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A DIVIDED PUBLIC POSES DEEP BUDGET CHALLENGES – March 5, 2012

BURGEONING CONCERNS WITH INEQUALITY

[Ottawa – March 5, 2012] – Budgets are the most attentively followed and important legislation that Governments produce. In a climate of growing economic anxieties where the Government has staked out the economy as its principal focus, this is even more so. On top of that, we have a federal government reeling from a nasty controversy over a potential vote suppression scandal which has seen its honeymoon period abruptly replaced with the NDP opposition nipping at their heels in the polls. To state that the budget will be important in this context would be a major understatement. A budget which squarely hits the mark could restore confidence in a restive citizenry and remind them of the reason they bestowed a majority only ten months ago. A misfire, coupled with growing controversies on other fronts, could accelerate a downward slide into a real political crisis.

Of all the areas which are prone to misinterpretation and distortion of true public preferences, none is more fraught with difficulty than charting budget priorities. No simple set of questions can adequately capture the complexity of the task, but there are some proven barometers that can help sort through the ambiguities and divisions in public opinion. Some of these divisions are simply disagreements across various defined communities of interest and values. Others are the product of the vagaries of the way questions are posed and interpreted.

Take for example the new consensus around the politics of austerity. There is little question that the public will respond very favourably to the offer of deep cuts to spending as an alternative to tax increases or continued even deepened deficits and public debt. In fact, there is an evergreen tendency of the public to believe that government is rife with waste, inefficiency and poor spending priorities.

Figure 1.0 shows a fairly typical response to a standard question of this sort. While a prudent 30 per cent eschew answering such a simplistic question, the overall lean is to spending cuts. Well that was easy; the public will reward savage cuts and abhor new taxes or debt. Some have even claimed that this new austerity aspiration is significantly up. On this latter point, we ask the same question of a very large random sample in 2010 and we find that this public read is actually dead stable. So there is no new thirst for austerity. Is the apparent single mindedness of the public on this issue really that straightforward?

Consider Figure 2.0. Hmmm. Well, if people prefer spending to tax and debt in the last exhibit, they prefer “investment in health, education and jobs” by an even larger margin. Also, at 63 per cent, that constitutes an overwhelming majority of Canadians and that number is up modestly but significantly since 2010 budget time. The emphasis on social investment dramatically higher among women, younger Canadians, university graduates, and among non-Conservative supporters. So the claim that (on a front page Globe and Mail Story of this week) that there is a huge and growing lean to cutting and that Canadians are in a “bloodthirsty” mood is only partially true (a point wisely acknowledged later in the story by Nik Nanos).

These perennial debates about where the public’s true budget priorities are shows the need for a more circumspect approach which recognizes that answers differ profoundly depending on how we ask the question and who is answering. For those who believe it is all about austerity, we would remind them that the highest scores we received were for social investment, not spending cuts.

There is, however, something truly new and important on Canadians’ minds this year which should have the attention of senior decision makers and budget planners. A range of diverse evidence is showing that income inequality has vaulted from relative obscurity to a pinnacle position in Canadians’ hierarchy of economic and social concerns. In Figure 3.0, even arrayed against the hugely important issues of the economy (jobs and growth) and health care and education (social) the growing gap between rich and poor emerged as the top priority and dramatically eclipsed fiscal issues like taxes and debt by a margin of more than three to one. What on Earth is going on here? Is this a rogue error? Recall that we found in our Beyond the Horserace series that income inequality appeared in a close second place of twenty topics for national discussion. Favourable attitudes to the Occupy movement dramatically outstripped favourable attitudes to the Tea Party movement (the poster child for austerity and minimal government). We also see evidence in the United States from both PEW and Rasmussen that inequality concerns are rising and there has been a dramatic shift to favouring taxing the wealthy. This is transforming a political landscape in a public which are increasingly sceptical of corporate tax relief and trickledown economics.

Figure 4.0 shows that this burgeoning concern with inequality can and probably will affect the political landscape in Canada. By a margin of two to one (and over three to one for those outside of the Conservative base) Canadians would be more likely to vote for a party that raised taxes on the rich than one which promised to keep taxes low. This dramatic shift to a search for greater fairness and social justice is reflected in deepening income inequality (which has risen dramatically over the past 25 years at the same time that wages among the working class have remained stagnant) and a growing sense of relative decline and deep fears of a further steep decline in the next 25 years. In an upcoming release we will see profound fears about the end of progress. It may be that apart from concerns of basic fairness, there is a growing conviction that dreams of a better future contrasted with a ladder with no middle rungs is having a paralytic effect on motivation and productivity in Upper North America.

All of this suggests a profoundly challenging and crucially important context for this budget.

Click here for the full report: Full Report (March 5, 2012)

2 comments to A DIVIDED PUBLIC POSES DEEP BUDGET CHALLENGES – March 5, 2012

  • Herb Wiseman

    Austerity is NOT about saving money. It IS about ramping down expectations so that the 1% can appropriate ever more of the income and wealth of the 99%.

    April 3 will mark 36 years since I first marched against cutbacks (or opposed so-called austerity programmes). Since that time the wealthy 1% has gotten even more wealthy, the campaign to dumb us down has ramped up along with efforts to discredit government and civil servants. The truly sad thing is that the debt has steadily increased during this time while the percentage of expenditures on education and health — the biggest ticket items — have remained at the same percentage of the GDP. Of course taxes on the wealthy have declined.

  • George Thomson

    $35Billion (and growing) for unusable fighter jets, $80 Million (for setup alone) for online spying, $88 Billion (and growing) for super-prisons we don’t need. Huge tax breaks to business. These are a few reasons _why_ we are nearly $400 billion in debt.
    The government keeps cutting social safety nets, attacking Pensions, unions and environmental groups, while more and more scandals pile up at their door. Robocalls, voter suppression, “in and out” and a dozen other examples of ‘dirty politics,’ are the reason that Canadians have lost confidence in the Harper Regime.