The big lie

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Jim Flaherty, Stephen Harper’s finance minister, has become a master storyteller.

His latest tale, or at least the one his friends are spinning for him, is the deficit was caused by the great recession of 2009.

Like every tale, there is a kernel of truth. This new version of history is necessary in order to perpetuate the falsehood that his government is a good manager of the economy.

But this is not a deficit the government can blame on the great recession and the subsequent stimulus budget that followed.

Rather, Canada’s $18.7-billion deficit has it roots in failed economic policies, decisions made before the world financial crisis, including reckless corporate tax cuts.

Remember, because the Conservatives would like us to forget, that this is a government that inherited $13 billion in surpluses.

They quickly emptied the cupboard with one tax cut after another.

Harper’s deficit has become, in many ways, a manufactured and convenient bogeyman. Bogeymen are useful especially when your goal is to convince Canadians we can’t afford public services or a social safety net, including universal medicare which is currently under immense attack.

A deficit is also handy if you are looking for an excuse to sell Canadians on more austerity, more public service cuts.

But the federal Conservatives have a few problems with the narrative they are so desperately trying to tell.

On the one hand they preach about their ability to manage the economy, and yet, when examined closely, their economic record is anything but stellar.

And a dwindling number of Canadians are buying into the big lie.

Not even millions and millions of dollars in “economic action plan” ads are helping.

The fact is billions and billions of dollars in corporate tax cuts have drained federal coffers. Canadians were told slashing the federal corporate tax rate nearly in half was like water, critical to our existence, our health.

Another big lie.

Corporate taxes make up a smaller and smaller share of federal government revenues, just over eight per cent in 2011, down from 8.8 per cent in 2010 and considerably less than an average of 11 per cent during the 1970s.

Part of the big lie was the tale that corporate tax cuts were necessary to spur on job creation, so companies would invest in the economy.

Indeed, rather than create jobs with these billions in tax cuts, corporate Canada is cash hoarding and paying CEOs obscene salaries. Your corporate tax cuts at work, or rather, not at work.

According to research by the Canadian Labour Congress and a number of economists, between 2001-2011 total cash reserves for corporations (excluding the financial sector) grew from $187 billion to $575 billion. And yet the government continues to slash their taxes while raising the retirement age for working Canadians because somehow in their twisted logic we can afford to give banks and oil companies a break, but grandma has to work until she’s 67.

This is not just a Canadian phenomenon.

The United States has a corporate cash-hoarding problem, too. It can’t get its corporations to spend their billions in tax breaks either.

According to Robert Reich, a professor in public policy at Berkeley University and former secretary of labour, U.S. companies are sitting on $2 trillion in cash and they are still screaming for more tax breaks.

This begs the question why governments continue down this path of tax cuts without any real economic benefit.

We know that governments don’t play hardball with big business. Indeed, our federal government saves all the hardball for the provinces.

And the biggest piece of hardball is about to unfold over the next year as provinces tie themselves into knots trying to figure out how to pay for health care given the federal government edict.

The current health accord ends in 2014 and Harper, with no consultations, has told the provinces to expect a lot less from Ottawa.

After all, he has to pay for those corporate tax cuts. No money for health care, but lots for big business.

Expect to be told that health care is unsustainable. That we can no longer afford it.

Another big lie.

What we can’t afford is more of the same Harper economic policies.

Let’s hope for all our sakes that the premiers can collectively provide the leadership needed to make sure medicare survives the Harper government’s neglect and retreat strategy.

Otherwise, Canada’s greatest national achievement will be severely diminished.

Lana Payne is president of the Newfoundland and Labrador Federation of Labour. She can be reached by email

at lanapaynenl@gmail.com. Twitter: @lanampayne Her column returns Aug. 24.

Organizations: Conservatives, Canadian Labour Congress, Berkeley University Newfoundland and Labrador Federation of Labour

Geographic location: Canada, United States, Ottawa

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Recent comments

  • gf
    August 14, 2013 - 09:37

    Most of this is true the conservatives think that the only people that count are business interests. They are true ideologues. Evidence facts and science do not matter to them. So I do not expect much change from them. They will continue their quest to blow out the gini index. However, this quote is particularly bad: "Remember, because the Conservatives would like us to forget, that this is a government that inherited $13 billion in surpluses. " This is really the root problem because the assumption is that deficits are a bad thing. This is a false hood that has been drummed into us by conservatives for decades. This one falsehood will be the undoing of things like universal health care in Canada and the west in general. To start to understand why follow University of Missouri professor Kelton. https://twitter.com/deficitowl Too much for one post.

  • david
    August 12, 2013 - 08:20

    The government lies. The last place to figure this out, and be completely shocked by it, is Newfoundland. Perhaps this explains why we continue to live, eat and breathe politics 24 hours a day....we're simpletons.

  • Herb Wiseman
    August 10, 2013 - 23:53

    Nice piece but still ignores the fact that our monstrous debt was caused by changes we made in the 70s. Nobody like to talk about those changes. Too bad. They really matter. The Star doesn't like to publish the reasons either.