Having seen some new Deparment of Finance estimates I'd like to amend my post below: Balancing the budget alone can't reduce the debt to 25% of GDP in eleven and a half years. It can do it in ten years and ten months.

If that weren't silly enough, the Liberals' fall back argument, that paying down debt saves on interest costs, doesn't hold up either. If the Liberals pay down $30 billion in debt we save $10.5 billion in interest over ten years. If they pay down $40 billion in debt we save $14 billion in interest over ten years. Either way, it will take 20 years just to break even.

But there's still more. The Liberal plan hurts the economy, at least in the short term.

During a recession, government can borrow from the future -- by running a deficit -- to pump money into the economy today. This creates a short term stimulus. But the converse is also true: paying down debt may produce lower long term interest rates, but it definitely produces a short term drag on demand.

So why would Paul Martin, fiscal steward, do something like this? Politics, maybe?

Hmm, let's see...

The Liberals talked investment from the Throne Speech to budget eve. They tried to placate the left with a flurry of minor spending programs. Then Martin pulled a U-turn.

On budget day he gave his Liberal base the shaft and engaged in a purely partisan endeavour meant to fend off the Conservatives and to conjure up images of his deficit slaying past -- all at the expense of our economy.

Yeah, maybe it is politics.