The Tories may be thriving despite recent controversies, but they need to deal with the burgeoning national debt.
After a run of polls giving the federal Conservatives as much as a ten point lead over the Liberals, it appears that the Tories have finally been knocked off their perch. Public outrage over the costs of the G8/G20 summit has boosted Liberal fortunes and sent a clear message to the government: big spending is not acceptable in a climate of economic restraint.
Prime Minister Stephen Harper isn’t the only politician feeling the heat on this issue: as world leaders prepare to convene in Toronto, they are facing growing pressure to rein in spending and balance the books. At the same time, they must contend with angry voters who don’t want to see cuts in social services and entitlements. But the Greek debt crisis has sounded the alarm bell: clean house, before it’s too late. While Canada’s books are in better shape than those of our European friends, our burgeoning debt could mean major problems for the Conservatives if they fail to take action soon.
According to economists Niels Veldhuis and Charles Lammam of the Fraser Institute, by 2014-15, federal spending will be $30.6 billion, 11.4 per cent higher than it is today. To finance this increase, the Conservatives plan to run deficits totalling $104.6 billion for the next five years. This will bring our national debt to the record level of $622.1 billion by 2014-15, more than negating all reductions made by the previous Liberal administrations of Jean Chretien and Paul Martin.
In February, Kevin Page, the parliamentary budget officer, also sounded alarm bells on the deficit and debt. He criticized the government for relying on overly optimistic growth projections and for ignoring the looming demographic crunch presented by Canada’s aging population. While the economy has rebounded beyond expectations, to the tune of 1.2 per cent in the fourth quarter of 2009, our recovery is still fragile, as external forces such as the Greek debt crisis continue to negatively impact economies worldwide.
Unless the Conservatives take serious action to rein in spending and balance the books, they risk compromising not only Canada’s economic wellbeing, but also their longer-term re-election prospects. By running large deficits for the next five years, they will all but guarantee the eventual need for higher taxes, a sure-fire vote-killer – and job-killer. An uptick in the unemployment rate, or worse yet, another recession, would certainly sour their standing at the polls.
So if the Tories need any advice, it is this: cut spending, eliminate the deficit, and balance the books now, as opposed to five years from now. From both an economic and an election standpoint, it would be smart politics.
