I agree that serious flaws exist in the Charter of Rights and Freedoms, and that there is no meaningful review or accountability mechanisms for Supreme Court justices.

But these things pale in comparison to the dangers and deceptions inherent in Bill C-2. My legal challenge constitutes the fifth time in the past 17 years that the National Citizens' Coalition has sponsored litigation against gag laws. On each previous occasion, the same scenario has unfolded: The government concedes the law restricts freedoms of expression and association, fails to provide a shred of evidence to justify such constitutional violations, and is laughed out of court.

In the most recent judgment earlier this year, Mr. Justice Donald Brenner of the B.C. Supreme Court shot down a provincial election gag law, saying: "To override Charter rights, it is necessary that there be more than a general hypothetical concern about a problem when there is no evidence to demonstrate that it has existed in the past or is likely to exist in the future."

The "hypothetical concern" is that independent political advertising could undermine electoral spending restrictions on political parties and candidates. Politicians argue that, because parties and candidates are limited, it is only fair that advocacy groups also be limited. If they are not, such "third parties" will upset the "level playing field."

The argument is intuitively appealing, but its premise is utterly dishonest. First of all, contrary to myth, Canada's major parties face no meaningful spending restrictions. In the next election, for example, the Liberal Party and its candidates will be able to spend more than $30-million. Most of those funds will come from the public purse -- through subsidies to both parties and donors -- without which such a "limit" could never be reached.

But what about the "level playing field" argument? Don't advocacy groups exist to help parties get elected? No, they don't. Advocacy groups may endorse or oppose parties and candidates, but their real goal is to advance a cause over the longer term.

Take the example of the "free trade" election of 1988. Gag-law folklore would have it that "third parties" poured millions of dollars into pro-free-trade advertising to help elect the Tories. The reality is the opposite.

Studies show free-trade spending had no effect on the partisan outcome of the election. (The Tories won on the opposition "split vote," not the issue.) But what the advocacy groups did was advance the issue of free trade and polarize the election around it.

On the one hand, this advocacy spending reinforced the pro-free-trade wing of the Liberal Party, which had traditionally supported the concept. And the reality is that the Liberals, once in office, did adopt and extend liberalized trade notwithstanding their 1988 opposition.

More important, it assured that the Tories in general and Brian Mulroney in particular -- historic opponents and reluctant converts to free trade -- became inexorably linked to the deal. So successful was this approach that the Mulroney government passed the free-trade agreement as its first and only bill in the following session.

That's why the Tories were livid about losing control of the election agenda. To prevent this from happening again, the Mulroney government passed a Draconian gag law.
In other words, political parties don't want to ban independent election advertising because it upsets a fair balance during elections. They want to curb such spending because it doesn't upset the balance, denying them the advantages that the Elections Act is supposed to provide.

Politicians seek these types of advantages all the time. Successive federal governments have used elections law to set high candidate thresholds for small parties, to expropriate minor party assets, to control broadcast times, to gerrymander riding boundaries, and to restrict publication of opinion polls by the media.

Only through court rulings have these provisions been exposed for what they are: arbitrary and unconstitutional provisions that confer advantages to the major parties at the expense of potential competitors and citizens' fundamental freedoms. It has only been through the courts that the famed "democratic legitimacy" of our elections has been preserved.

In short, the judges' activism is not resolved by the politicians' supremacy. Solutions can only be found in the classical theory of liberal democracy -- checks and balances of institutional power under limited government.

Unfortunately, this is something neither our Charter nor our Parliament provides.

Tweeting the NDP

Here's a sure sign I had too much time on my hands yesterday. I actually watched the NDP convention and tweeted some of my observations.

In case you missed any, here are my top Tweets:

• Saw a movie in the video store called "The Neverending Story". I thought it was a documentary on the NDP convention.

• At news conference, Mulcair reacts to charges he has a temper by beating two reporters to death.

• During victory speech Mulcair expresses surprise: Thought he was running for leadership of Conservative Party! #ndpldr

• Next election will answer burning question: Who is more unlikable -- Harper or Mulcair? #cdnpoli

• News flash: Supreme Court of Canada has just ruled NDP convention a form of torture. #ndpldr

• Two of Muclair's drummers drop dead from exhaustion.

