Ontario Liberals Deficit Experiment

A poll released on March 17 by Léger marketing preceded by one day an announcement by the McGuinty Liberals an accounting change would mean that the the 2004-05 deficit would be much higher than forecast last spring. The poll gave the Ontario Liberals a big lead: L - 44, PC - 31, NDP -19.

This gives us an interesting real time political experiment. It is considered a given of our political economy, that balanced budgets are a sine qua non of political success. The McGuinty Liberals have just opted for higher deficits of some order of magnitude, rather than a slash and burn approach to budget-making. How high a political price might they pay? Their $23 billion gap campaign is clearly designed to offset some of the expected damage. But the public reaction to this year’s budget will be most interesting given all the bloodletting of a year go. Stay tuned.