What are they, twelve?!

I remember an episode of some 'Law & Order'-type show in which the prosecution (or maybe the defence) requests documents under discovery, and the opposing side responds by dumping box after box after box of paper in their office.

It seems John Baird saw that episode too.

The Harper government has dumped three boxloads of information about its efforts to stimulate Canada's sputtering economy on Parliament's independent budget watchdog.

Kevin Page had asked for more information, complaining that the sketchy data provided up to now made it impossible to tell whether $12 billion in stimulus spending is having any impact on the economy.

But rather than provide an easy-to-analyse spreadsheet listing infrastructure projects and how much money has been spent on each of them to date, the government flooded Page Thursday with 4,476 pages of documents.

...[Baird] made no apologies for not delivering the information in a more user-friendly form. He said 200 officials at Infrastructure Canada have been "working flat out" to get 7,600 projects up and running and that has to be their "first priority."

"The parliamentary budget officer has asked for a significant amount of information. We've given him a significant amount of information," Baird said.

Tell you what. Next time Canada's Not-So-New Government asks for you to pay your taxes, why don't we all drive up to Jim Flaherty's office in Ottawa and dump it on his desk. In pennies.

That'll show 'em!

Kevin Page Grades Jim Flaherty's Math

53%

James participates enthusiastically in Question Period. James sometimes completes his assignments on time, but needs to take more care and check his work before handing it in. He frequently skips over difficult questions, and appears to skew his results according to what he thinks will please his classmates instead of trying to find the correct answer. Next steps: review math fundamentals; consider peer tutoring.

Budget of the Pod People

Watching Jim Flaherty trying to choke out words like "deficit" and "infrastructure spending" in any sort of convincing way was like watching one of the pod people from "Invasion of the Body Snatchers" trying to approximate human behaviour but never quite getting it right. The brand new Conservative budget has most of the right elements (and a few very wrong ones), but you can tell that they don't like it, they don't believe in it, and on a fundamental level, they really don't understand it.

The overall effect is that of a paint-by-numbers painting: disjointed, vaguely appealing from a distance, and yet utterly devoid of any overarching theme or vision.

Still, there is very little here that one can specifically object to - at least, not in 100 words or less. Some tax cuts were inevitable, but although they are so low as to be completely ineffective as stimulus (as if they could be effective anyway), they are directed mainly at low and middle income earners instead of corporations, and at least they didn't cut the GST again. They made a token effort at extending E.I., but avoided really addressing the major problems with it. I was glad to see the $400 billion for VIA Rail 'service improvements', but what does that really mean? Are we finally getting the high speed rail link from T.O. to Montreal, or are they just getting new seats?

The biggest issue is the infrastructure spending, which appears to be tied to matching provincial and municipal funds. If this is actually the case (and it seems it is), then they might as well not have bothered because just about every municipality in the country has already set their infrastructure budget and is already maxed out in terms of property taxes.

Oh, and the Canadian film industry got pooched. Again. But yay for the Canadian Television Fund! Now if they'd only start requiring Canadian broadcasters to actually start making and/or carrying Canadian programming again...

As for the deficit, what can I say? Given current circumstances it could hardly have been avoided. But let us never forget that current circumstances are a direct result of Flaherty pissing away the surplus built up by previous governments on vote-buying fripperies such as a two percent GST cut and massive corporate and personal tax cuts.

My advise to Michael Ignatieff, for what it's worth: do what Dion did with the Afghanistan mission. Insist on cheap but essential tweaks such as the elimination of the two week wait time on E.I. benefits and making federal infrastructure spending less contingent on matching funds before you agree to anything.

Otherwise, see you at the ballot box.

The People Flaherty Isn't Listening To

Jim Flaherty has been a busy boy. Running all over the country, meeting, consulting, listening, getting input from all sides as to what stimulus measures he should put in his budget.

Well, some sides. Ok, one side.

So far, he's met with the CEOs of the big banks, the Canadian Taxpayers' Federation (aka "The Canadian Federation of Really Rich People"), and of course his 'economic panel' of top corporate movers and shakers.

Funny. I'm not seeing the word "labour" anywhere here. I'm not seeing the word "poverty" mentioned, either.