• If Mulcair wins first action will be to declare Ed Broadbent an Enemy of the Revolution! #ndpldr

• NDP accomplishes the impossible: Makes Canadian politics even more boring. #ndpldr

• Due to computer problems, NDP now says leadership will be decided by best 2 out of 3, rock, paper, scissors competition. #ndpldr

• NDP online computer now signing "Daisy, Daisy, tell me your answer true" as officials frantically deactivate circuits. #ndpldr

• Fed up with voting snafu, NDP now taking a different tack: Winning leadership candidate will be the one with most Facebook "likes".#ndpldr

• Latest NDP vote yields bizarre result: Thomas Mulcair is now president of Spain! #ndpldr

• "Voting problems" a diversion. NDP's real plan is obvious: Keep delaying vote until Stephen Harper retires. #ndplr

• Maybe the Liberals were right to acclaim Michael Ignatieff?

• At the rate this NDP vote is preceding, the winner will also be the oldest party leader in Canadian history.

• The good news for the NDP is nobody in Canada is actually watching the convention.

• Prediction: No matter who wins today, starting tomorrow media will suggest the new leader is a serious threat to Harper.

• In a desperate attempt to fill air time CBC is arranging a boxing match between Peter Mansbridge and Ezra Levant.

• Too bad there isn't a "refresh" button for entire NDP convention.#cdnpoli

• NDP voting mix ups leading to a crisis: media running out of ways to fill air time. #ndpldr

• My idea for new voting system: Piece of paper, a pencil and an X.#ndpldr

• NDP votes to merge their computer with Liberal voting software.

• NDP voting problems causing chaos in CPC headquarters as they frantically work to update attack ads. #ndpldr

• Thanks to online voting problems at NDP convention, Stephen Harper now leads on the second ballot.

• Syd Ryan today said NDP delegates should stop Mulcair by throwing support behind Joseph Stalin. #ndpldr

The New New Democratic Party

For the first time since 1960, the New Democratic Party is really new.

And when I say “new” I mean “different.’

In electing the fiery Thomas Mulcair their leader, the New Democrats dramatically changed the nature of their party.

They have gone from Tommy Douglas, a populist socialist, to Ed Broadbent, an intellectual socialist, to Jack Layton, an urban socialist to Mulcair, a tough, politically savvy, ambitious, street fighter.

See the difference?

The stodgy, class warfare, Solidarity Forever, NDP is gone forever, relegated to the dustbin of history. From now on the New Democrats are less about fomenting socialist revolution and more about winning votes. It has gone from an ideological party to a “We want to be in power party”.

You could sense the change at the party’s leadership convention. Previous NDP conventions were always one part union hall meeting, one part religious revival and one part hippie festival. By contrast, this convention was all politics, all business. It was essentially a generic political convention, except with orange signs.

And uppermost on the minds of NDP voters was one question. And it wasn't who can best promote a union boss agenda, it was who offers the best chance of  beating Prime Minister Stephen Harper?

On paper at least, the answer was Mulcair. It didn’t matter that he was a newcomer to the party, it didn’t matter that party elder statesman Ed Broadbent had denounced him, it didn’t matter that he wanted to dilute socialist principles – all that mattered was Mulcair matched up best against Harper.

For one thing, Mulcair had the best chance of holding onto the party’s newly won bastion in Quebec, for another he might appeal to non-traditional NDP voters, and for another he could take on Harper in a gutter fight. In short, cold political calculations won out over ideology.

Congratulations NDP, you have now attained the rank of a serious, mainstream political contender.

And all it cost you was your soul.

Media Falling for Tory Trick

The architects of the latest Conservative anti-Rae attack ad must be exchanging high-fives.

After all, their devious plan is working to perfection – Interim Liberal leader Bob Rae is getting tons of good ink.

This is great news for the Conservatives because, as I recently noted, the Tory attack ad was not meant to hurt Rae but to help him.

To sum it up: Any Conservative attack on Rae from the right, will undoubtedly rally leftist voters to his defence. This would in turn undermine the NDP.

It’s an old political trick.

So the Conservatives must be pleased to see the media help their cause.

The Globe and Mail’s John Ibbitson, for instance, wrote the Tories are attacking Rae because they are afraid.

