Saturday, January 17, 2009

A Tale of Two Stimuluses

One country is planning to try to blast its way out of the recession with vast new permanent spending commitments. Another will rely primarily on tax cuts aimed at the middle class. Surprise - or anyway, it's a huge surprise for a Canadian of my generation - one is the United States and the other is Canada. From Stephen Harper's Thursday interview with the National Post:

[M]ake no mistake, that as a Conservative government, we think it is very important that the middle class be part of a stimulus program. Yes, it is very important to help the vulnerable, struggling sectors and help people who are losing their jobs, but you can’t sustain economic activity without having stimulus for the middle class as well. That’s very important. Since the middle class is paying most of the freight, the middle class has to share in the stimulus program and we will be making sure that is the case.

Q: That sounds very much like a tax cut.

Harper: I’m not laying out any specific — we’re looking at a range of specific spending and tax measures of all kinds. I’m not committing to you any particular measure, but the principles are clear. We have to help the vulnerable and those affected most severely by the downturn. But you can’t do that and leave the middle class to fend for itself. A program like that would not be successful.

And:

If we stick to the plan we are going to bring forward, which will be large short-term deficits, we’ll come out of this in a good situation. First of all, let’s be clear, everyone around the world is going to be running deficits. Those deficits everywhere are going to be large and in most countries will be much larger than Canada’s because they started in a far worse financial situation than Canada. Canada’s going to come out of this with a marginally higher debt-to-GDP ratio — only very marginally — and relative to other countries, we’re going to be in a relatively even better financial position than we were before, because their positions are going to deteriorate markedly and ours are not. We have the financial situation that allows us to borrow money in the short term and spend that money, as long as most of that is time-limited spending. That’s what we’re going to be proposing — programs of one to two years duration for the most part. The key will be for us to resist calls that will be inevitable to extend some of those things indefinitely.

The contrast between Obama's Chicago way wrapped in the rhetoric of hope and change - and Harper's steady governance - reminds me of that scene in the remake of the Untouchables where the Capone gangsters try to smuggle whisky across the border and run into a cavalry charge of Canadian Mounted Police. It summons up a wave of Steyn-style pride in the old Dominion.

01/17 08:10 AM