Happily, the Canadian Centre for Policy Alternatives - which, as the media has helpfully informed us, is a "left-wing think tank" - has come out with its own proposals for a stimulus package that focus more on jobs and strengthening the social safety net than anything being proposed by Flaherty's advisors.

The stimulus package, whose promised impact was validated by Informetrica Ltd. -- which has a macroeconomic computer model -- would boost GDP by three per cent and create 407,000 jobs, it said.

A breakdown of the proposed key investments includes:

- $12.4 billion to strengthen the employment insurance system so more out of work Canadians receive benefits, and to provide income support for low-income seniors, children and the working poor.

- $14.7 billion to strengthen municipal infrastructure and affordable housing, invest in child care, post-secondary education, and honour the First Nations Kelowna Accord scrapped by the Conservative government.

- $5.8 billion investment in "green infrastructure, training and education, and energy retrofits."

Most significantly, CCPA's proposal omits the one element almost guaranteed to figure prominently in Flaherty's budget.

The package does not include any broad-based tax cuts.

"Simply put, government-spending initiatives outlined in this plan provide far more job-creating stimulus than across-the-board tax cuts," said David MacDonald, an economist who co-ordinated preparation of the alternative federal budget.

"People who have jobs spend; people who lose (jobs) do not."

A few things need to be understood here. One is that, fundamentally, tax cuts cost just as much as government spending. 'Tax cut' sounds better in an election, but translated into personal terms it amounts to the difference between having a $500 rent increase and a $500 cut in your paycheque.

Another is something that Ali Velshi just pointed out on CNN, talking about the possibility of Obama bringing in tax cuts: that giving everyone, say, an extra $500 in their pockets doesn't really solve anything because if you are out of work or losing your house, it's not enough to help, whereas if you are doing ok then you won't really need it.

The third point is this: a lot of the stuff we buy here in Canada is made elsewhere. So a goodly chunk of the money spent at Wal-Mart or Loblaws or Canadian Tire, is just going to go to support the economies of the U.S., China and Mexico. And that's assuming that people would actually spend that money and not just sock it away in, say, one of Flaherty's not-really-tax-free savings accounts.

All of this would be perfectly obvious to Jim Flaherty if he were listening to those who speak for the low to moderate income Canadian workers (i.e. most of us) who are going to be hardest hit by this recession. Instead, he is choosing to consult only with those seeking to protect their profits and wealth. Who, incidentally, are the very people whose opinions on economics are pretty much identical to Flaherty's.

Welcome to the echo chamber.

Robbing Peter to Pay Paul

Now that Garth Turner is no longer a Member of Parliament, he's been focusing more on economics and real estate than on politics in his blog. Happily, this has resulted in most (but not all) of the more repugnant trolls losing interest, but it hasn't always made for the most fascinating reading for the rest of us political junkies.

Today's post is a notable exception:

Toxic Cash?

Do you know what’s backing your money? You should. Because in the last 90 days this has changed drastically. There’s a big gamble been taken by politicians which was never explained, never debated, never questioned, and yet could affect us all.

Here is the way the system is supposed to work, and until this autumn, did.

* Our money’s printed by the Mint and backed by the Bank of Canada. The central is expected to hold assets equal to the amount of cash in circulation, which is more than $50 billion.
* Because our nation no longer owns gold reserves, our money is backed by the safest of securities, long-term government bonds and Treasury bills. This is what gives our money true value. At least, until recently.

But in the last 90 days, without public notice, the Bank of Canada has sold off more than $11 billion of those secure T-bills, plus cashed in billions more of its bonds. As stock market researcher John Paul Koning discovered last week, the central bank now lists on its balance sheet a stunning $32.4 billion in “other” assets, which comprise a whopping 42% of everything it owns.

That means more than two-fifths of the total assets backing our money supply is – what, exactly?

Well, let’s flip back a month to the middle of November, when finance minister Jim Flaherty announced the federal government was purchasing $50 billion in residential mortgages from the Big Six banks, following an earlier deal to buy another $25 billion in mortgages. “At a time of considerable uncertainty in global financial markets, this action will provide Canada’s financial institutions with significant and stable access to longer-term funding,” he said, adding, “with no additional risk to the taxpayer.”

