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"The Harper government does not want to be stampeded into providing a large fiscal stimulus," Prof. Jack Mintz noted Saturday in his Globe essay A well-shaped package would be worth the wait

"That will now wait until a winter budget is presented.

"The opposition parties are howling, arguing that the economy is in much worse shape, immediately requiring a major fiscal-stimulus package.

"The real reason for their consternation is that the opposition could be kneecapped by the Conservative proposal to eliminate federal taxpayers' subsidies to political parties by April 1.

"It does not make sense that taxpayers' dollars are used to finance political parties, especially the Bloc Québécois, which pushes for Quebec's separation from Canada, but that issue should be dealt with at another time.

"If both sides smartly back down, they will allow Canadians to get back to focusing on the global economic crisis and its impact on Canada."

Prof. Mintz went on to argue: "Because Canada is threatened by a major downturn — potentially more than a technical recession — we should be debating the size and the type of fiscal stimulus that is needed to make the economy grow . . .

"The government is quite right to take a little time to frame a fiscal plan, given that the economy is so far chugging along better than expected, despite the storm clouds."

Whether you agree or not, it's a provocative thesis, so we at globeandmail.com are pleased that Prof. Mintz will be online Tuesday from 4:30 to 5:30 p.m. ET to take your questions on his essay, on the stimulus package and on the resulting political uproar in Ottawa.

Join the Conversation at that time or submit a question in advance.

Your questions and Prof. Mintz's answers will appear at the bottom of this page when the discussion begins.

Professor Jack Mintz is a former president and CEO of the C.D. Howe Institute and world-renowned fiscal and tax policy specialist.

He recently was named head of a new School of Policy Studies at the University of Calgary.

Prof. Mintz hails from Alberta, receiving his Bachelor of Arts (Economics) from the University of Alberta, followed by a Master of Arts degree at Queen's University and his PhD in economics from the University of Essex in the UK as a Commonwealth Fellow.

Editor's Note: globeandmail.com editors read and allow or reject each question/comment. Comments/questions may be edited for length or clarity. HTML is not allowed. We will not publish questions/comments that include personal attacks on participants in these discussions, that make false or unsubstantiated allegations, that purport to quote people or reports where the purported quote or fact cannot be easily verified, or questions/comments that include vulgar language or libellous statements. Preference will be given to readers who submit questions/comments using their full name and home town, rather than a pseudonym.

Christine Diemert, globeandmail.com: Thanks for joining us today Professor Mintz. Before we get to our other questions, I'd like to ask what you think of the news from Ottawa of the past few days?

Jack Mintz: To be embroiled in a political fight at this time is most unfortunate. It would have been good if our poltiical leaders took the approach used by President-elect Obama in developing a non-partisan team to deal with the economic crisis in the United States. He has involved not just his supporters but those who challenged him in the primary and, in some cases, some Republicans. Instead, we have had a government that tried to use the occasion to hurt the opposition parties and now have coalition that requires support of a party that wants to see Canada break-up. Surely a far better approach should have been used to bring people together.

TNSFAN BOOKER from Toronto: With the Bank of Canada cutting the prime rate, it seems like a logical step to stimulate the economy by encouraging banks to lend money. However, mortgage rates today are higher than they were 2-3 months ago. Why aren't banks lowering their posted rates to match the BoC?

Jack Mintz: Interest rates charged on mortgages and other loans are equal to the government treasury bill rate plus a premium for credit and other risks. Even though the Bank of Canada has lowered interest rates, it has been reflected in government treasury bill rates that have dropped considerably as people look for a safe haven for their money.

However, other securities, including mortgages, are viewed as more risky in the market since their is uncertainty that borrowers will repay the loans. Thus the credit risk has increased offsetting the decline in government treasury bill rates, leaving mortgage rates somewhat higher. If the Bank of Canada did no lower rates, we would have had even higher mortgage rates.

jal jal from vancouver: Do you believe that a targeted conditional Employment Insurance extension based on retraining will have an financial stimulus impact for 2009-10, (which is the projected impact of a recession), in the very geographical areas that would be the worst affected, (auto industry)?

