Prime Minister Stephen Harper demolishes value of the Canadian dollar to boost chance of reelection - 2015-07-15
The headline above this article might seem a bit harsh. But that's exactly what Prime Minister Stephen Harper is doing with his determination to keep a balanced budget in an election year.
The Canadian economy is clearly on the skids. The Bank of Canada has forecast that the gross domestic product will shrink in the first two quarters of this year. It shouldn't come as a surprise, given the collapse in most commodity prices.
Normally when the economy contracts, governments loosen up their fiscal policy to stimulate the purchase of goods and services. This is how western industrialized countries clawed out of a brutal meltdown in 2008.
But this time, Harper insists on keeping the budget balanced because it's an election year. He knows that his supporters are too stupid to realize that running a government is not like running a household—cutting back on public-sector spending in hard times merely exacerbates the pain.