So, the “other” assets the Bank of Canada has swapped for secure, near-cash holdings appear to be tens of billions of dollars in high-ratio mortgages. The money to buy those assets apparently came from the central bank, through CMHC, and ended up in the vaults of the Big Six banks.

You know, I had been wondering how Flaherty managed to pull $75 billion out of his ass without toppling his little budgetary house of cards. Now I guess we know.

When Chickens Attack

Peter MacKay: "When they play chicken, they wind up looking up like chickens"

That just speaks volumes about the attitude of the Conservative Party, doesn't it?



It's really remarkable how badly Harper and Flaherty have miscalculated here. So much for the Conservatives' legendary "psychic powers". You know - the ones that enabled them to intuitively know what actions to take to simulate the economy way back when they are now insisting that nobody could possibly have known that a crisis was coming and had no reason to think they needed to do anything but purely by coincidence ended up doing exactly the right thing anyway?

Ta da!

And for his next trick, Jim Flaherty will pull a deficit out of... wait... Jim? Jim? Where'd he go?!

Flaherty Fiddles While the Economy Burns

Unbelievable. Our economy is going down in flames, our manufacturing industry is at death's door, tens of thousands of people are facing unemployment - largely in Jim Flaherty's own riding - and THIS is what our finance minister has for us?

Tories expected to slash party funding

Symbolic cuts to politicians' perks, temporary relief for pension plans and a political grenade – ending the $30 million public subsidy to parties – are expected highlights of Thursday's federal economic statement.

Finance Minister Jim Flaherty will ask the five political parties to give up the $1.95-per-vote subsidy they get to pay for staff and expenses.

...Stephen Harper's Conservatives, who won the most votes, stand to lose $10 million.

But proportional to revenues raised last year, the taxpayer subsidy represents 37 per cent of the totals raised by the Tories.

That's far less than the 63 per cent chop for Liberal coffers, 86 per cent for the Bloc and 57 per cent for the NDP. The Greens stand to lose 65 per cent of total revenues.

This is such an obvious, cynical ploy to screw the opposition parties and gain permanent political advantage that even Stephen Taylor cannot restrain himself from gloating. And yet, the Conservatives are painting this as 'an austerity measure'; 'leading by example'; 'tightening our belts' - despite the fact that none of this would come into effect for at least a year anyway, by which time the current financial crisis will be well past the point where a lousy $27 million will have the slightest effect.

Just for the record, here are five reasons why public funding of political parties is a good idea:

- Chretien brought this in for the same reason he brought in the donation limits: to reduce the influence of money in politics. That's a good thing.

- Public funding takes the pressure off MPs and parties from having to spend all their time begging for cash and puts more emphasis on their performance.

- It adds an element of proportionality to the system, allowing smaller parties like the Green Party to participate more fully than they would otherwise be able to.

- It encourages people to vote by making sure that their vote counts for something even if their chosen candidate has no chance of winning.

- As Mark Francis pointed out, the government already subsidizes political donations to the tune of 75% for donations up to $400, and 50% for someone donating the $1275 maximum would get half their money back (how much does that cost?). But that's only if they could afford to donate that much, and only if they actually made enough money to get this non-refundable credit back. Therefore, relying on donations only gives advantage to parties that appeal to the wealthy. Public funding, on the other hand, allows all voters regardless of income to financially support their party of choice simply by voting for them.

In any case, electoral reform is a debate for another day. Right now, all of the opposition parties must demand that this item be removed from the economic statement. If it is not, they must vote against it and consider approaching the Governor General about forming a new government.

If this is allowed to stand, there will be no end to it.

Bald Faced Fibbers

Even Don Martin is having a hard time swallowing this one:

Technically speaking, he either fibbed or flip-flopped. But the best-case explanation for the most startling about-face of Prime Minister Stephen Harper's career is that he simply failed to see bad times coming, even with hundreds of fiscal gurus on the payroll and Canada's best economists on call.

No really, I think we should stick with that 'fibbing' theory. Except we really should call it for what it is:

THEY WERE LYING!!

Stephen Harper and Jim Flaherty knew full well that the global economy was going to tank at least a year ago. They bought their first election by promising billions in cash and tax cuts they knew would eat up the surplus and put us on the thin edge. They knew that they would have no choice but to rack up a deficit when everything went south.