Jack Mintz: I would favour an extension of unemployment insurance benefits and the length of time that employees have access to support. This would give immediate fiscal stimulus. Retraining programs are more difficult to put in place at large scale but some expansion of them at the provincial level, perhaps assisted by federal funding, might work although the stimulus would take much longer.

scott thomas from Canada: Thanks for taking my question, Jack, although I suspect you won't agree with its premise. For those of us from Ontario with long enough memories, Flaherty was a finance minister who balanced the budget only through cutbacks, downloading, and privatization. I know that he wasn't the finance minister when the Harris government finally lost the election, but it was his policies (policies that were seen by many to be mean spirited) that led to the surprise deficit discovered immediately thereafter. Imagine running a deficit when times are good, much less managing the economy when times are bad. There is a real sense that Flaherty is out of his depth, the best Harper can do in a rather dim-witted caucus.

Why shouldn't the other parties, parties with better track records on balancing the budget, parties with more intelligence and depth, be given the chance to form the government? Especially in these worrisome times.

Jack Mintz: Thanks for the question. I won't get into discussing the merits of various people or parties (although I certainly understand your comments and the importance of good leadership). My point in the article was not to support any party or person but to make the case that to move immediately to a fiscal stimulus package without some consultation with the public and understanding more what is happening to the economy, is foolish.

The US has been in recession for a whole year -- and the unemployment rate rose by two percentage points this past year -- they are reacting now. Luckily, Canada has had no increased unemployment (yet) and consumption is holding up. Surely, we can take a couple of months to get the package right including knowing just how big it needs to be.

Tom Porteous from Nanaimo: Virtually every leading economist confirmed that cutting the GST, which is a tax on consumption, would primarily benefit the rich - saving them thousands on big-ticket purchases. The savings for average and low-income Canadians would be pennies here and pennies there, hardly noticeable. Yet each one per cent cut in the GST rate costs the national treasury: $5 billion per year x two per cent = $10 billion, each and every year.

Now that the government has confirmed that a deficit is imminent, wouldn't it have been a wiser move to cut taxes elsewhere?

Jack Mintz:Actually, several economic incidence studies show that GST cuts help more lower-income Canadians although the analysis is complicated since GST does not fall on food and only partially on housing.

However, I believe that it would be far better to reduce marginal income tax rates and provide help to poor households by increasing refundable credits and perhaps reducing some clawback rates.

Jack Mintz: I think there are a lot reform issues surrounding unemployment insurance that need to be dealt with in the future such as regional benefits, experience rating etc. Now, however, is not the time to do this. I do believe it would be useful in increase the time in which claims can be made and even bump up some of the support. This is something easy to do in the short term.

Alan Walker from Ottawa: Do you think that any subsidy on Canada's or Ontario's part given to the our automotive industry will stop or delay the American car companies from pulling production or closing plants if they are given billions of dollars in aid from the US Government. Surely there will be 'strings' attached. Thank you

Jack Mintz: If the US government goes ahead with a package for the three US auto companies we will likely do so. From what I understand, the primary support will be in the form of guaranteed loans to the sector. The biggest risk to the US and Canadian government is that the support given to the industry will be insufficient to forestall bankruptcy.

Dan Theman from Ottawa: Do you think that an auto industry in Canada has any long- term future or should we lead a policy of a control shift from this industry to other alternatives while spending the funds on retraining and helping more viable industries to grow (and hire)?

Jack Mintz: In the long-term the auto industry will be challenged, but does not mean its death. New manufacturers like Toyota who have come to Canada have done well. Autopart makers like Linamar and Magna have done well over the years.

The problem lies with the Big Three US automakers that have been on a secular decline for years. They have lost market share to other companies. They have settled wage negotiations that have been too expensive for them in face of the pension, health and other expenses they have to bear (studies have shown that employer-paid benefits are typically shifted back onto workers in terms of lower wages).

