In the first part of a two part series of my columns for the ROB’s Economy Lab feature in the Globe and Mail I take the Liberals to task for breaking the now decades-long consensus in Canada in favour of balanced budgets outside periods of genuine deep crisis. Yes, the Liberals won a mandate to do so (having defeated two other parties both committed to balanced budgets, including, wonder of wonders, the NDP), but as I say in the column that does not make it good policy.
The Liberals claim that the economy is underperforming and that roughly $10-billion of deficit financed infrastructure spending each year for three years will shock the economy out of its torpor. What they neglected to consider was the stimulative effects of balanced budgets. This is a lesson we learned from Paul Martin when he balanced the budget in the 1990s and I lay out the case in some detail….