So they broke their own law, called an early election, and swore from here to Sunday that they would NOT run a deficit, knowing full well that they would. And beat the tar out of Dion for not promising to do the same.

That's not fibbing, Don. That's a cynical, calculated, bald-faced LIE.

But that's not even the worst part. The worst part is that they won the election on that lie. Because people believed them, despite Flaherty's track record - despite the track record of every conservative government over the past quarter century. They bought it, and now they appear to be buying the pleas of "wow, gee guys, we're really sorry but who could possibly have seen all this coming?"

Oh, yes - and they lied about the recession too.

September 15, 2008: "My own belief is if we were going to have some kind of big crash or recession, we probably would have had it by now." — Prime Minister Stephen Harper

November 25, 2008: Canada's economy entering deep recession — OECD

If they were actually that stupid it would almost be a comfort.

The Wrong Side of History

I nearly choked yesterday when I heard the following delusional nonsense come out of Georgie's mouth in his speech to the Manhattan Institute in New York yesterday:

"The crisis was not a failure of the free market system," Bush said. "And the answer is not to try to reinvent that system."

"History has shown that the greater threat to economic prosperity is not too little government involvement in the market, but too much."

Blink. Really? Wow. Who knew? I guess he must be reading out of that OTHER history book - you know, the one where America single handedly won every war it's fought, humans walked with the dinosaurs, and Herbert Hoover was the greatest president of all time.

That same day, Stephen Harper was busy exhorting his base not to become mired in ideology, raising hopes that he might finally be prying himself (and us) loose from the dying, toxic carcass of the Bush administration and it's thoroughly discredited economic policies.

This morning, there's this:

Harper lines up with Bush on reform
Two leaders balk at calls by other leaders for far-reaching new financial regulations

OTTAWA — Prime Minister Stephen Harper is expected to join U.S. President George W. Bush in a defence of free-market capitalism and resistance to international calls for dramatic re-regulation of financial markets.

On the eve of a meeting in Washington of leaders from the 20 largest economies, Mr. Bush argued yesterday against drawing the wrong lessons from the global financial meltdown.

In doing so, he rejected the view of leaders like France's Nicolas Sarkozy, Australia's Kevin Rudd, Brazil's Luiz Inacio Lula da Silva and even many U.S. Democrats, who have argued the root of the crisis lay in deregulation, greed and unchecked speculation.

...German Chancellor Angela Merkel last month attacked "greed, speculation and mismanagement" as the root causes of the crisis, while Australia's Mr. Rudd slammed the "obscene" failures of financial oversight.

French President Sarkozy yesterday defended capitalism but slammed what the French typically describe as the Anglo-American approach that "everything will be solved by deregulation, free competition and the market."

But in a comment article in Britain's Financial Times yesterday, Finance Minister Jim Flaherty supported Mr. Bush's view that free markets - properly regulated - remain the best approach for encouraging global economic growth and prosperity. "The open market system did not fail in this crisis."

It's like listening to the parishioners of some discredited minister trying to cling to their faith even as their leader is hauled off in handcuffs.

I almost feel sorry for them.

BREAKING NEWS! Brent Fullard to run against Jim Flaherty

Word came today to Garth Turner's campaign office that Brent Fullard, activist and founder of CAITI (The Canadian Association of Income Trust Investors) will be the Liberal candidate in Whitby-Oshawa and will run against his nemesis Jim Flaherty in the October 14th election.

Photos and video from today's campaign launch in Halton will be posted later today. Stay tuned!

This is your Finance Minister. And this is your Finance Minister on drugs.

Everyone today seems to be wondering what the hell Jim Flaherty's been smoking. Theories abound regarding the logic behind his recent rants against Dalton McGuinty, Dwight Duncan and Ontario in general - everything from a possible run at John Tory's job to punishment for the province's stubborn refusal to vote Conservative ever again.

One popular theory that even I was starting to suspect was true, is that Harper has written Ontario off entirely and is trying to gain seats everywhere else by indulging in Canada's second favourite sport: Ontario / Toronto Bashing.

