Looking North For Ideas

If conservatives were given a free-hand to re-write the stimulus bill, what should they press for?

Here’s a simple check list:

• Agree with spending money now, but in a more restrained manner.
• No to massive spending commitments years into the future.
• No to any new entitlements.
• Cut taxes across the board.
• Try to keep the GDP-debt ratio relatively constant over the next half decade.

Even though the Senate has reshaped the massive stimulus package approved by the House of Representatives (details are still emerging as I write this), the final product looks like it falls short of achieving the above 5 goals.

In fact, the U.S. Congress seems unlikely to achieve any of these 5 goals. Spending commitments push past $800 billion and will last years into the future, well past this economic downturn; the House bill commits the federal government to expand Medicaid to anyone who collects unemployment benefits -- yes, a new entitlement, and yes, it covers millionaires; tax cuts are narrow and anemic; debt will explode.

Has another western government fared better during this financial crisis?

Earlier this week, with little notice, Canada’s minority government, led by Prime Minister Stephen Harper, survived its first budget vote.

His task was great: to pass the first reading of the bill, he needed to rely on the support of one of the Canadian opposition parties -- that is, he required approval from the Liberals, who publicly oppose any tax relief, the New Democrats, who are socialists and want massive new spending, or the Bloc Quebecois, a separatist party led by a former Marxist (enough said). So far, he’s secured the support of the Liberals.

Just two months ago, the opposition parties banded together and Harper’s government and political career seemed finished. This week, he’s cleared the first hurdle in passing a budget that would achieve all five goals -- yes, including broad-based tax relief.

Curiously, the sharpest criticism for the budget has come from conservatives. My friend Andrew Coyne declares the budget a “sell-out” and, in a cover story for the weekly Maclean’s, describes it as “the end of conservatism.” The Fraser Institute’s Tasha Kheirriddin calls it a “betrayal.”

Fortunately, more sober analysis has also been offered up. Ezra Levant, writing in the National Post, summarizes the conservative case for the Harper budget:

The first is that the government’s stimulus package is much smaller than in other countries, especially the United States. This year’s government stimulus spending is 1.9% of GDP, compared to 2.9% in the U.S. Next year, Canada’s stimulus falls to 1.4% of GDP, while the U.S. plans to keep going full tilt, at 2.8% of GDP. And that’s on top of the enormous U.S. bank bailout, a crisis that has not afflicted Canada. Even in a worst case scenario, Canada will still have the lowest debt-to-GDP ratio amongst all the G7 countries when we’re done.

Another reason why the deficit is large is because of the $9-billion in tax cuts. Canada already has a lower corporate tax rate than the United States. By 2012, ours will be lower still Ñ and lower than that of every other G7 nation. And that’s just on the corporate side. Personal income taxes are going down too, and the GST cuts continue to pour $12-billion a year back into consumers’ pockets.

But perhaps the most important reason why conservatives shouldn’t be too depressed by this budget is that it doesn’t create any new, permanent government programs that will continue to drain the treasury for generations to come. There are no new “product lines,” such as a national daycare or pharmacare program that would be difficult to uproot. The bulk of the spending is in tangible one-off programs, such as rebuilding roads and bridges and low-cost housing.

Conservatives north of the 49th parallel need to take a big, deep breath. Mr. Harper didn’t produce a perfect budget. But he also didn’t produce one in a vacuum.

Friday’s news should give Canadian conservatives pause for thought: the House of Commons had barely voted on the budget when opposition parties clamored for more spending, armed with the latest unemployment stats. Mr. Harper, for the record, neither backed down nor minced his words: “We cannot have in Parliament, quite frankly, instability every week and every month, every time there’s a new number, people demanding a different plan…”

American conservatives south of that border should pay attention.

Some have looked across the Atlantic for ideas on refurbishing the movement. Yes, yes, David Cameron is a remarkable and capable leader.

And, yes, the two leaders couldn’t be more different: Stephen Harper lacks oratory skill; he’s not charismatic; he can be too shrewd for his own good. But, like Mr. Cameron, he is smart. And unlike his English colleague who gets to ride out this recession warming the opposition benches, Mr. Harper must lead a government -- and has done so competently.

In a recent conversation, David Frum predicted that of the world leaders in office in 2008, Harper would be the only one still in office come 2010. I was tempted to offer him a wager on that prediction.

Increasingly, I’m glad I didn’t.