{"id":179748,"date":"2021-02-16T22:32:13","date_gmt":"2021-02-16T19:32:13","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/avoid-creating-new-permanent-spending\/"},"modified":"2021-02-16T22:32:13","modified_gmt":"2021-02-16T19:32:13","slug":"avoid-creating-new-permanent-spending","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/avoid-creating-new-permanent-spending\/","title":{"rendered":"#’Avoid creating new permanent spending’"},"content":{"rendered":"

“#’Avoid creating new permanent spending’<\/strong>”<\/p>\n

\n Paul Wells: Earlier this year, Justin Trudeau gave his finance minister a mandate to avoid any new recurring spending. Here is a brief history of that doomed campaign.\n <\/div>\n
\n So here\u2019s something.<\/p>\n

On Jan. 15, five months after she became finance minister, Chrystia Freeland received a mandate letter<\/a> from Prime Minister Justin Trudeau. It told her to \u201cuse whatever fiscal firepower is needed in the short term to support people and businesses during the pandemic.\u201d But there was an important, and seemingly categorical, limit on this order: \u201cDoing so, you will avoid creating new permanent spending.\u201d<\/p>\n

The distinction was clear, and as I\u2019ll demonstrate, the government had been preparing the ground for it for some time before this letter became public: Spend \u201cwhatever\u2026 is needed\u201d but only in the \u201cshort term.\u201d Recurring spending\u2014like a new transfer payment to the provinces that they would reasonably expect every year\u2014\u201dwill\u201d be avoided.<\/p>\n

On Feb. 10, Trudeau announced<\/a> \u201cthe creation of a permanent public transit fund of $3 billion per year.\u201d<\/p>\n

Twenty-six days separated the announcement of a rule against new permanent spending and the announcement of new permanent spending. I\u2019m not sure whether this establishes a new record for brevity in self-contradiction, but it\u2019s certainly admirable in its clarity. Don\u2019t start a permanent new program. I will now start a permanent new program.<\/em> Since the subjects involved include federal spending; management of the economy (the government advertises its transit fund as a measure to \u201csupport economic recovery\u201d); long-term planning; federal-provincial relations; and the value of the prime minister\u2019s word, I\u2019m not sure the contradiction is trivial.<\/p>\n

Let me provide a brief history of Justin Trudeau\u2019s doomed campaign against Justin Trudeau\u2019s new permanent spending, Then I will add some details about this new permanent spending that further complicate the question of what this government thinks it is doing when it makes an announcement.<\/p>\n

By last September it was becoming obvious this pandemic was going to last a while, and that it had revealed structural flaws in government services that would need fixing. That meant the titanic spending governments had already undertaken (especially, and properly, the federal government, which had more fiscal room) wouldn\u2019t simply melt away in a few months. There\u2019d be a long-term cost. The provinces started to wonder who\u2019d pay it.<\/p>\n

Quebec\u2019s premier Fran\u00e7ois Legault noted that Trudeau had developed a fascination for the state of long-term care in Ontario and Quebec, where most of the COVID-19 deaths in Canada had happ<\/a>ened. The Prime Minister was full of advice, and he justified his interest in provincially-delivered services by saying it took Canadian Forces members visiting those care homes to sound the alarm about conditions in them.<\/p>\n

Legault wondered<\/a> whether the feds would be as eager to chip in financially for any solution. \u201cWhat we\u2019re lacking in the health-care system right now, and particularly in long-term care is personnel,\u201d the Quebec premier said. \u201cAnd personnel is a permanent cost, not just a cost this year. Mr. Trudeau helped us this year, but the 10,000 people we add in long-term care, who\u2019ll help us pay for that next year?\u201d<\/p>\n

Legault was spelling out a longstanding rule of thumb in federalism: a federal interest in programs delivered by the provinces is normally only empty musing unless the feds are willing to share the cost burden. This argument has enough surface plausibility that by December, the feds needed to start explaining why they were spending more on just about everything except<\/em> transfers to the provinces. It fell to Trudeau\u2019s Quebec lieutenant, Pablo Rodriguez, to test-drive the new line.<\/p>\n

