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What happened to that strategy they had campaigned on?

The Liberals’ insistence in the early weeks of its government that federal finances were in dire straits was difficult to understand at the time: revenues were running ahead of what had been projected in the Conservatives’ last budget. And their first budget — with deficits of almost $30 billion dollars in the first two years — was equally perplexing. The economy was not in recession (the slump everyone had been talking about happened in early 2015, and had hardly affected revenues), and the infrastructure program wasn’t going to start spending money for years.

What happened to that strategy they had campaigned on? “The economy tanked” is not a valid answer: projections for constant-dollar revenues in last week’s economic update are almost exactly the same as those in the Liberal platform, which were in turn based on the Conservatives’ 2015 budget. As Andrew Coyne has pointed out in these pages, the Liberals’ are running these deficits not because circumstances have forced them to do so, but because they choose to do so.

This brings us to the issue of when, exactly, the Liberals made that choice: did they campaign on a program that they never intended to carry out? It’s a vexing question, especially for those of us who took the Liberals at their word during the election campaign and spent time working through the numbers in their costing documents to see if they checked out. (I confess that some of my irritation with this file is that all that wonkery in 2015 turned out to be a waste of time.) The Liberals should have simply said during the campaign that they would keep federal debt at 30 per cent of GDP, instead of continuing to reduce the debt-to-GDP ratio to 25 per cent as the Conservatives wanted.

We’re all supposed to be inured to politicians saying one thing in a campaign and doing another in power, but that doesn’t mean that we should just shrug it off and say, “Well, that’s politics.” It doesn’t have to be. To reprise a refrain made popular in the last election campaign, we can do better.

National Post

Stephen Gordon is a professor of economics at Université Laval.