Wednesday, January 14, 2009

NDP: Window for defeating Harper minority government closing

Ignatieff was very cool on the coalition in any event so if, as the NDP suggests, Harper puts enough in the budget that Ignatieff can support it, both Conservatives and Liberals will be happy to say goodbye to the coalition. Ignatieff uses the idea of a coalition simply as a rather limp club to cudgel Harper into concessions. Ignatieff will be glad to have time to rebuild and refinance the Liberal party before the next election is called.
This is from the Canadian Press.

Window for defeating Harper minority government closing, says NDP
21 hours ago
OTTAWA — The NDP is warning the Liberals they likely have at most a few months to defeat the minority Conservative government and replace it with a coalition that would make Opposition Leader Michael Ignatieff prime minister.
And MP Thomas Mulcair, the NDP finance critic, held out a veiled threat to Ignatieff that his party may not be willing to topple the government at a later, more conducive time for the Liberals.
Speaking Tuesday before handing Finance Minister Jim Flaherty his party's wish list for the Jan. 27 budget, Mulcair appeared as intent on sending a message to the Liberals as he was the Harper Conservatives about his party's position on the budget.
Last November, then Liberal leader Stephane Dion and NDP Leader Jack Layton formed a coalition, with Bloc Quebecois backing, to topple the government in the hopes Gov. Gen. Michaelle Jean would turn to the coalition rather than call another election on the heels of the October vote.
But that hope was dashed when Jean agreed to suspend Parliament until Jan. 26. Since then Ignatieff replaced Dion and has been decidedly cooler to the coalition prospect, saying he would support a budget that met his party's demands to stimulate the economy.
Mulcair suggested the Conservatives are laying a trap and will spike the budget with enough concessions to opposition demands to secure survival beyond the point where the Governor General would call on a Liberal-NDP coalition to form the government.
"They are simply trying to get themselves beyond the date after which the Governor General rather than giving the other parties a chance to govern, would (agree) to an election," he said.
Mulcair said the consensus among experts is that if the government survives six months from the Oct. 14 election, Jean is unlikely to turn to a coalition in case of a non-confidence vote.
On the NDP's part, it would take "a miracle" for Flaherty to get his party's support on the budget, he said.
The miracle would be a document that proposes about $32 billion in stimulus spending with a massive infusion of infrastructure spending, direct aid to at-risk sectors such as forestry, increased employment insurance benefits and help for families.
He said the NDP would not support an across-the-board cut to corporate taxes, describing previous reductions in the rate as a big mistake that favoured the resources and financial sectors that were doing well, while abandoning manufacturing and forestry, two battered sectors of the economy.
But the biggest problem, he said, is that Harper and Flaherty don't believe in government intervention in the economy.
Following the near-death experience of his November economic update, Flaherty has repeatedly said he would spend billions of dollars to stimulate the economy, as well as cut back taxes to spur spending.
"We're trying to do the right thing," the finance minister told a news conference Monday. "This is unprecedented. This budget is about ensuring that Canada has actions taken that Canada needs . . . to get through the consequences in Canada of a synchronized global recession."
More signs that Canada has entered into a significant recession appeared Tuesday with a report showing Canada's trade surplus with the world fell to $1.3 billion in November, the smallest surplus in more than a decade. Making matters worse, Statistics Canada revised the October surplus down to $2.3 billion from the previously-stated $3.8 billion.
While many governments are raising spending massively, U.S. Federal Reserve chairman Ben Bernanke had some sobering news for those thinking fiscal stimulus will cure the world's economist malaise.
"Fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system. History demonstrates conclusively that a modern economy cannot grow if its financial system is not operating effectively," he said.
TD Bank chief economist Don Drummond said that logic applied to Canada's economy as well, saying the Flaherty and Bank of Canada governor Mark Carney must find a way to free up lending so Canadians and businesses can borrow, spend and invest.
Drummond said the most important issue for bank lending is the cost of five-year funding. He said today's costs to banks of securing medium term financing is 2.8 percentage points above the Government of Canada five-year bond rate, compared to just a 0.14 of a point above before the financial and credit crunch hit.
"If you've got no interbank lending, you've got the corporate spreads as wide as they are and you have the bank cost of funds as high as they are, there's no way you can sustain a growing economy," he said.
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