Economists weigh in on the Conservative budget

The Calgary Herald features an article which discusses the perception of the budget with some of Prime Minister Harper’s former mentors, which belong to a group of economists and political analysts known as the Calgary School. The group interviewed is split on the value of this week’s federal budget.

Comments include those from political science professor at the University of Calgary, and former Harper senior advisor, Tom Flanagan. Flanagan is not impressed with the direction the Conservative Party has taken with this budget.

"You can find some things in the budget that are consistent with the Conservative philosophy, but the weight is like 90 to 10 against it," said Tom Flanagan.

He even goes as far as saying that this heavy-handed intervention in the economy is "unwise and unnecessary."

"In this budget there is no direction really, except political survival," Flanagan suggested Wednesday. "So I'm hoping this is a temporary phenomenon brought around by circumstances."

Harper’s masters’ thesis advisor, University of Calgary economist Frank Atkins, also warns of the misleading impact of deep government spending. He qualifies the announcement as a political, rather than economic budget.

[Atkins] warns the big-spending budget won't solve the country's economic woes and could create bigger problems down the road, such as inflation, higher taxes and greater interest rates.

"This is not an economic budget in my mind. It's a political budget, much more so than any other budget has been a political budget," Atkins said.

"Probably most importantly, it was designed to cut off the legs of the coalition, which it has done."

However, others who are part of the Calgary School have more lenient views in relation to the latest Harper budget.

[Roger] Gibbins, president of the Canada West Foundation policy think-tank, calls the overall budget package fiscally sensible and politically attractive, offering broad and modest financial relief to Canadians.

"They had to do something. We couldn't be the only G-20 country that wasn't responding in some way," Gibbins asserted. "It was a reasonable response to the time, just trying to cushion things a bit for Canadians and that's probably all that the federal government can do."

One must not forget this engagement taken with the international community. But Gibbins does not think the Canadian spending plan will help the country’s economy very much, because Canada’s financial health is dependent on a rebound in commodity prices and the United States' demand for goods.

Robert Mansell another economist who taught the Prime Minister at U of C, believes the budget does offer the right remedy for these tough economic times, particularly the government's plan to significantly boost infrastructure spending.

"That is one of the areas where the government can have a major effect in terms of stabilizing in the economy," Mansell said, adding he doesn't deem the deficit-financed budget a departure from Harper's political and fiscal ideologies.

"He's very practical,"Mansell noted. "As a student of economics he understands there are ups and downs in the economy and one of the roles of government is to respond and help stabilize those.

"And this is one of those downs. So I don't see an ideological shift."

Neither does [Barry] Cooper, a political science professor at U of C. In his view, the Harper government's budget is pragmatic, not a transformation of core conservative beliefs.

"It's probably an inevitable response to the public perception of the (economic) problem," Cooper said. "And that's what politicians have to respond to, not their understanding of the underlying realities because the underlying realities don't vote. The public perceptions vote."

Flanagan also commented in a Canadian Press article:

"I spent five years getting Harper into power, so God knows I want him to survive," Tom Flanagan, a political scientist at the University of Calgary, said in an interview Wednesday.

"I perfectly understand the imperatives of political survival and the need to make compromises and to adjust, etcetera, etcetera, etcetera. But ... it's got a creepy feel to it."

[…]

"The record of accomplishment is still there," said the former Conservative campaign director.

"But it looks like things are grinding to a halt. Are we just going to enter a period of political pragmatism, when all you do is fight to survive? That's very discouraging.

"We thought that Mr. Harper had the strategic acumen to survive and make some progress toward conservative goals."

While the debate on the budget measures is far from drawing to a close, we cannot let this cause a divide among conservatives. This would be too beneficial to Ignatieff and the Liberals.

The budget, Liberal Leader Michael Ignatieff suggested Wednesday, "throws the Conservative movement in Canada into a certain form of deep ideological confusion - from which I sincerely hope it never recovers."

As former cabinet minister Monte Solberg reminds us in his Sun Media column yesterday:

The Conservatives have easily escaped to fight another day, but what are they fighting for?

This budget isn't a conservative document so much as it's a political document; a document that will give the Conservative government the room necessary to craft a compelling conservative vision for the future.

They must craft that vision without hesitation, and they must do it in a way that makes people want to be a part of it.