\u201cWe\u2019ve wound up with an enormous deficit,\u201d Rodriguez told Le Devoir<\/em><\/a>. But at least \u201cit\u2019s not structural. We have to keep that in mind because the message we send to the credit rating agencies, the Moody\u2019s and Standard and Poor\u2019s and so on, is that we\u2019re getting through this crisis without recurring expenditures. But if we tell them we\u2019re doing it with non-recurring spending and also with recurring spending, there\u2019ll be a direct impact on our credit ratings. And that also affects the provinces.\u201d<\/p>\n

This was in effect an even stronger message than the one Trudeau had delivered to the provinces a few days earlier, during a virtual first-ministers meeting. Trudeau had insisted<\/a> he wanted to talk about increasing transfers, just not right now. (The Prime Minister meets the premiers by Zoom most weeks over the past year, but plainly prefers that these meetings not be decision-making events.) Now Rodriguez was claiming a durable exogenous reason for resisting permanent spending: Moody\u2019s would make us all pay if the feds gave in. And a month later, the rule had the force of a mandate-letter instruction from the PM to his indispensable lieutenant.<\/p>\n

So the pressure to create permanent new spending came from the premiers, for health care. The feds\u2019 resistance increased over time, from simple stalling to a newly-elaborated rule of budgeting, to a formal principle. Then it vanished\u2014so Trudeau could spend on something besides<\/em> health and long-term care.<\/p>\n

I should note some important elements of this permanent transit fund. First, at $3 billion a year, it\u2019s peanuts compared to the provincial health-care demands, which were in the neighbourhood of $18 billion in increased annual transfers. No conceivable federal government, of any party strip<\/a>e, would have delivered new transfers on the scale the provinces wanted this year. But a government would have been free to pay any fraction of the provincial demand that it deemed more manageable. Unless it preferred to spend the money on something else.<\/p>\n

Second, the new permanent transit fund is to take effect beginning in 2026-27. This introduces elements of absurdity I really don\u2019t know what to do with. The Prime Minister was \u201cannouncing\u201d something that will be delivered, not by his government, and not even by the one that will be elected in the next general<\/a> election, but in all likelihood, by the government after that<\/em>. And, if \u201cpermanent\u201d has any meaning, by every government that follows it. The lines of democratic accountability in such a plan are\u2026 tenuous.<\/p>\n

You say to me: Paul, you are making a huge fuss over very little. The feds want to avoid massive spending now; they plan for modest spending later. And that\u2019s true. Except it ignores what\u2019s between the \u201cnow\u201d and the \u201clater:\u201d up to $100 billion over three years, already promised by Freeland in her fall update<\/a>, for \u201cstimulus\u201d measures designed to build an innovative green economy. A large part of that $30-ish billion per year will certainly end up going toward public-transit projects. Most people have a term for temporary spending that is followed by permanent spending. Most people call that sort of thing \u201cpermanent spending that starts earlier.\u201d<\/p>\n

My favourite thing about this new transit fund, to be implemented by the government after the government after Trudeau\u2019s, is that its details will have to be negotiated with the provinces. As Trudeau\u2019s own announcement acknowledges. So the prime minister after the prime minister after Trudeau (who could well be Trudeau! As always, that\u2019s up to you) will, as Trudeau imagines it, sit down with the premiers and say, \u201cNow we will negotiate the use of the money I don\u2019t<\/em> want to give you for health care.\u201d<\/p>\n

That\u2019ll go over well. Remember that Pablo Rodriguez says the government has to act this way because it\u2019s important to convince Moody\u2019s that it\u2019s a serious government.
\n<\/span><\/p><\/div>\n

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Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

“#’Avoid creating new permanent spending’” Paul Wells: Earlier this year, Justin Trudeau gave his finance minister a mandate to avoid any new recurring spending. Here is a brief history of that doomed campaign. So here\u2019s something. On Jan. 15, five months after she became finance minister, Chrystia Freeland received a mandate letter from Prime Minister…<\/p>\n","protected":false},"author":1,"featured_media":179749,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/www.macleans.ca\/wp-content\/uploads\/2021\/02\/CP18684101-750x422.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[82287,67806,73014,67816,79476],"class_list":["post-179748","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-chrystia-freeland","tag-editors-picks","tag-health-care","tag-justin-trudeau","tag-provinces"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/179748","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=179748"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/179748\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/179749"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=179748"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=179748"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=179748"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}