Budget will renege on health care, schools and kids to appease tax cut lobby

Count on win for tax cut lobby and more hemorrhaging for health care, schools, pensions, and social programs

By: Linda McQuaig

  The success of the federal Liberals has been due, in no small part, to their ability to portray themselves as the party of moderation.
  They've been helped in this task by the forces on the right, which have done little more than let out a shrill, ear-splitting cry for tax cuts and for handing over the management of the country to business interests. Anyone could look downright reasonable in comparison.
  In this climate, the Liberals have had little trouble portraying themselves as the defenders of social programs, even though they were the ones who launched a massive assault on social spending in their 1995 budget.
 

To exit the HRDC scandal, the Liberals will give in to the tax cut lobby. Now social programs will only receive 19% of the surplus instead of 50%, as repeatedly promised. The implications are staggering.

  They told us we had to endure these cuts to cut the deficit. And they repeatedly promised that, once the deficit was gone, 50 per cent of future surpluses would be re-invested in social programs.
  But now, just when those surpluses are finally materializing - and promise to become huge over the next five years - the Liberals have shifted ground. Suddenly, they are talking about moving tax cuts to the top of the agenda.
  All this is happening, we're told, because of public anger over the apparent mismanagement of public money in the HRDC fiasco. But if the Liberals misused the HRDC funds, as alleged, they should pay for this at the ballot box in the next election.
  Their mismanagement shouldn't be used as grounds for retreating from their long-held promise to revive social spending.
  Polls repeatedly show that Canadians want to see the surplus spent - first and foremost - on social programs, particularly health care. Yet this is clearly not what the Liberals have in mind.
  Even if Ottawa kept its promise to re-invest 50 per cent of the surplus, our social spending would still remain far below its 1995 level.
  And now, with their new focus on tax cuts, there will be even LESS money available for social re-investment.
  Rather than social programs receiving 50 per cent of the surplus, as repeatedly promised, it now seems social programs will receive only 19 per cent of the surplus.
  The implications are staggering.
 

Bill Clinton raised taxes for the biggest earners in 1994 - yet the US economy continues to grow by leaps and bounds

  The reduced social spending will severely restrict our ability to ensure a viable public health-care system, adequate public schools, universities that are affordable, a reduction in child poverty and a national child care program.
  All these goals are being abandoned, so the well-to-do can enjoy lower taxes - because it's the well-do-do who chiefly benefit from the tax cuts. Tax savings will be modest, except for those at the upper end.
  Of course we're told that lowering taxes for the affluent will fuel economic growth. The U.S. is always held up as the model.
  But, if anything, the U.S. model provides a case for RAISING taxes on the rich. Certainly, recent U.S. experience shows that raising taxes at the upper end does nothing to discourage economic growth. The Clinton administration raised the top marginal tax rate in 1994 - yet the U.S. economy continues to grow by leaps and bounds.
  But higher taxes for the rich is one thing you can be sure won't be in Monday's budget.
  Instead, expect tax cuts for the rich and the abandonment of years of promises on social re-investment.
  Perhaps the only surprise is that the Liberals are able to continue to present themselves as moderate, even as they severely undermine the future of social programs and deliver gobs of surplus cash to the nation's elite.

Linda McQuaig is an economic journalist and author of many books, including Shooting the Hippo and The Wealthy Banker's Wife. She currently writes a biweekly column for the National Post. This commentary used by permission of Linda McQuaig and CBC radio.

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