OTTAWA – Michael Ignatieff says Liberals will support a “modest,” temporary deficit to stimulate the economy but he fears next week’s federal budget will plunge the country too deep and too long into red ink.
The newly minted Liberal leader, who holds the fate of the Conservative minority government in his hands, refused to specify Monday what he means by a modest deficit.
“I know one when I see one and will know one when I see it next week,” Ignatieff said following a two-day Liberal caucus meeting to plot strategy for next week’s resumption of Parliament.
“I’m not going to be boxed into a particular figure.”
Still, Ignatieff said he’s “very concerned” about the $40 billion deficit being projected by officials close to Prime Minister Stephen Harper.
“Critical to the Liberal view of this budget is fiscal prudence, is fiscal responsibility,” he said.
“I think every Canadian knows we have to go into temporary deficit to dig this car out of the (economic) ditch. But we don’t want to tie . . . something to the bumper that drags behind it for another 10 years. That’s the issue.”
Ignatieff and Harper sat down for a half-hour meeting later Monday afternoon at the prime minister’s Langevin Block office across from Parliament Hill. A PMO official said their talk was “cordial and business-like.”
Harper’s officials have said they expect measures to stimulate the economy in the Jan. 27 budget will run up a deficit in the range of $40 billion. Harper has hinted that tax cuts for middle-class Canadians may be among the stimulative measures.
But Ignatieff warned against broad-based tax cuts as well.
He said Liberals believe “targeted tax relief for the most vulnerable that would improve their purchasing power would be a good thing.”
However, he added: “We have concerns about broad-based, middle-class tax cuts because we worry this will pitch the country into a (long-term, structural) deficit.”
Still, Ignatieff left himself plenty of room for determining whether Liberals will support the budget or defeat the Tories, risking an election if Gov. Gen. Michaelle Jean refuses to give a Liberal-NDP coalition a chance to govern.
Ignatieff said he’ll make his decision based on the budget in its entirety, not on the size of the deficit or tax cuts or any other single issue.
“There’s no one single trigger on this issue. A budget’s a big document . . . . We look at the whole thing.”
For the second consecutive day, Ignatieff didn’t raise the idea of attempting to form a coalition with the NDP, propped up by the Bloc Quebecois.
He’s always been lukewarm about the idea, initiated last month by his predecessor, Stephane Dion. Opinion polls suggest the notion is massively unpopular everywhere except Quebec.
However, Ignatieff has refused to retract the coalition threat until he sees the budget.
Privately, Liberal MPs said there would have to be something really egregious in the budget for Ignatieff to choose to defeat the government.
That’s consistent with party insiders who say Ignatieff would prefer not to risk an election. He needs more time to rebuild the party and prepare for a campaign.
As for forming a coalition government, Liberal strategists see little upside to Ignatieff taking the reins of power at the start of what is promising to be a deep, severe recession. They’d rather let Harper take the blame for the economic pain.
