B4

Neil Reynolds

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Strange, isn't it? Along with other Canadian journalists, CBC anchor Peter Mansbridge (to cite only one example) uses the word "massive" to describe the US$700 billion economic rescue package in the United States - but declines to use it to describe the cost of Liberal Leader Stephane Dion's election promises. Why this deference?

Most analysts say that Mr. Dion's promises would cost $80 billion. Based on population numbers and using the usual 10-to-1 conversion ratio, Mr. Dion's promises would thus cost the U.S. equivalent of $800 billion in supplementary spending. If the U.S. credit-crunch expenditure is massive, Mr. Dion's campaign-promise expenditures must necessarily be massive, too.

Throw in a high-speed train service between Toronto and Montreal, which Mr. Dion has endorsed but hasn't promised (at a cost of another $20 billion), and the Liberal leader - his promises again expressed in cross-border conversion - hits $1 trillion in campaign commitments, making the credit-crunch relief operation look quite restrained and, in an odd way, less important than the restoration of Liberal rule in Canada.

In this relative kind of comparison, useful in keeping things in perspective, Mr. Dion's election promises exceed the cost of the U.S. government's emergency credit-crunch bailout.

Yet Mr. Dion's promises exceed the U.S. bailout in absolute terms - when compared on a per-capita basis. Mr. Dion's promises would increase government spending by $2,424 for each man, woman and child in the country; the U.S. emergency funding package would increase government spending by $2,330.

The definitive cost of Mr. Dion's promises, of course, can't be known. Some promises defy analysis. He has promised, for example, to provide long-term debt money (through a new federal agency) at subsidized rates of interest "to all levels of government-" an innovation which would essentially provide a Liberal government with its very own central bank. You can't really calculate the cost of such novel, experimental expenditures.

Yes, there are qualifications to make. Mr. Dion's infrastructure promise, for instance, commits $70 billion across 10 years. The cost of campaign promises are generally calculated on a four-year basis.

Mr. Dion's four-year increase in expenditures is only $54.5 billion (cross-border equivalent: $545 billion). But why not use a 10-year base for campaign promises? The increased spending remains for as long these promises, once made, are kept. And these promises, when kept, tend to be kept forever.

On a 10-year basis, expressed in here-at-home numbers, Mr. Dion's promises would cost $176 billion - rising by $17.6 billion a year; expressed in our cross-border comparison, they would exceed $1.76 trillion. Mr. Dion's promises suggest a 10-year increase in federal expenditures (from the current election alone) of $5,333 for each man, woman and child in the country.

There is another factor to keep in mind. In the U.S. bailout, the government will buy mortgages at discount prices, will eventually sell these assets back to private investors and will perhaps make a profit in the process.

On a 10-year timetable, the U.S. emergency expenditures could possibly be negligible - precisely as kindred expenditures proved to be in the saving and loans crisis of the 1980s. In Dion's promises, on the other hand, the government simply increases expenditures forever, which would probably require either higher taxes or a return to deficit spending.

The other Opposition parties have their own ambitious campaign promises. NDP promises and Green Party promises, combined with Liberal promises, would collectively cost more than $100 billion (based on four years of these expenditures). It's probably a good thing that these three left-of-centre parties can't work together.

Conservative promises in this campaign have been remarkably, well, conservative. So far, Prime Minister Stephen Harper has made only $5.9 billion in promises, a mere $181 per-capita (based on four years of these expenditures).

In these circumstances, we must hope for a majority government. The country can't afford too many more minority governments. In the last minority transition, the Conservatives increased budgetary expenditures from $208 billion in 2006 to $220 billion in 2007 - a one-year increase of $14 billion; a four-year increase of $56 billion; a 10-year increase of $140 billion.

Alternatively, expressed in cross-border comparison, this transition-year Canadian increase in federal spending equates to a $1.4 trillion expenditure in the U.S. The practice of buying power is essentially a bipartisan phenomenon.

Majority governments, though, can procrastinate, which is one of the most valuable attributes any government can possess - whether it arises from astute political judgment or from routine bureaucratic practice. (Someone once observed that the bureaucrat who delays a $100 million program by one week saves his or her salary for an entire year.)

The party that dithers on its promises can save billions - or, expressed again in cross-border comparison terms - trillions. The party that dangles election promises skillfully enough can even use them, as former prime minister Jean Chretien famously demonstrated, in election after election.

Neil Reynolds, a former editor-in-chief of the Telegraph-Journal, is the Ottawa-based national affairs columnist for the Globe and Mail's Report on Business. He can be reached by email at reynolds.globe@gmail.com.