We need a significant restructuring of these companies including the potential merger resulting in signficant job losses. However, over time, an innovative company could do fine.

Adam Here from Canada: While ensuring that a stimulus package is well thought out is fine. The issue is really related to priorities and using the backdrop of a failing economy to attack ones political enemies.

How exactly is it that Harper and the conservative party can justify minimizing peoples' loss and fear in order to simply attack a political rival?

Jack Mintz: There is no justification. This is a time to pull people together to find solutions, requiring a serious debate and consultation. This was the main point of my article. I am not trying to justify the actions of any political party -- I think leadership is letting us down.

Scott Player from London: I agree that the government should not take a knee-jerk reaction to the economic problems we face and should take the time to craft a response that is appropriate to the Canadian situation.

Having said that, I am sure that there are some approaches which are clearly more appropriate than others and I would appreciate hearing your views on whatever guidelines you believe should be given consideration.

For example, what about taxation; what about infrastructure projects; what about the auto industry in particular; and finally what about increased health care and education spending at this time?

Jack Mintz: I would consider three major efforts. I am fine with additional infrastructure spending as long as it can be done this coming year (filling potholes and bridge repairs would work but projects requiring a long time to put into place will not provide immediate benefit). I would also consider improving support programs for the unemployed including a longer and higher benefit payment. I would also consider a personal income tax cut including increased refundable credits like the child tax credit.

Additional health and education spending is not the best way to address a fiscal stimulus since they could simply result in higher professional salaries. However, as provincial governments face a revenue shortage as they will be squeezed, it would not be a bad time for the federal government to consider increasing some transfer payments (to some extent) for health, education and social programs temporarily. In other words, provide more stabilization revenues to the provinces.

Cal Davidson from Kingston: In light of the rapid collapse of the major sectors in the US, and considering that every economist of any note has indicated that time is of the essence, don't you think that waiting 3 months may be a fatal mistake?

Jack Mintz: We have to remember the stage Canada is in at this time compared to the United States (and even learn from their mistakes). The first problems in the US arose in the summer of 2007 with Bear Stearns' failure and losses incurred by a number of institutions holding subprime mortgages and related securities.

The US tried a rebate program later on that was a failure as it had little impact on consumption. The unemployment rate has risen almost two percentage points this past year in the US. The major failures of financial institutions happened in early September. It is only the past several months they have developed large packages, some of them even withdrawn and so far little working that well. As for a fiscal stimulus, it has not yet taken place as Congress could not agree on much this past month.

For Canada, our data have been totally different. Housing starts have only started to decline. Unemployment has not increased except for some parts of the economy (but this begun with the rising Canadian dollar this past while). Personal consumption is good. We are not experiencing yet the problems that have occurred in the US for some time. It would be a mistake to rush into a package without knowing better how much stimulus is needed, developing a package in consultation with the provinces and to mesh it with any monetary stimulus that could be effective at this point.

We are talking about two months (end of January) which is the grand schemes of things is not long and in itself, a short timeline.

Dan Zenderman from TO: How much money was lost on the TSX Monday, Dec 2nd . (The day of the big coalition announcement ) How much did the last federal election costs taxpayers? Subtract the costs of an election from the losses on the TSX yesterday and how much did the coalition govt. cost us after one day as compared to having another election ?... ( actually a referendum is more like it.)

Jack Mintz: Don't know. Haven't tried to compute it. However, the political uncertainty now being created will hurt us a lot more as a country than whether a stimulus package is adopted in month rather than two months. It is a shame that Canada, which has developed a good record in economic policy since 1994, is now appearing to throw away its reputation as prudent manager of its economic affairs.

Christine Diemert, globeandmail.com: We're coming to the close of our time. Thanks Prof. Mintz, for joining us today. Before we finish, is there anything you'd like to add?

Jack Mintz: My appreciation to all those who asked some very good questions. It was a pleasure to receive them.