As he put it, “The Conservatives are convinced Mr. Rae will lead the Liberal Party into the next election–an increasingly safe assumption. And they fear him more than they fear whomever the New Democrats choose on Saturday.”

Meanwhile, the Vancouver Sun's Barbara Yaffe writes:

Rae is a guy with an enviable CV: a law degree from the University of Toronto and a PhD from Oxford in England. He’s a Rhodes Scholar, an officer of both the Order of Canada and the Order of Ontario, a past chair of the Royal Conservatory and the Toronto Symphony. He has a suitably folksy side as well, with a website labelling him “a family man, author and fisherman.”
By contrast, Harper, with a Master’s degree in economics from the University of Calgary, has more pedestrian credentials.

And if columnists are thinking this way, it's probable many rank and file Liberals are thinking that way too: If Harper is attacking Rae, he must fear Rae, ergo we should support Rae.

The Tories must have known it would play out this way -- in fact, they were counting on it.

They certainly didn't run the ad because they feared Rae; indeed the very notion is ludicrous. It's like suggesting Hulk Hogan is afraid of Woody Allen.

What’s to fear? I hate to be blunt, but Rae is a past-his-prime politician who leads a third place, cash-starved, intellectually-bankrupt, down-in-the polls political party that lacks a regional base.

Yeah, I’m sure Harper is just shaking in his boots.

And does anybody seriously believe Rae’s academic credentials make him a threat to Harper? If that was the case Harvard-educated Michael Ignatieff would have won in a landslide.

If anything, it's more likely Harper and the Tories would dearly love to see Rae stay as Liberal leader.

And so when Ibbitson and Yaffe and other writers praise Rae to the high heavens, it’s music to Tory ears.

What's really behind those new anti-Rae ads?

The Conservative Party is targeting Interim Liberal leader Bob Rae with an attack ad.



This probably strikes a lot of people as odd. After all, on the surface going negative against the leader of a third place party, three years before an election, makes zero strategic sense. So at best the Tory strategy seem like a waste of resources and at worst like mindless, nastiness.

But what if the anti-Rae ad really isn't about hurting Rae? What if it's really designed to hurt the NDP?  Well, if that's the case then the Tory attack ad makes perfect sense. And indeed, I believe that is the case.

But. you might be asking, how could an ad going after a Liberal leader possibly harm the NDP?

It's simple. By attacking Rae from the right, as they do in this ad, the Tories are likely hoping left-leaning voters will rally around the embattled Liberal leader. The Conservatives, in other words, want leftists to react thusly: "Hey, if that right-wing, reactionary, robo-calling Prime Minister is so much against Rae, them I am for Rae!"

It's psychology 101.

Naturally, if this ploy works the net result will be to drive "progressive" voters away from the NDP and towards the Liberals. Hence, the anti-Rae ad is really about strengthening the weaker Liberals and weakening the stronger NDP.

And given that the NDP leadership race is coming up this weekend, what better time for the Conservatives to pull such a stunt?

Left Wing Columnist Cheats Me

I just sent the following letter to the editor to express my outrage concerning today's Frances Russell column in the Winnipeg Free Press.

Dear  Sir/Madam:

I would recommend that before columnist Frances Russell smears Prime Minister Harper in print, she first check her facts.

In her column, “Harper wages 'wars'” she claims the Prime Minister called Elections Canada “the epitome of bureaucratic evil” with “leftist axes to grind.”

The reality is Harper never said those words, I did.

The Lawrence Martin Globe and Mail column Russell cited, was actually quoting me.

I hope the Free Press quickly sets the record straight.

After all, why should Harper get the credit for my colourful quotes?

Professor learns a lesson

Former Liberal leader Michael Ignatieff gave a speech last night on the lessons he learned during his short stint as a politician.

And the key lesson was: Academics have a lot to learn about the real world.

Anyway, it reminded me of a column I wrote three years ago which explored Ignatieff's political naivety.

I have reproduced it below:

******
Professor needs a lesson in Liberal politics
A couple of weeks ago, Liberal leader Michael Ignatieff made a serious mistake: He said what he believed.

While answering questions in Cambridge Ont., he declared if he ever became prime minister he would raise taxes.

Sure it was a controversial comment but Ignatieff believed he was just being honest and he probably expected such honesty would be applauded.

He was wrong.

