The Budget Boogie: Three Things to Remember About Harper’s Kitchen Sink Budget

Posted on January 27, 2009

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Three things to remember while you consider the “everything AND the kitchen sink” 2009 Budget tabled today by the minority Conservative Government.

1) Today’s budget — not a single word of it — has been drafted with the good of the economy in mind. It has been prepared with one and only one purpose in mind: to make it difficult — if not impossible — for the Liberals to enter into a coalition with the NDP and the Bloc and topple the Conservatives. That’s it, that’s all.

2) One should also remember the Conservatives are quite happy to say and promise anything and then try to get away with whatever they can under the radar once the budget passes. The Conservatives, of course, are not unique in employing this communications strategy, but they do seem to take an extra special delight in the brazenness of their duplicity.

3) Finally, there is little consensus that the kind of “stimulus” being proposed by the major parties actually works as imagined. Moreover, if there is any chance for “stimulus-spending” to jump-start the economy out of recession, as hoped, the money needs to be spent immediately and the Conservative government’s insistence that its money will flow only if the money of other levels of government flow along with it seems certain only to cause delays by adding additional bureaucratic hoop-jumping and negotiating. Moreover, the threat to withdraw the money, if matching funds are not found, also seems unnecessarily provocative but for the fact that it provides the Conservatives with a convenient blame-the-other-guy excuse if major projects are not undertaken in a timely fashion.

I think these three observations triangulate nicely on what has to be the highlight of the budget for me: the temporary tax credit for home renovations exceeding $1,000 in cost — good only until February 1, 2010. Essentially, a person can get a $1,350 non refundable tax-credit, if $10,000 is spent on renovations.

I doubt anyone who has lost his or her job — or is worried about losing it — thinks, hmm, now is the perfect time to take out that wall in the living room or fix that leak in the basement. I can see it now: Look dear, if we spend only $10, 000 dollars of the savings we don’t have, we get a tax credit for income we don’t have either. Hurrah! Forget saving for a rainy day, let’s put in a new kitchen sink and a hot-tub! What’s worse, people will probably only have the disposable income to take advantage of the tax credit if they are mostly unaffected by the recession or they will only have the disposable income to take advantage of it precisely when the economy won’t need any more fuel on the fire. Hello inflation!

This is not to say there aren’t potentially useful expenditures in the budget. Deficit spending on essential infrastructure can be useful but it will not likely pull an economy out of recession and, if it done imprudently for crass political purposes, it can actually hinder economic recovery. Of course, if this “everything AND the kitchen sink” budget is passed and the Conservatives hold onto power, the important question to ask is: “which of these measures will actually see the light of day, will they arrive in time, and will they genuinely be helpful for the economy and the well-being of Canadians?”

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