Friday, February 24, 2012

Flaherty changing his budget tune?

Update (6:50 p.m.) below.

Flaherty seems to have found a new word for his upcoming budget:
The federal budget expected in mid-March will focus on "moderate" measures to cut government spending and encourages provinces to do the same, he said.

"We are not one of the countries, many of them in Europe, that have run up deficits for a long period of time, accumulated substantial debt and must really act dramatically - some of them in a draconian way in order to get their house in order again," he said.
"Moderate," he says. That would be a change in tune. What is going on?

Den Tandt, coincidentally, has a budget theory today. That the uproar over the internet surveillance proposed law, Vic Toews' nasty performance in connection with its introduction and the burgeoning robocall scandal are reinforcing an image of the Harper government as a gang of partisan brutes. Making it more difficult to avoid a perception that they are enthusiastic axe wielding budget cutters. "[I]f they go into Budget 2012 perceived as vengeful partisan warriors, hacking and slashing with abandon...," it's a toxic political combo, he suggests.

Or, if you don't buy that theory as driving Flaherty, there were the warnings by ratings agencies that Canada didn't need to be so austere.

There was also, perhaps most importantly, the Bank of Canada's special warning yesterday to Canadians on household debt and a possible decline in housing prices. If interest rates go up, households could be in trouble. Flaherty might be worried things are going to get bad.

Whatever the reason, Flaherty seems to be changing his tune. Whether that tune will carry through on major budget items that have been on their agenda such as OAS changes and federal department cuts remains to be seen.

Update (6:50 p.m.): Tweet from Bob Rae today with his own theory on what may be going on in Ottawa as between Flaherty and Harper: