There is policy and there is politics. And politics is why the federal budget, which will be unveiled later this month, will commit to balancing the books before the next election, even though that may be a mistake.
This is not an argument against balanced budgets – far from it. Balancing a budget should be the highest priority for any finance minister.
Yes, some economists argue that budget deficits are sustainable provided they do not grow faster than the increase in revenues.
But man is born into sin, and that includes finance ministers. Governments that run deficits in normal times run huge deficits in bad times, which gets those governments into trouble.
Keeping the books balanced provides "a fiscal anchor," as Douglas Porter, chief economist at BMO Capital Markets, puts it. So Mr. Flaherty is wise to aim for a balanced budget sooner rather than later.
That said, Mr. Porter would be just as happy if the Finance Minister delayed getting back into surplus by another year – to fiscal 2016-17, rather than 2015-16.
Growth is slower than projected. Why? Name your poison: Europe, the sequester, weakening growth in China. Whatever the reason, the Canadian economy will struggle to reach two-per cent growth this year.
That means, if the deficit is to be eliminated on schedule, the government will have to cut spending further. Government spending cuts act as a drag on the economy, further weakening growth. As Europe has painfully learned, too much government austerity can throw a slow-growing economy into recession.
So if Mr. Flaherty wants to extend his deficit-elimination target a bit, that's fine with Mr. Porter.
"There's no shame in letting the target slip by a year, given the circumstances," he said in an interview.
And that seemed to be Mr. Flaherty's intention last November, when he released his budget update. That document projected a small deficit in 2015-16, with a modest surplus expected the year after.
But that did not sit well with the Prime Minister. There will an election in autumn 2015, and Stephen Harper intends to campaign, as he always does, on his government's economic record. That means a balanced budget, as he publicly reminded Mr. Flaherty. Absolutely, Mr. Flaherty agreed.
In truth, the budget is so close to being balanced that a couple billion here or there won't make much of a difference. The fiscal drag will be minimal, and the necessary cuts can be accommodated without too much visible pain.
So when the budget comes out, expect to see Mr. Flaherty promise to balance the books come hell or high water – as another finance minister once famously said – by 2015.
It might not be the best policy, but it is certainly the best politics.
John Ibbitson is The Globe's chief political writer in Ottawa.