After squandering its huge budget surplus on tax cuts to their corporate friends and nickel-and-dime tax credits to nearly everyone else, the Conservatives have the government right where they want it: with no alternative but to make more ideological cuts to program spending under the cover of the global recession.
So much for all the recent talk about transcending party lines and doing what's good for the country during a time of crisis.
Experienced at pushing their opponents to the wall, the Conservative Government also announced a plan to scrap the party financing system that allocates public funds to political parties based on the number of votes cast for each party.
Finance Minister Jim Flaherty went so far as to announce that the Conservatives will make the cut a matter of confidence, assuming that the Liberals would rather back down (as they did many times during the previous Parliament) than risk another election while broke and leaderless.
The Liberals and NDP responded by threatening to topple the government in favour of a centre-left coalition. Liberal MP Dan McTeague summed up the situation when he said, "They're either very stupid or very arrogant in thinking we'd simply just buckle. We don't have many more cheeks to turn here."
Harper responded by dropping the plan to scrap the public party financing system. Unlike the previous capitulations, which were merely political losses, this decision would effectively bankrupt the Liberals when they are already struggling to pay off their election campaign debts.
Stephen Harper and his advisors have been remarkably savvy in how they have managed Parliament over the past few years, but they may have crosed the line this time with a partisan move that threatens not only the fortunes of is opponents but their financial viability.
It remains to be seen whether the back-channel coalition talks will continue, now that the Conservatives have backed down on this particular plan.
The Liberals and NDP combined have 114 seats (77 and 37, respectively) to the Conservatives' 143, so a coalition would need to include the left-leaning but nominally separatist Bloc Quebecois as well. The Bloc has 49 seats and independents hold the last two.
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