Why doesn’t the government break up the budget?

The Tories should focus on stimulus in the short-term. Move on the rest later.

This month’s federal budget is shaping up as a behemoth. Not only is it expected to include a massive deficit to fund aggressive stimulus spending and tax cuts, Prime Minister Stephen Harper said last week it must chart an economic course for three to five years. Finance Minister Jim Flaherty said that along with juicing the economy to fight the recession, his Jan. 27 fiscal plan must provide relief for laid-off workers, lay the groundwork for Canada to pounce on opportunities when the recession ends, and—hey, what the heck—consider the usual range of niche spending projects. All in, Harper said hundreds of ideas are being considered, implausible as that sounds.

It’s increasingly obvious that this is all too much too fast. The government just hasn’t been contemplating such ambitious measures long enough. Consider that as recently as late November, Flaherty was still voicing doubt that any additional stimulus would be needed. And not only is the government grappling with the world economic crisis, in the run up to Harper’s meeting with premiers later this week, it’s also dealing with other major economic questions—notably the Tom Hockin panel’s finding that Ottawa has the constitutional power to set up a single regulator for stock markets, if it sees fit.

Complicating the entire budget-making process even further is the political backdrop. Harper must come up with a budget that satisfies the Liberals sufficiently for Michael Ignatieff to decide to let the Tory minority live on, rather than defeating it and trying to exercise (if he can get the Governor General to play along) his coalition option. The combination of daunting economic policy challenges and tricky politics makes it look all but impossible for this budget to do everything it’s supposed to do.

So why doesn’t the government just break it up? All that’s needed quickly, after all, is a stimulus package to offset the immediate damage being inflicted as the recession takes hold. Get moving on infrastructure, and perhaps some employment insurance changes aimed at getting some spending money into the hands of the newly jobless. Then back off and spend the following month or six weeks finalizing the more far-reaching elements of the economic plan—worker retraining, measures targeted at troubled industries, programs designed to help the economy bounce back in better days, any special projects deemed worthy of money in tight times.

There’s no point in rushing unduly on many elements. A convincing stimulus package can be carved off and done on its own. Then Harper and Flaherty can use the ad hoc consultation process they have rushed to put in place to better effect, tapping the experts they have lined up, to help create a credible medium-term plan to be tabled in, say, late February or early March. (That’s normally budget season anyway.) The mood in late 2008 turned all panicky. Time to establish a more sober style for 2009.