The Alternative Federal Budget Papers 1998

Eric P. Mintz is an associate professor of political science at Sir
Wilfred Grenfell College, Memorial University of Newfoundland.

What would the Canadian government’s budget look like if it were
written by unions and other equality-seeking groups instead of
reflecting the views of mainstream economists and the interests of
business? In this fourth annual “alternative” budget, increases in
spending for a wide range of government programs (other than defence)
are proposed. A stimulative macroeconomic approach is seen as necessary
to reduce unemployment. On equity grounds, a more progressive tax system
is proposed.

In its advocacy of greater government spending and its support for
Keynesian economic policy, this social-democratic budget contrasts
sharply with the conventional wisdom of economists, the major media, and
most contemporary politicians. Interestingly, the authors try to show
that their budgetary proposals would decrease the national debt faster
than would existing government policies. The key assumption is that
lowering interest rates would result in greater economic growth and
greater tax revenues, which would more than offset the increases in
government spending that are proposed. The increase in inflation that
would result is judged to be modest. However, although low interest
rates have contributed to the elimination of the deficit, would further
interest rate cuts result in more economic growth, which would allow
government debt to be reduced? Or would inflationary pressures and
further declines in the value of the currency reduce private-sector
activity and the living standards of Canadian workers?

The book also includes an interesting analysis of environmental policy
(with recommendations for a “greener” budget), discussions of the
“gender-blindness” of the budgetary process, a critique of the
diminished role of the federal government in social programs, and a
discussion of the unfairness of the tax system. Although the book has a
leftist perspective, different viewpoints are presented in a summarized
roundtable discussion of the alternative budget.