A Strategy For Fiscal Conservatives

June 4th, 2016 | J. Hodgson
fiscal conservatives

I recently wrote an article for C2C Journal that gained a lot of traction called, "Give the people what they want". The basic point was that Canadians aren’t fiscally conservative and trying to sell them fiscal conservatism politically doesn’t work unless we’re in an emergency. I had some good rebuttals like this article by Colin Craig called, "Deficits aren't the answer" and an even better one by the editor of Poletical, RR, called, "Conservatives against deficits".

While I understand, appreciate and even agree with many of the sentiments traditional fiscal conservatives hold about the issue, I will simply have to disagree with the process of implementation. Trying to sell something to people that they don’t really want is difficult. If Conservatives are going to win elections more frequently, they need to change tactics and implement a more nuanced (some might say cynical) approach. We need a new means to the same end, otherwise we’ll be standing on principle in the opposition benches for the next decade.

First, let’s be honest.

Fiscal conservatism is not in vogue. (Was it ever?) The most recent turning point seemed to be when Harper/Flaherty jumped on the Keynesian bandwagon back in 2008/09 and started firehosing deficits at the Canadian public. People didn’t seem to mind as Conservative polling pushed them into majority territory shortly after the March 2009 budget. This is a culture that is comfortable swimming in unprecedented levels of debt after all, so why should the principles of fiscal conservatism matter to anyone...anymore...in anyway?

People simply don’t care.

So what should the Conservative Party do? Just become another tax and spend leftist party? That won’t work. Real conservatives aren’t going to support a CINO party. Some conservatives are calling for a mass education campaign in order to explain and educate people about fiscal conservatism. That won’t work either. Nobody normal wants a fiscal lesson that they didn’t ask for, and as Ronald Reagan said, “If you’re explaining, you’re losing.”

What needs to happen is for fiscal conservatism to be scaled back into a more palatable-sounding “fiscal responsibility”. Implementing the plan, however, requires these 6 principles. Here they are...

#1. Never cut anything

Conservative parties take a lot of grief for being cold-hearted because they have the audacity to attempt a scaleback of government largesse. Too often the media jumps on every small spending cut with all the alarm of a nuclear war breaking out. Even when Harper tried to scale back the rate of increase to healthcare funding, it was played out like a massive cut to services.

This also instills fear among anyone working in a job associated with government funded departments. Riling up the union-class crowd isn’t worth the political capital. As RR mentioned in his recent article, slowly cutting and threatening the CBC only leads to more aggressive bias. Why incite it?

By never cutting anything you aren’t putting yourself in the awful position of trying to explain to voters why you’re cutting what you’re cutting. The go-to-phrase with never cutting anything is, ”We haven’t cut anything!” All the leftist hyperbole is destroyed when you can honestly make a statement like that.

#2. Freeze things you actually want to cut

Inflation is your friend. If you want to make cuts, just make freezes instead. Then you can honestly say, “We haven’t cut anything!” and your critics will have to explain inflation to a population that will instantly get bored with trying to understand inflation.

A budget freeze amounts to a 1-2% cut every year that the freeze is in effect. Relatively painless and slowly, but surely, effective.

(Added bonus? Standing in front of a microphone saying, “We haven’t made cuts to anything!”)

#3. When increasing spending, increase below the inflation rate

Increasing a department’s budget by millions of dollars will look impressive to low-info voters. If those millions of dollars amount to an increase of 0.5% in the overall budget, then you are still effectively cutting a department’s budget by using inflation. It’s not as good as a freeze, but still better than real growth.

The Harper idea of matching spending to “GDP + population increase” is a recipe for constant government expansion. The goal should be to shrink the size of government without enduring the avalanche of leftist criticism for doing so.

By making increases below inflation, you get the credit for increased spending without the criticism of government cuts. Re-read that last sentence.

#4. Don’t exempt transfers to provinces from freezes

One of the biggest mistakes Harper made was promising never to cut transfer payments to provinces or individuals, leaving only about 25% of the federal budget available for cutting.

The idea was that the federal government would decentralize responsibility by maintaining transfers provincially and individually, but find savings by taking the axe to everything specifically federal. What Harper was hoping for was peace and credit from the provinces and individuals, while minimizing the power and influence of the federal government.

This plan was the opposite of the Chretien-Liberal plan of the 90’s. In those days, the Liberals were constantly criticized for downloading cuts to provinces and people...thus balancing the budget at the expense of the citizens. Harper wanted to reverse the tactic by propping up the people and the provinces and streamlining the federal government. As a result, creeping leftism due to heavy federal funding, has now occurred in all the provinces...simply because Harper allowed it to be financially possible by always increase their allowances.

In the 90’s, governments of all stripes veered to the right due to lack of funding. They had to make hard decisions because they were forced to do so by the tight-fisted feds and this resulted in fiscally responsible provincial governments of all political stripes across the country. Harper’s plan granted the provinces with largesse and now we’re stuck with big spending leftist governments in 7 out of 10 provinces. (And let’s be honest BC Liberals and Saskatchewan’s Brad Wall Party are basically just anti-NDP bulwarks, rather than actual conservative parties. Even Manitoba’s recent PC win wasn’t a clarion call for austerity, so much as a reprieve from NDP chaos and tax increases.)

The second problem was that Harper actually did make cuts to the 25% of the federal budget that pertains only to the federal government. These cuts then turned into a massive outrage campaign against Harper. He basically took the criticism for making cuts to 25% of the federal budget, without getting the credit for increased spending on the other 75% of the federal budget that gets sent to people and provinces.

The worst of both worlds optically and now a country full of leftist provincial governments and a federal Conservative brand stuck at under 30% in the polls.

Next time, make ALL expenditures accountable by including people and provinces in the equation.

#5. Don’t pay down debt

When you eventually run a surplus, don’t pay down the debt. All this does is build capacity for the next Liberal government to do stuff they want to do.

An example of the uselessness of debt paying is Ralph Klein’s Alberta. Ralph Klein paid off Alberta’s debt and all it did was kick start a mad scramble for more spending from everyone with a pet project. Eventually he was replaced by progressively more left-wing Premiers until in a fit of madness Albertans elected an NDP government. Now the NDP are going bonkers with the provincial credit card and spending on everything socialists love. Alberta is looking at racking up nearly $50 billion in new debt over the next four years. The NDP can only do this, because our fiscal situation is so good. Conservative fiscal principles have allowed for New Democrat dream fulfillment. Yes, you read that last sentence correctly.. Fiscal conservatism builds capacity for future socialist spending orgies.

Try not to run Flaherty-style deficits again, but don’t aim for Martin-style surpluses either. When extra money is kicking around...never use it to pay down debt.

What should it be used for?

#6. When you run a surplus, cut taxes to get rid of it

Harper cutting taxes and draining the annual surpluses was a good idea. Too bad a massive recession then hit us so soon after that idea was implemented. Nevertheless, if there’s a surplus...eliminate it with a tax cut. Raise the basic personal exemption on income tax. That’s a good way to get rid of it. It gets money into people’s pockets quickly and into the economy efficiently. Another populist idea is to further cut the GST. Low-info voters love it.

FISCAL RESPONSIBILITY is the focus. The way to implement this inside a culture of fiscal irresponsibility is by stealth. Promise to never cut anything...ever. Then freeze what you want to cut. If you can’t freeze, then raise below the rate of inflation. Don’t exempt transfers from this process. When surpluses arrive as a result, don’t pay down debt, cut taxes.

This is the way to beat progressive spendthrift critics, win over low-information voting centrists and keep the conservative base happy. It’s not a home run, it’s a triple, but that ain’t bad.