Polls now show 30% of Canadians are less likely to vote Liberal in the next election as a result of his honest view on taxes.

Needless to say, this turn of events has likely caused some consternation in Liberal Party headquarters.

In fact, I can just imagine what happened when the Liberal leader met to discuss the situation with his high-priced political consultants.

It probably went something like this:

Consultant: Michael what the heck were you thinking when you talked about raising taxes? Remember our plan? It's simple. Do nothing. Say nothing.

Ignatieff: But surely as anyone with a PhD in advanced economic theory realizes, the only way to eliminate the deficit is to raise taxes. It was common knowledge among us faculty at Harvard. Indeed, I remember attending a striking lecture on the subject ...

Consultant: Excuse me, professor Brainiac, but we have been through this a hundred times. Let me repeat, politics is not like Harvard. Didn't you read the Liberal campaign manual I sent you?

Ignatieff: Not yet. I thought better preparation would be to read Plato's Republic in the original Greek.

Consultant: (heaving deep sigh) Alright forget it. Just listen to me. We have to do some serious damage control. Next time you give a speech I want you to promise to scrap the GST. Then I want you to publicly sign a pledge which states you will never, ever, under any circumstances raise taxes. Got that?

Ignatieff: I can't do that! What if one day I have to raise taxes to pay for something important, such as a national library to house all the books I've written?

Consultant: Relax. I didn't say you couldn't raise taxes, I just meant you should promise not to raise them. Once you're in power you can do what you want.

Ignatieff: I don't understand. It sounds like you're saying it's alright to break an election promise.

Consultant: Of course, it's alright. That's how it's done. Don't you remember, that's how we Liberals win elections, with fake promises.

Ignatieff: No. I don't remember. How could I? I was in the United States for the past 30 years. I even have a hard time remembering the name of Canada's capital. By the way, what is the name of our capital? Is it Toronto?

Consultant: Never mind that. The point is, Jean Chretien promised to scrap the GST and he got elected. Later in Ontario, Dalton McGuinty promised he would never raise taxes and he got elected.

Ignatieff: And you're saying after they got elected they broke their promises.

Consultant: We still have the GST don't we? And McGuinty hiked taxes about five minutes after he became premier.

Ignatieff: This is fascinating. It reminds me of an academic paper I wrote on the political dilemma facing the Roman orator Cicero in the dying days of the Roman Republic ...

Consultant: Something tells me this is not going to be easy.

Alberta Race Getting Tough

A couple of months ago I was part of a TV panel discussing the impending Alberta election.

My view at the time was even though the Wildrosers were lagging in the polls they could still make a race out of it.

And it seems I was right because recently the Alberta Progressive Conservatives launched an anti-Wildrose attack ad.

Typically you don’t go on the attack if you have a big lead; you do it when you want to quickly degrade a growing or potential threat.

At any rate, the PC ad goes after Wildrose for opposing the Alberta government’s tough new anti-drunk driving law.

What’s interesting about the ad is the tag, which I suspect will be the framing message for all the PC party’s future attacks: “Wildrose: Not worth the risk"

It’s a nice succinct message that appeals to the “status quo” bias of voters and to their fear of the unknown.

Not a bad strategy.  Essentially the PCs are saying “Hey, we realize you might not be crazy about us, but why take the risk of handing over power to somebody you don’t know and who might be a radical?”

In other words, it’s the old “Better the Devil you know” tactic.

This is essentially the formula the federal Conservatives and the Ontario Liberals used successfully in recent elections.

And in this regard, the Wildrosers did not do themselves any favours by so publically opposing a drunk driving law.

Yes, I realize it will appeal to the party’s libertarian base, but it will also make non-ideological Albertans and even “law and order” conservatives a little antsy. In short, it’s a hard sell that feeds into the PC narrative about risky Wildrosers.

This is why the PCs are attacking them on this issue.

Nor do I like the Wildrose attack ads going after Alberta Premier Alison Redford. See below.

These “flip flopper” ads, while common, are not that effective. Basically you are saying your opponent is right half the time! Plus, this ad focuses on process. Does anybody really care about fixed election dates?

My point is Wildrose will have to get more savvy about picking the issues which they fight on and get a lot tougher when attacking the PCs. Of course, such actions will only invite more PC attacks.

All of which means the Alberta election could get pretty hot.