There's just one trouble with that theory. The kind of people who form Harper's base out west are also exactly the kind of people who don't take kindly to the Federal government sticking its nose into Provincial business. Even the Saskatoon Star Phoenix, even while agreeing that cutting corporate taxes would probably help Ontario, is positively dumbfounded by Flaherty's blatant meddling.

Paul Wells has an excellent analysis over at Maclean's, and may come the closest to explaining just what the Conservatives might hope to gain from all this. For insight, he turns to the intellectual font from which all of Harper's political strategies spring. From the Book Of Flanagan:

"Our appeal followed the time-honoured advice for raising money by direct mail -- make people angry and afraid, and set up an opponent for them to give against."
— Tom Flanagan, Harper's Team

...As for Ontario's chances of becoming an equalization-receiving province, here's Don Drummond of TD Bank saying the biggest culprit if that ever happens will be the Harper-Flaherty government. "They seem to be bent on making Ontario's situation worse at the moment," Drummond says.

Of course they are. For then Harper will have created a bogeyman Ontarians can be angry and afraid of, so he can do some fundraising against them. It's what he does.

Happily, Duncan and McGuinty aren't buying any of it. They, like most of us here in Ontario, remember all too well what happened last time we listened to Mr. Flaherty, and aren't about to let it happen again.

Following Mr. Flaherty's advice would reduce the province's revenue by $5.1-billion. This would include eliminating the annual health premium - which costs each taxpayer up to $900 a year - and cutting the corporate tax rate to 10 per cent.

“You can't take $5.1-billion out and not close hospitals and not fire nurses and not make cuts to education and not give rise to dramatic increases in tuition and not fire water inspectors and not make cuts to social assistance,” [McGuinty] said. “It just can't be done.”

Regardless of all the political motives and machinations at play, what it comes down to is a battle between two fundamentally different approaches to economics: progressive vs. conservative, bottom-up vs. trickle down, Keynes vs. Friedman in an all-out death match.

We've tried it Flaherty's way before and it was an unmitigated disaster. If Duncan and McGuinty turn out to have a better approach to weathering the coming storm, it might just be enough to convince the rest of the country to try it as well.

At which point Mr. Flaherty can get some first hand experience in the ranks of the unemployed.

Thursday News Round-Up

Those pesky Conservatives have sure been busy busy busy over the past couple of days. Where to begin...

CANADA: LEADING THE WAY IN FOLLOWING GEORGE BUSH

Here we go. Remember a couple of days ago when Finance Minister Jim Flaherty inexplicably took it upon himself to criticize Quebec for trying to bring in tough new California-style greenhouse gas emission standards?

Now we know why:

Ottawa moves to emulate U.S. on new fuel mileage standards

OTTAWA — Canada's auto makers as well as consumers are keen to see new fuel economy standards applied on a national basis, says federal Transport Minister Lawrence Cannon.

"Industry and the average Canadian, they all want to have a national standard," Mr. Cannon said this morning at the unveiling of a 60-day consultation process aimed at developing a fuel-economy target by 2020.

The goal is a target that "achieves at a minimum" recently enacted legislation in the U.S. Congress calling for auto makers' fleets to average 35 miles per gallon, or 6.7 litres per 100 kilometres, by the year 2020.

Mr. Cannon conceded that some provinces have struck out with their own fuel-economy programs but said he believes a common standard can be worked out in the talks.

Quebec, for example, has said it wants to move to more stringent standards such as those being proposed in California

But Mr. Cannon pointed out that the U.S. Environmental Protection Agency has launched a court challenge against the California measures and that it makes more sense to use the U.S. Congress legislation as the benchmark. The new U.S. standard falls well short of the regulations proposed by California.

One would hope that Harper wouldn't take it any further than simply suggesting that provinces stick with the federal standards, but given his recent fondness for draconian, bully-boy measures whenever his will is defied, I wouldn't put it past him to try to force the issue.

In which case Quebec can do what Arnie and the State of California are doing: sue the bastards.


MORE CNSC FALLOUT

The National Post (The National Post?!?) has published an op-ed piece that soundly criticizes Harper and Lunn and suggests what we bloggers have been saying all along - that this has nothing to do with the 'health and safety of Canadians' and everything to do with getting Keen out of the way of the government's plans to privatize AECL.

