Spending Cuts a Challenge for McGuinty in the Era of "Occupy" Movement

By Susanna Kelley

Tin soldiers and Nixon coming

We're finally on our own

This summer I hear the drumming

Four dead in Ohio.

   - Neil Young, "Ohio", May 21,1970

Mary Ann Vecchio kneels in shock and 
horror beside the body of Jeffrey Miller, 
who was shot by the Ohio National Guard at Kent State University,
May 4 1970. This iconic photo by John Filo won a Pultizer Prize.

We must give the poor their due, or they will take it from us.

   - the late Allan Grossman, Ontario PC cabinet minister and  MPP, 1955-1975

Ontario Premier Dalton McGuinty's new government will face a major financial challenge over the next years - and with it, perhaps a social challenge more serious than any seen for the last 40 years.

Finance Minister Dwight Duncan revealed last week Ontario's economy shrunk by 0.3 per cent in the second quarter of 2011.

And while he's confident of a GDP bounce in the third quarter, there are still many storm clouds on the economic horizon.

The European Union deal to provide a bailout for Greece totaling €130b was greeted with great relief at first.

But that and the fact private investors have agreed to take a 50% haircut in the face value of their Greek bonds seem to have appeased the markets for only a couple of days.

Here in Ontario, the truth is, while Mr. Duncan can make soothing sounds and quote economists to back up his assertion that the third quarter will be better, both governments and private sector economists hardly have stellar records when it comes to predictions. 

Finance ministers frequently low-ball their budgetary growth predictions - on purpose.  That way it's "good news" when a better figure is attained.

As for even the top economists, how often do we hear they are "revising their predictions" in light of new economic events?  (You'd be forgiven for asking "what kind of predictions are those, then?"  Those would be incorrect predictions.  We should all be so lucky to have high paying jobs that allow us to "revise our predictions" so often.)

In truth, no one really knows what's on the economic horizon for Ontario. But with the US stuck in economic quicksand, we certainly can't depend on our biggest trading partner to keep us afloat.

Which brings us to Mr. McGuinty's dilemna. 

He has promised to bring the budget to a balanced position by 2017-2018.

Everyone knows that means cuts are coming. And cuts usually mean layoffs.

As the various factions of society cast about for ways to fix the financial shortfall, you can hear the polarized yelling matches loud and clear.

Some conservatives have ramped up their fight against public sector unions, and indeed, against all unions.  They are particularly galled that public sector employees enjoy guarantees of comfortable pensions and benefits paid for by private sector workers who don't have anything near that. 

The left says the solution is not to cut public sector compensation but to unionize private sector workers so they have equally good benefits.  They point out the mortgage fraud shows human nature has not changed, and so the time for union relevance is far from over.

The "Occupy" movement, which began with New York's "Occupy Wall Street" and has spread to Canada and other countries, accuses the top 1% in the U.S. of raking in large incomes while the other 99% have been flat lined in the last 30 years.

Protester with sign at one of the "Occupy" demonstrations.

Let's look at the union argument first.

First of all, unions, along with education and some social programs, are one of the great income levelers of our time.  It is no coincidence that income levels have stagnated over the last three decades as union membership decreased.   

Free trade, initiated in 1980's by Conservative Prime Minister Brian Mulroney, decimated the already shaky steel industry, and tore up the auto pact whereby auto jobs were guaranteed here. Then, just like a mother bird pushing her babies out of the nest, Mulroney and his Liberal successors Jean Chretien and Paul Martin, pushed the nation into the a globalized free market, free trade world that pitted Canadian workers against countries paying much lower wages.

As the number of jobs - especially in manufacturing - decreased, so did, naturally, the rate of private sector union membership.

Meanwhile, only the top 20% of income earners have increased their take of the nation's wealth since 1976, according to the Conference Board of Canada. By 2009 (latest figures available) they claimed 39.2% of the nation's income.  This was not due to investments they held but rather high salaries, the Conference Board says.

Meantime, the poor and middle income groups stagnated. Median income went from $45,800 in 1976 to $48,300 in 2009.

5.5% in 33 years.

The gap between the richest 20% and the poorest grew from $92,300 in 1976 to $117,000 in 2009.

Paul Krugman, the 2008 winner of the Nobel Prize for Economics, says this was due to lower rates of unionization, flat-lined minimum wage rates and deregulation, and policies favouring the wealthy.

Meanwhile in the U.S. the situation was even worse. Between 1980 and 2007, the income of the richest 1 per cent rose 197 per cent.

The solution is obvious, say the OWS protesters:  tax that 1% more and then redistribute the wealth more equitably.

However, as Conservatives point out, figures from the U.S. Tax Foundation show that in 2009, the top 0.1 % - about 140,000 Americans with incomes of about $4 million  - paid over 17% of all US taxes. 

The top 1%, with incomes above $344,000 and making about 17% of the nation's total income, paid almost 37% of the country's federal tax take. The top 5% - those above  $155,000 and earning almost 32% of the US' income, paid 59% of all taxes.  The bottom 95%, then, earned 68% of the country's income but paid only 41% of the federal tax take.

Conservatives say the middle class is the one not paying enough, when you look at these numbers, and that is undemocratic. The relatively few 1% are already paying for more than their share of taxes, and to increase them would drive money from Canada.

But the OWS groups say this is where the money to pull the US out of recession and to pay back people who lost their homes to unscupulous mortgage brokers and bankers, must come from.

And now they have pitched their tents and are refusing to leave until there is some movement on this issue.

From the Arab spring to the violent Toronto G20 protests to the Occupy encampments, we've seen a generation of young people rise up against what they see as an unjust distribution of wealth.  In all cases their political masters have sent in police against them, armed with rubber bullets and pepper spray.

One man, former Iraq veteran Scott Olsen, has sustained brain damage and cannot talk from what is said to have been a police "projectile."  Many others have been injured.

If anyone doubts the harm rubber bullets can do, they may recall that's what the police in Northern Ireland used during The Troubles.

These are the most serious and widespread protests since the 1960's brought us demonstrations over the U.S. being at war with Vietnam. 

On May 4 1970, then President Richard Nixon called in the National Guard at Kent State University during a protest against the US military invading Cambodia.

Four students were killed that day.

The Kent State shootings marked the turning point in public support for the US being at war with Vietnam, and Nixon himself.

The "Occupy" movement has many supporters across America and Canada, and yes, even in Toronto. Ontarians saw enough of violence by police and some protesters during the G20 riots.

Governments should re-read their history about Kent State before someone else is seriously injured or worse.

As the late Ontario PC cabinet minister 0Allan Grossman once said "We must give the poor their due - or they will take it from us."

You can find Susanna here: @susannakelley