Well, the above video is the latest attempt by the Liberals to reply to the campaign-style ads that the Conservatives have floated on YouTube. I’m not sure whether either party have aired their ads on television yet, but it certainly seems as though the rhetoric has been amplified toward a spring election.
The Liberal ad might be effective for people who believe the simplistic explanation that corporate tax cuts are a bad thing. I don’t know. I do know that I argued in favour of the 4.5 per cent tax cuts the federal government has made since 2006 being the main reason why the Canadian economy has rebounded more quickly than the rest of the G7.
I’m well aware of the Conservative deficit and the deficit spending that has little to nothing to do with the economic recovery, the burden of which will only create further problems on the balance sheet later. I’m also aware that dropping the corporate tax rate by another one and a half percentage point in 2012 will reduce the immediate revenue to the federal treasury by an estimated $6 billion. So the Liberals certainly aren’t lying on that point.
But where the Liberals, and the NDP and Bloc and Greens for that matter, seem to fall short in their reasoning is that the corporate tax cuts won’t create any economic stimulus. On the contrary, corporate tax cuts are most likely the strongest kind of economic stimulus, as it gives companies an opportunity to keep employees, make investments, hire new workers, or just simply decide not to move to a more favourable tax jurisdiction.
Which means that as far as the Liberal attack ad goes, it’s not much of an attack at all. Hammering on the Conservatives for cutting taxes is like being mad at a dog for barking. It’s what sound fiscally conservative policy should be.
If the Liberals wanted to mount a less self-defeating attack, removing “$6 billion tax cut” in big letters from their ads would be a good place to start. The second thing would be to question the spending practices of the Conservative government, and it would be no more difficult than quoting the Fraser Institute’s Niels Veldhuis.

As I’ve mentioned numerous times before, the so-called stimulus that was spent during the recession will have a compounded debt of $110 billion by the time the Conservatives expect to balance the ledgers in 2015. The federal debt at this juncture will be $626 billion, or fully $63 billion more than the Liberal government drove it to in 1997 when Canada’s debt hit a record high.
The problem is that although the Conservative government has taken a fiscally sound plan in cutting corporate taxes to 15 per cent, it continues to outspend all previous governments in growth and overall expenditures. In fact, in the five years that Stephen Harper has been Prime Minister, spending has increased from $209 billion under the Martin government to $278 billion for fiscal 2010-11, an increase of 25 per cent.
According to the Conservatives’ own estimates, when the budget will finally be balanced 2015-16 spending will be 25 per cent greater than it is now. It isn’t sustainable, even if revenues do recover to the point where we can begin to run modest surpluses again.
The problem is that the Liberals can’t exactly attack this plan, since they’re busy making large spending promises of their own. While they would cancel the 1.5 per cent corporate tax cut in 2012, they would implement a program aimed at expanding Employment Insurance, at a minimum cost of $1 billion every year. That’s not an alternative. That’s a worse scenario.
There are numerous methods and ways to balance the budget more quickly than the Conservative plan and without causing any panic. Among those are eliminating liberal spending programs like regional economic development agencies, corporate subsidies and handouts, so-called environmental subsidies and “loans” like the one handed to aerospace giant Pratt & Whitney Canada.
Privatize inefficient public companies, including the CBC, and end taxpayer support for the ones in competition with the private sector. Freeze hiring for the public sector and wages for two years. Reduce the Equalization program, which sees $8.5 billion sent to Quebec annually. Force them to develop their own revenue stream by tendering drilling rights in shale oil like British Columbia. Eliminate the vote subsidy. Claw back the departmental increases in spending to immigration and scrap the appeals process for denied refugees.
None of these choices should be considered too difficult when carrying a half-trillion-dollar public debt. When the government returns to surpluses sufficient to pay down the debt, then personal incomes tax cuts should follow. There’s a clear way forward. Now we just require the courage to walk in that direction.