We also have op-eds in the Star and the Globe and Mail saying essentially the same thing. But of course most people don't read newspapers or blogs and there's nothing about the privatization scheme or a profit motive in any of the 30 second news 'stories' on the TV, so chances are nobody will notice.

BTW, correct me if I'm wrong, but it occurs to me that 11:00 p.m. is the optimal time to put out a press release if one wants to ensure that it does NOT make it onto the front page of the paper the next morning. Funny, that.


NEW WRINKLE IN CANADARM SALE

Last week's story about MacDonald, Dettwiler's sale of its satellite and space technology division to U.S. firm Alliant Techsystems (ATK) managed to leave out this little nugget:

The company they sold this stuff to makes, among other things, LANDMINES.

Aside from the obvious ethical problems with having technology funded by Canadian tax dollars being sold to a major arms manufacturer, there's the little matter of that anti-land mine treaty Canada signed on to that might just make the whole deal illegal.

ATK derives more than half of its $4 billion US in annual revenue from military contracts, including cluster bombs, depleted uranium rounds and landmines.

In December 1997, a total of 122 governments signed the Mine Ban Treaty in Ottawa — the most comprehensive international instrument for ridding the world of anti-personnel mines.

Lloyd Axworthy, the foreign minister when Canada signed the Ottawa protocol, said he believes the sale contravenes the provisions of that treaty.

"It [ATK] is a major arms merchant that is creating some of the dirtiest weapons in the world," Axworthy said Wednesday.

"The transfer of public money into a company making landmines is clearly banned under the treaty so this would be a clear case of non-compliance," he said.

And the government's response is... about what you'd expect:

Federal Industry Minister Jim Prentice, who will have to review the sale, declined an interview with CBC News. His spokesperson said Prentice will review the sale based on whether it's good for Canada.

"Good for Canada" means "Good for Canadian shareholders and corporate profits", of course. Time to give Scott Brison a call.

(H/T to Blast Furnace Canada Blog)

Monkey See, Flaherty Do

Apparently it isn't just all other countries that need to be on board before the Conservatives will do anything about global warming. The same theory now applies to provinces as well:

Canada needs common greenhouse gas regulations, not patchwork, Flaherty says

January 14, 2008

VANCOUVER - A patchwork of carbon taxes and greenhouse gas rules across the country isn't a good solution to Canada's environmental woes, the federal finance minister says.

Jim Flaherty said Monday the country needs to work toward a common set of regulations aimed at reducing greenhouse gas emissions.

…Quebec became the first jurisdiction in Canada to put in place a green tax on carbon fuels in its last budget, to help finance the province's plan to reduce greenhouse gases, something that Flaherty has criticized.

The plan was created to help Quebec reach its Kyoto protocol targets, which is to reduce greenhouse gas emissions to 1990 levels by 2012.

Wait, wait… this sounds strangely familiar. Where have I heard this before? Oh, yeah…

Friday, Dec. 21, 2007

The EPA on Wednesday denied California's attempt to place first-ever U.S. limits on automobile emissions of heat-trapping gases, which account for about 30 percent of the U.S. total.

The EPA said an energy bill signed into law this week by President George W. Bush means no further action is needed to cut carbon dioxide emissions from vehicles.

The EPA, charged with making the decision, said the law to raise automobile fuel standards by 40 percent by 2020 was a "better approach" than a "patchwork" of state rules.

Apparently the Bush-appointed head of the EPA reached his decision, which went against the wishes and advise of his staff, soon after Dick Cheney met with auto industry executives who presented him with a letter explaining why it would be wrong to allow individual states to set greenhouse gas emission standards on their cars.

I'm guessing all it took for Flaherty to reach the same conclusion was a quick peek across the border to see what the Americans were doing. And then copy down that whole 'patchwork' thing. 'Cause that sounded pretty good.

And by the way, isn't Jim Flaherty the Finance Minister?!? Shouldn't the Minister of the Environment be dealing with this? Or Industry? Or Intergovernmental Affairs? Or... well, anybody else?

(H/T to 'Pyotr Petrobitch', a fellow commenter over at
Garth Turner's Political Mayhem)