Stockwell Day: Canada will weather crisis by heeding basic math

Politicians at all levels must resist the urge to increase deficits and taxes to fight the global economic crisis, argues former Treasury Board president Stockwell Day.

Politicians at all levels must resist the urge to increase deficits

The chat over lunch in Vancouver with former U.S. president Bill Clinton, just as Barack Obama was on the verge of being elected to the Oval Office, was engaging — as one might expect.

The occasion was the launch of a new joint venture between a Canadian mining company and Clinton's Corporate Social Responsibility group.

As I was there representing Canada, we were seated side by side, allowing for some good "off the record" chat on all things political from both sides of the border.

Earlier in 2008, when I was in the United States observing the Democrats' run for the White House, I managed to snag one of those "Hillary for President" buttons. I took it from my pocket during lunch with Bill, only displaying the chrome obverse side and not the picture, and asked if he would sign it for me.

I explained, "I'm kind of a fan of the person on the other side of this pin and if I ever run into her again I think she'll be impressed that I got you to autograph it for her."

He willingly signed a "Best Wishes, Bill" and then asked if it was anybody he knew.

He broke into an appreciative chuckle when I showed him the photogenic pic on the flip side.

"Absolutely my favourite candidate," he mused. "She has all the makings of a great president."

It was not those comments that surprised me. It was his introductory remarks onstage a few moments later that caught me off guard and likely surprised the 800 gathered guests and many reporters.

The former statesman began by saying that he would first like to give some personal observations about Prime Minister Stephen Harper and the federal government. (Remember, this was a non-government, private-sector function without the need for the customary protocols of governmental acknowledgements.)

Now that he had the room's full attention he used his time to full effect.

He said he wanted to congratulate the Canadian government on two unrelated accounts: the PM's substantial and ongoing financial commitment to battling the huge challenge of HIV/Aids in Africa (which outpaced that of most other governments), and the Canadian government's handling of the global recession and debt crisis.

"It seems that my own country has forgotten basic math," Clinton reflected.

He continued on to extol the fiscal virtues of the approach our country was taking in very difficult times. It will be no surprise that I was one of the more energetic applauders in response to his words.

(On a side note, the next day there was zero reporting from any media of Mr. Clinton's positive remarks. Would that have been the case if he had criticized our policies of reducing debt and lowering taxes?)

Now, Mr. Clinton and I might not agree on the exact formula of spending cuts versus taxes, but whether you agree with his remarks or not, Canada's present position of relative strength surrounded by faltering economies around the world is certainly no accident.

It really does come down to some basic math.

Neither individuals nor nations can dig themselves out of debt by plunging further into it. And you don't encourage workers to work harder by punishing their efforts with higher tax brackets.

Nor do you get businesswomen, corporations or mom and pop franchisees to invest more and hire more people by burdening their enterprising shoulders with heavier tax loads.

Standard & Poor's was criticized for its recent downgrade of the U.S. It is kind of interesting that only a couple of years ago, rating agencies were pounded by some who thought they should have been more aggressive in lowering credit ratings around the world.

The downgrade was not at all the fault of the U.S. Congress's so called "partisan" bickering.

Remember, on one of the votes against allowing the debt ceiling to rise, 82 Democrats voted with Republicans, despite President Obama's vow to veto anything the Republicans brought forward.

No, the U.S. rating was downgraded for the first time in history because its debt is the highest in history. Nor was the downgrade the result of "The Market."

After all, who is "The Market?" It is hundreds of millions of people like you and me, invested in RRSPs, pension funds and company stock-sharing plans.

And regardless of what politicians say, we intuitively understand that today's deficit is tomorrow's tax.

Therefore, tens of thousands of fund managers receiving millions of nervous signals from investors about the U.S. debt start to move funds and job-creating investments to places of relative financial stability.

Hello, Canada.

If ministers like Jim Flaherty, Tony Clement and Diane Finley maintain their nerve and their understanding of basic arithmetic, we will indeed weather these global storms.

Countries such as Greece and Portugal are entering periods of severe fiscal austerity. They didn't follow the basics decades ago when their own warning bells were sounding.

Canadians can be spared that level of pain. It just means that politicians at all levels have to resist the well-intended but misguided urgings of those who believe that increasing deficits and taxes is the way to paradise.

In fact, that is the road to the "other place."

And thank you, Bill, for reminding us that math matters.