Suppose Iggy proposes an amendment to the budget. He can do this before deciding whether to vote for or against the budget. Offering a proposal makes the Liberals appear more collaborative, co-operative, constructive, etc.
There are three outcomes:
A) The amendment fails to pass. This means it was not supported by either the government, the NDP or the BQ. OK, I guess either the BQ or NDP could support it, but not both. Result: Iggy can safely pass the budget and avoid accepting responsibility for it. Since the coalition didn't support him he can justify not defeating the budget based on that lack of support from partners. Further, Iggy can run an election campaign filled with "I told you so, but you didn't listen".
B) The amendment passes with coalition support. I don't expect this, because then it would force the coalition to vote for the budget. After all, why pass an amendment then defeat the budget? It makes you look foolish. However, it could happen - how could the NDP argue against the ideas of a Liberal partner? I'll leave that as an exercise for Mr. Layton.
C) The amendment passes with Conservative support. Depending on what's in the budget this could anger the Conservative supporters further, a dangerous choice for Mr. Harper. It makes him appear even weaker. I don't expect this outcome is very likely, but it is possible. Voting for the amendment would guarantee passage of the budget and continued government. In this case, expect Harper to return and exact his revenge in the future sometime. To quote Mr. Burns - "I'll let the sword of Damacles dangle about his head, while I bide my time. Yes, excellent." Result: Iggy demonstrates he's the most powerful man in the house, and gets what he asked for - so be careful. On the downside, he must share the responsibility which is probably suicide.
I expect Iggy's best outcome would be A), so I expect a very aggressive amendment designed to fail, yet provide help for the next campaign. EI restructuring, limits to tax cuts and easing restrictions so municipalities can access the money easier, faster are my guesses.
We'll see, in just 3.5 hours.
Overall I thought the budget was the best I expected from Harper, and I must give him full credit for trying. If you've seen my comments around other blogs, I never expected Harper to deliver a budget with so little conservatism - and my evidence is over at the Blogging Tories. He certainly appears to be on the ropes... for now. But he must not be underestimated.
Wednesday, January 28, 2009
Friday, January 16, 2009
Spending cuts are the key? To what?
Martin Masse at the FP writes here: Spending cuts are the key - FP Comment.
He argues government spending during boom times diverts resources away from business, which artificially inflates particular sectors relative to others.
What past massive spending does he mean? I was under the impression that we hadn't spent enough public monies on infrastructure, that it desperately needed renewal. I thought we'd cut spending to balance the budget. If there was an increase in spending in, say, the last couple of years, that still couldn't explain his point - that spending would be too recent I think.
Which sectors were inflated by government competition? Automobiles? Credit? Real estate? High tech and IT? Really, I don't know what he's talking about here. I don't see the evidence that past inflation or bubbles were created by too much government spending.
I thought stimulus spending seeks to employ idle resources. If the resources are idle, then how is there competition and thus inflation? If the resources are NOT idle, why is the economy shrinking? There is a decent point underneath this, though: the government shouldn't outbid private industry for already employed resources, if at all possible.
When I see opinion without any facts or data to back it up, I usually see red flags waving.
He argues government spending during boom times diverts resources away from business, which artificially inflates particular sectors relative to others.
When governments launch massive spending programs, they simply grab more of the factors of production that businesses need, which keeps the economy down.I have a few problems here.
What past massive spending does he mean? I was under the impression that we hadn't spent enough public monies on infrastructure, that it desperately needed renewal. I thought we'd cut spending to balance the budget. If there was an increase in spending in, say, the last couple of years, that still couldn't explain his point - that spending would be too recent I think.
Which sectors were inflated by government competition? Automobiles? Credit? Real estate? High tech and IT? Really, I don't know what he's talking about here. I don't see the evidence that past inflation or bubbles were created by too much government spending.
I thought stimulus spending seeks to employ idle resources. If the resources are idle, then how is there competition and thus inflation? If the resources are NOT idle, why is the economy shrinking? There is a decent point underneath this, though: the government shouldn't outbid private industry for already employed resources, if at all possible.
When I see opinion without any facts or data to back it up, I usually see red flags waving.
Wednesday, January 14, 2009
Crass politics in NS
David Jackson at the Chronicle Herald reports the public accounts committee would like to question the [PC] government about the state of the provinces' finances - before the budget in June. That's 6 months after the update of December 19.So now a two month prorogation doesn't sound so bad, eh?
PC MLA Jamie Muir said "I think you're playing crass politics, and I'm not sure that's the place of this committee," in an accusation directed at NDP opposition MLA Graham Steele.
