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Day 11 - I'm having trouble believing that you believe what you're saying

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I've used this line before - it was overheard at a news conference in Ottawa years ago when a bunch of race car drivers covered in Players logos tried to tell reporters they weren't promoting tobacco use. Many of us could not believe they actually believed what they were saying.

I often think of that line when I hear politicians blame each other for economic woes. Liberal Leader Stephane Dion is busy trying to convince Canadians that Prime Minister Stephen Harper and Finance Minister Jim Flaherty are somehow responsible for the economic crisis bearing down on Canada. He pointed out how the Liberals ran a $12-billion surplus in the last fiscal year they governed, and that Harper and Flaherty have suffered quarterly deficits as the credit crisis hovers over world markets.

Harper has returned volley at Liberal MP Bob Rae, who is travelling with Dion. Harper said Rae "took a slowdown and turned it into the biggest recession since the 1930s." In a news release later in the day, he called Rae "the architect of Ontario's biggest recession."

Can a single politician or government provoke an economic crisis? Of course not and both Harper and Dion are guilty of the worst kind of politics when they try to blame everything from the ice age to a rainy day on one person or party.

What we do know is that government policies can either mitigate or exacerbate economic woes. In the 1990s, Rae was staring down the barrel of a recession. He tried to respond by cutting government costs by negotiating concessions with public sector unions to deal with a profound economic slowdown that was afflicting the world. The unions rose up and smote him. Smited him? The unions were not smitten with Rae's NDP government. Did Rae design the recession? Hardly. Did he come up with a government strategy to soften the blow? No.

Similarly, Harper and Flaherty cannot be held responsible for the fact that Wall Street gorged itself on tenuously structured mortgages, and then barfed back up a mess that has enveloped the world. The credit crisis has hammered US shoppers and businesses, and that has devastated Canada's manufacturing sector, and sent stock markets into a tailspin. All that is putting less money into government coffers. Did Harper and Flaherty provoke the economic downturn? Absolutely not. Are they prepared as the country navigates choppy economic waters? That's where things get interesting.

IMHO, the promise to cut two points off the GST was brilliant electioneering. It not only caught the attention of voters, but exposed a Liberal weakness, namely that they promised to get rid of it and didn't. But it has always occurred to me that the plan to cut the GST was based on the theory that the good times were going to roll forever and ever. If you anticipated a recession, or deep slowdown, any politician of any stripe would think twice about cutting a sales tax. On this one point, I would say Harper and Flaherty didn't do a very good job of anticipating a future economic downturn. That still doesn't mean they brought this on themselves.

The real question for this Conservative government in this economic slowdown is whether it still supports lower taxes in what could become a recession. In Ontario, Flaherty showed he was willing to put lower taxes above almost all other economic priorities. The tax cuts under Flaherty's watch were significant, but the Tory government of Premier Mike Harris did not run surpluses. That's borrowing money to cut taxes, and seems like a good tell on how deeply Flaherty feels about lowering the tax burden. Voters may ask themselves whether that is a good philosophy for budgeting through an economic crisis. And prior to this election, I would have said the Tories were not foolish enough to cut taxes further as an electioneering ruse. When Harper announced a $600-million cut to diesel and jet fuel, I reconsidered my earlier prediction. Up against the federal balance sheet, that cut may not seem significant. But it's $600 million Harper and Flaherty probably don't have now for a tax cut that is more sympbolic than practical.

Back to the campaign, where I understand today Dion has blamed Harper for Hurricane Ike, and Harper has suggested NDP Leader Jack Layton is personally responsible for the Stanley Cup drought in Toronto. (That Layton! I knew it was him.)

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