Harper, Mulcair find unfamiliar territory: sharing deficit views

Federal leaders agree a deficit to stimulate the economy from the fallout from the 2008-09 global economic crisis was necessary.

September 3, 2015   by The Canadian Press

OTTAWA — Stephen Harper and Tom Mulcair found themselves in unfamiliar economic territory Sept. 2 – sharing the same page on when they think it is acceptable to plunge the country into a deficit.

The Conservative and New Democrat leaders, along with their Liberal counterpart Justin Trudeau, still expressed sharp differences on the economic way forward following Statistics Canada’s recession pronouncement a day earlier.

The three federal leaders attempted to put a bit more flesh on the bones of their respective economic positions after the agency reported Sept. 1 that the economy had contracted for a second straight quarter – the technical definition of a recession.

But as they dealt with the fallout from the data, it was Harper and Mulcair who found themselves occupying the same position on an important, related question: when is it OK to run a deficit? Both leaders are opposed to them, and are promising balanced budgets if elected. But when asked about deficits, they gave strikingly similar answers. Harper and Mulcair both agreed on the need for stimulus following the Great Recession of 2008-09.

“Back in 2008-2009, we faced two circumstances we do not face today, both of them are important,” Harper said in North Bay, Ont., citing the drop in global output and the breakdown in the financial system.

“We are nowhere near those kinds of circumstances today,” he added. “I do not believe you would run a deficit on purpose if the economy is actually showing growth. Our economy will grow this year and that is why we will keep the budget in balance.”

Speaking in Kamloops, BC, Mulcair said: “We might recall back in 2008 when the worst financial crisis since the 1920s hit, it was obvious then that it was such a true head-on hit to the economy that spending was required and that’s what was done.”

As for the current situation, Mulcair said: “Right now, we are in a recession that’s been measured according to the definition accepted here, which is two consecutive quarters of negative growth.”

Trudeau, meanwhile, said Harper and Mulcair share the same future decision if they have any chance of honouring their balanced budget promises – budget cuts.

“They want to cut programs and they hope in vain that the same plan that has been in place for the last 10 years will still work and will kick-start the economy,” he said in Trois-Rivieres, Que.

But the Liberal leader was also forced the defend the budget-cutting that his party undertook in the 1990s when Paul Martin served as former prime minister Jean Chretien’s finance minister.

Martin made the right decision when he cut provincial transfer payments back then because the Conservatives left the country’s books in bad shape, Trudeau said.

“Right now, we have a very different situation where for 10 years, even though we have a very good debt-to-GDP ratio, we can’t seem to create growth,” Trudeau said.

Trudeau said only his plan to run deficits to 2019 and increase infrastructure spending will spur real growth in a slackening economy.

“Mr. Harper doesn’t understand that in order to grow the economy in the 21st century we need to invest in people and give them the tools they need to succeed,” he said. “Confident, optimistic countries are always willing to invest in their own
future rather than believe that cutting is somehow the path to growth and success.”

Harper and Mulcair disagreed, while still taking shots at each other.

“Proposing a deficit right now with economic growth is a recipe for permanent deficits,” Harper said. “It’s why we’re not going to do it and why I think the country will reject that proposal from the other parties.”

Mulcair reiterated that the NDP will be able to deliver on its various spending promises by cutting some Conservative initiatives.

“We have a plan for investing in infrastructure and housing, but it’s all done within the framework of a balanced budget,” he said. “Tommy Douglas balanced the budget 17 times in Saskatchewan and still brought in medicare in Canada for the first time.”

© 2015 The Canadian Press

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