It isn't crass politics for the opposition to demand updated information during a 6-month government absence from the assembly, especially with the current economic climate.
NS is expecting an election this year, and I expect the PCs are planning their election campaign around the release of fiscal and economic news. Especially, they're probably waiting to see what the federal budget looks like (assuming it passes) and to see how that affects NS. But that's life - the government gets to set the agenda to its own favour.
But both the federal Conservatives and the NS PCs are withholding fiscal and economic information from the opposition. How can the opposition do its job without that information? It can't, and that's the point. Again, this is the privilege of the government to withhold that information and this isn't new either.
But don't accuse the opposition of crass politics because its doing its job. That's crass politics.
Tuesday, January 13, 2009
Oil bubble inside the credit bubble?
60 Minutes asks the question "Did Speculation Fuel Oil Prices Swings?" in the video below.
Near the end of the article, Steve Kroft writes:
That is, was there an oil bubble inside the credit bubble? How were the two problems linked?
Watch CBS Videos Online
Perhaps cutting interest rates simply isn't enough to offset losses on oil futures.
Near the end of the article, Steve Kroft writes:
The oil bubble began to deflate early last fall when Congress threatened new regulations and federal agencies announced they were beginning major investigations. It finally popped with the bankruptcy of Lehman Brothers and the near collapse of AIG, who were both heavily invested in the oil markets. With hedge funds and investment houses facing margin calls, the speculators headed for the exits.So was there a vicious circle? Did a decline in the credit market cause LB, AIG and others to sell their oil futures, causing a decline in oil prices, so that their remaining oil holdings value declined, causing further ratio problems, making credit problems appear more severe?
That is, was there an oil bubble inside the credit bubble? How were the two problems linked?
Watch CBS Videos Online
Perhaps cutting interest rates simply isn't enough to offset losses on oil futures.
Sunday, January 11, 2009
8 Reasons Why Big Business Prefers a Carbon Tax
I think BigCityLib asked an interesting question in this post: Exxon Supports A Carbon Tax Because...
So here's my list of why big business prefers a carbon tax over cap & trade (C&T):
1. Raise public discussion to confuse and delay action. As long as the battle is still active, you haven't yet lost.
2. It strengthens the position in the voters minds and gives talking points to right-wing pundits.
3. Carbon taxation is friendlier to business and the economy than C&T, especially if that tax is very small or negligible. "See: we're doing something! Look at the millions of tax dollars! How can you say it isn't enough." A carbon tax with real teeth would bring in a lot of revenue, not a few million dollars.
4. They can argue for a carbon tax to be revenue neutral there must be corresponding decrease in corporate taxes to offset the carbon tax. And by corresponding I mean much, much greater than resulting in a net drop in corporate tax revenue.
5. There are no limits to the price of carbon in C&T - it is determined by the market. You could easily imagine "bubbles" and speculation driving carbon prices to insane levels. Carbon competition is another competitive threat to a corporation. This is why I favour a carbon tax - it is much easier to predict and control the economic effects, where C&T controls the pollution and lets the price float as per the market. Big business wants a system that won't burn them like fluctuating energy prices have.
6. As BigCityLib points out, a carbon tax is more visible to consumers (voters). C&T costs get bundled into prices, and consumers would blame the companies for higher prices. But they'd blame a carbon tax on the government (and hey, what is the government wasting this new tax grab on, anyway?).
7. There are no limits on pollution with a carbon tax. Business is under less pressure to "green up". Hey, that tax isn't their problem, it's the governments'.
8. Someone has to perform the trading, which drives up administration costs compared to another tax.
While those reasons suggest C&T may be superior, I still prefer carbon tax. I'm disappointed with the last federal election and I expect a federal Canadian carbon tax is mostly dead, especially if Obama goes with C&T.
But doing either a carbon tax or C&T is better than nothing - unless the tax and caps are close to nothing. David Gow at The Guardian writes that carbon trading isn't working in the EU. It seems too many carbon credits were issued by governments and the resulting price of carbon was just 1 Euro/tonne.
In short, my position FOR carbon tax over C&T is that we've seen a lot of market volatility latey in everything: equities, bonds, currencies, interest rates, commodities. Why introduce another artificial, arbitrary market which could be just as volatile? Probably more voltile, IMHO.
I'll be watching the B.C. provincial election to see how their carbon tax fares. Mostly dead is also slightly alive.
When I get time, I'll try to make a list of why C&T is better than a carbon tax (like real limits to poloution, maybe). Unless someone beats me to it... any takers?
