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given that our continent tooka huge terrorist hit at the same time that its economy was in a severe downturn, Paul Martin seemed pretty upbeat about our prospects in Monday’s budget. I’m not surprised he didn’t want to be too explicit about the source of his confidence. Our finance minister and leadership hopeful is banking on the Americans and their war to pull us through.
He’s betting an American economy stimulated by war-based spending will lift ours out of recession. That’s how Martin’s lush new spending package will avoid a deficit even in these uncertain times.The overthrow of the Taliban has sent a surge of new confidence into market players. While most of the dying and unspeakable suffering is far away, defence spending is not. In real time, the economic payoff is expected fairly soon — as early as this spring, Martin predicts.
It’s depressing to ruminate on the fact that Martin is counting on the war. And that he expects the upturn that will come from it to save us all — from failing to use our credit cards. After all, healthy consumer spending is the benchmark of Liberal (and neo-liberal) good government.
But war is pretty much the safest bet in the economic lottery, especially when it’s going well. Afghanistan’s pain will likely be our gain.
Without it, the odds of an American recovery would have been too iffy for Martin to rely on. And Canada’s budget would have looked quite different. Martin would have had to follow the Bush example and go for a stimulate-the-economy budget. That would have meant a level of spending roughly twice as high as the one he brought down, with lots more new tax cuts (as the right wing advocates) and/or job-oriented infrastructure projects (god forbid health care or social housing). That level of spending would surely have meant a budget deficit, as it will in the U.S.
But now that the American market is acting upbeat and the Yanks acting old-style-big-government interventionist, Martin felt he didn’t have to go there. Canada could just ride the U.S.’s coattails.
A jolt of spillover U.S. stimulation with a chaser of interest rate adjustments and, voila — those Canadians who are healthy and able should be fairly content next year.
Just don’t get sick or have children. If you have reason to fear the police (maybe your skin isn’t white) or you need health care, clean air, social services or education, you’re out of luck. If you need a low-interest mortgage, fun retail bargains and perhaps a chance of making some money on investments, next year looks promising.
Chances are, even the job market will start to pick up. The new budget may not be a classic stimulus package, but for the deficit-shy Martin there’s a lot of public spending on the table. A $9.7-billion security and infrastructure spending spree — that’s big-boy money for our-size economy.
If he’d thrown that kind of money around during peacetime, he’d have been pilloried, no matter how slow business was. Even if the spending had been geared to stimulating a recessionary economy, the market would have punished Martin. The dollar would have dropped like lead, and so would his standing in the polls.
There’s nothing like budget time to highlight how much room financial markets are ready to allow for public spending now that there’s a war.
This is a time of strange twists of fate and high irony. Security and military needs have written a big role for government back into the neo-liberal formula. For those who have long seen the benefit of taxpaying and commitment to the public good (the majority of Canadians), it comes as no real surprise that the existence of a well-financed government is a useful asset for citizens.
But it’s not much comfort. It’s hard to remember how the old military-industrial complex was limping along on Project Colombia, using the war on drugs to keep itself alive (and others dead, of course), before the “war” on Osama bin Laden. In that faraway time it was hoped by the powers that be that true resurrection would come in the form of Star Wars patronage.
No need. Al Qaeda provides the perfect opportunity to enrich arms manufacturers with huge infusions of tax dollars.
Meanwhile, the public service sphere is still withering. But Martin, ever the true Liberal, has as usual provided us with a mirror of public opinion. And, blessedly, that mirror reflects the balanced beauty of Canada’s political consciousness, relative to that of the U.S. at least.
By his reckoning, the package — maintaining modest tax cuts and promised health care spending and adding some social spending increases and job creation initiatives — pays homage to our collective sense of what’s right while at the same time paying our high international dues for security and trade. The military got only a restrained boost.
Pollsters may argue that Martin missed the public’s dedication to more health care spending, but overall the budget affirms what right-wingers hate about Canadians. We aren’t tax-averse and we want social services like free, high-quality health care for everyone.
Should we feel relieved or devastated by how good the U.S. war will likely be for Canada’s economy? The only possible redemption for this one is to hold the finance minister to his pledge to boost foreign aid — and not as a commitment conditional on a budget surplus, as it currently stands. I hope Paul Martin has noticed that Canadians are too nice to want to bankroll our prosperity on the hunger and misery of little children far away.
alice@nowtoronto.com
