Editorial (Economic stimulus): A spending spree

Sure, some stimulus money is justified. But throwing money at cruise ships is going way overboard.

It is easy to find something to like in the recent federal budget. That’s the problem. It was an exercise in pandering, not leadership.

During tough times, new spending programs — like real incentives to replace old cars with greener models (a fair way to help all automakers, not just unionized ones) and real improvements to social safety nets — can be justified. There are also good reasons to consider significant deficits when it comes to major new infrastructure projects. But Ottawa is throwing billions at PR ventures, not make-sense projects.

Simply put, taxpayers will now be financing everything from cruise ships to the new furnace next door because our finance minister made some political miscalculations and the Harper administration went into survival mode — where it clearly decided to toss aside what it thinks is in the best long-term interests of the nation rather than explain to voters why Opposition calls for drunken-sailor policy-making were unwarranted. As a result, Canada runs the risk of putting itself back on the path to Third World status by eliminating our former competitive advantage, which was fiscal restraint.

Budget supporters point to other so-called stimulus plans around the world. But these are in countries that are in deeper trouble, not to mention ones that never had their fiscal act together. Why should we accept they are suddenly setting examples Canada should follow? As independent Wall Street economist Robert Brusca recently pointed out, U.S. President Barack Obama can’t even seriously claim to be carrying out emergency spending since only 21% of his initial multi-billion plan could have any impact this year. And 36% is pure agenda spending, since “it is going to have its impact beyond the year 2010 and can’t be categorized in any reasonable way as a recession buster.”

Before Canada’s budget was tabled, fund manager Albert D. Friedberg, head of Friedberg Mercantile Group, offered the finance minister some advice: “The U.S. and the rest of the world are taking enough reflationary measures to spare you the need to do anything too dramatic. If the global economy recovers, Canada recovers on its back. If it does not recover, whatever Canada proposes in the way of fiscal and monetary stimulus will go to waste.” He was right. The Harper gang could have suggested we try riding out this downturn with spending kept in check. Instead, we’re risking our ability to manage the next one.