Maybe he really does eat kittens. Certainly, Dalton McGuinty has turned out rather differently than voters might have expected, after they watched him criss-cross Ontario last fall, vowing to end the austerity of the Ernie Eves government and rebuild the province’s shattered public programs.

By the end of the election campaign, McGuinty was soaring so high in the polls that an unhinged Eves campaign was reduced to tarring him as a kitten-eater.

But all McGuinty’s promises of social reinvestment have been put on hold since he arrived at Queen’s Park and discovered the provincial cupboard was bare — a revelation about as surprising as George W. Bush’s discovery that the Iraqi weapons cupboard was bare.

Now McGuinty has become unhinged, threatening to sell off valuable public assets (including the lucrative provincial liquor board with its billion-dollar-a-year revenue), sabre-rattling with public sector employees and backing off from the very social reinvestment promises that made him so attractive to the electorate.

All this makes me wonder — what is it about our political leaders that reduces them to pools of jelly when they’re confronted with a deficit?

A deficit isn’t something to quake and quiver in front of; it’s something to tackle intelligently. If a family runs into a rough financial patch, it cuts back on indulgences, but doesn’t pull its children out of university or sell the family’s highly successful wine-making business.

Public finance used to be considered an art that involved finding the right balance between the public needs and the appropriate level of taxation. Now, urged on by a deficit-obsessed media, it’s become a contest of who can slash valued public programs most deeply and most quickly.

The mother of all slashers of course is Paul Martin (who showed considerably more interest in wielding a knife over the country’s social programs than over its Liberal ad agencies).

Martin has been lionized for his deficit-fighting. In fact, his big achievement — eliminating the federal deficit — was also achieved by most other industrialized countries in the late 1990s.

Canada just did it more quickly. Or, as labour economist Jim Stanford puts it, Canada did it more “violently,” imposing drastic cuts that have impoverished every level of government.

Frankly, I’m more impressed with the deficit reductions achieved by 18 other OECD nations. They, too, balanced their budgets (although more slowly) in the late 1990s — but they maintained roughly the same level of spending on their social programs.

Some even increased their social spending while balancing their budgets. Now that’s artful public finance.

They did this by allowing the lower interest rates of the late 1990s to increase their economic growth and revenues, making spending cuts unnecessary.

We, too, had that option. At the time, some respected Canadian economists — including Pierre Fortin and Lars Osberg — recommended Canada pursue a similar course. But this sensible advice was drowned out by the incessant braying of business leaders and bank economists urging deeper, faster, bloodier cuts.

They recognized that at stake wasn’t just balancing the budget, but achieving their long-held dream of permanently reducing the size and scope of Canada’s social programs.

Now McGuinty seems keen to stick to this well-worn Canadian path of violent deficit-reduction.

But why? By next year — even if no fiscal action is taken — Ontario’s deficit will shrink from $5.6 billion to about half this size, economist Hugh Mackenzie calculates, using government growth projections. Mackenzie predicts that within four years, the deficit will be gone.

Most Ontarians would probably be willing to wait. Balancing the provincial budget, while a nice goal, doesn’t rank ahead of ensuring smaller class sizes in our schools or enough nurses in our hospitals.

I’d even guess most Ontarians would be willing to pay slightly higher taxes to have these things now. Mackenzie says that by closing some loopholes and increasing tax rates by two per cent — costing the median taxpayer just $60 a year — McGuinty could deliver on his promises.

But the business community would howl, and the Canadian Taxpayers Federation would accuse McGuinty of breaking the no-tax-increase pledge he made to it last fall.

So we’ll likely see McGuinty play the anti-deficit tough guy. In fact, this isn’t real toughness. With the full backing of business, any wimp can cut spending — as politicians across this country have shown.

It’s standing up to the business elite that takes guts.


I wrote last week about B.C.’s harsh welfare reforms. After the column went to press, B.C. introduced a change that will reduce the number of welfare recipients losing benefits. Now if it would just alter the rest of the legislation …

Linda McQuaig

Journalist and best-selling author Linda McQuaig has developed a reputation for challenging the establishment. As a reporter for The Globe and Mail, she won a National Newspaper Award in 1989...