But, given our last federal election result, is one still a viable policy option in Canada, or are we stuck with some version of C&T merely because it has the advantage being, in effect, a hidden tax, and thereby palatable to our bovine electorate?I would have to answer yes to this question, but for the bovine electorate. I don't find that part particularly offensive, I expect its just the passion this topic brings out in people. I left a long comment over there, the comments are interesting reading. So I'm expanding that comment into a post.
So here's my list of why big business prefers a carbon tax over cap & trade (C&T):
1. Raise public discussion to confuse and delay action. As long as the battle is still active, you haven't yet lost.
2. It strengthens the position in the voters minds and gives talking points to right-wing pundits.
3. Carbon taxation is friendlier to business and the economy than C&T, especially if that tax is very small or negligible. "See: we're doing something! Look at the millions of tax dollars! How can you say it isn't enough." A carbon tax with real teeth would bring in a lot of revenue, not a few million dollars.
4. They can argue for a carbon tax to be revenue neutral there must be corresponding decrease in corporate taxes to offset the carbon tax. And by corresponding I mean much, much greater than resulting in a net drop in corporate tax revenue.
5. There are no limits to the price of carbon in C&T - it is determined by the market. You could easily imagine "bubbles" and speculation driving carbon prices to insane levels. Carbon competition is another competitive threat to a corporation. This is why I favour a carbon tax - it is much easier to predict and control the economic effects, where C&T controls the pollution and lets the price float as per the market. Big business wants a system that won't burn them like fluctuating energy prices have.
6. As BigCityLib points out, a carbon tax is more visible to consumers (voters). C&T costs get bundled into prices, and consumers would blame the companies for higher prices. But they'd blame a carbon tax on the government (and hey, what is the government wasting this new tax grab on, anyway?).
7. There are no limits on pollution with a carbon tax. Business is under less pressure to "green up". Hey, that tax isn't their problem, it's the governments'.
8. Someone has to perform the trading, which drives up administration costs compared to another tax.
While those reasons suggest C&T may be superior, I still prefer carbon tax. I'm disappointed with the last federal election and I expect a federal Canadian carbon tax is mostly dead, especially if Obama goes with C&T.
But doing either a carbon tax or C&T is better than nothing - unless the tax and caps are close to nothing. David Gow at The Guardian writes that carbon trading isn't working in the EU. It seems too many carbon credits were issued by governments and the resulting price of carbon was just 1 Euro/tonne.
In short, my position FOR carbon tax over C&T is that we've seen a lot of market volatility latey in everything: equities, bonds, currencies, interest rates, commodities. Why introduce another artificial, arbitrary market which could be just as volatile? Probably more voltile, IMHO.
I'll be watching the B.C. provincial election to see how their carbon tax fares. Mostly dead is also slightly alive.
When I get time, I'll try to make a list of why C&T is better than a carbon tax (like real limits to poloution, maybe). Unless someone beats me to it... any takers?
Saturday, January 10, 2009
New poll - how do you decide your vote?
A comment from janfromthebruce reminded me of something I've wondered for a while. Different people use different criteria to decide their vote. I like to consider policy, but I know some people who decide by their local candidates (e.g. they'd vote for any party with a good local candidate).
There was a poll released in mid-December that claimed many people (51%) thought they voted directly for the Prime Minister. I don't think that many people were wrong, I think the question might have been interpreted to mean "vote for the local candidate of the party with the leader I'd like as PM."
But in the latest Nanos poll puts Ignatieff ahead of Layton. If some voters choose their local candidate based on leader (and I would argue Dion had this effect last October), then could some voters shift from NDP to Liberal?
Or could other factors such as a percieved shift of the Liberal leader to a more right wing stance affect voters deciding based on party policy?
How many of each? And so forth.
So I put a poll in the left-hand margin. Feel free to leave comments here.
There was a poll released in mid-December that claimed many people (51%) thought they voted directly for the Prime Minister. I don't think that many people were wrong, I think the question might have been interpreted to mean "vote for the local candidate of the party with the leader I'd like as PM."
But in the latest Nanos poll puts Ignatieff ahead of Layton. If some voters choose their local candidate based on leader (and I would argue Dion had this effect last October), then could some voters shift from NDP to Liberal?
Or could other factors such as a percieved shift of the Liberal leader to a more right wing stance affect voters deciding based on party policy?
How many of each? And so forth.
So I put a poll in the left-hand margin. Feel free to leave comments here.
Friday, January 9, 2009
Subscribe to:
Posts (Atom)