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Speaking to reporters in Toronto earlier this month, Bill Morneau said the government wasn't going to be "impulsive" in the face of tax reform in the United States and its serious threat to the competitiveness of Canadian business.

Well, mission accomplished. The Finance Minister has released his budget, and it doesn't react at all. The seismic impact of Trumponomics, with its blend of low taxes and know-nothing protectionism, makes barely a ripple in the serene document the Liberals have tabled.

The budget focuses on inoffensive, broadly agreeable policies like equal pay for equal work in federally regulated sectors, and money for scientific research. But on corporate taxes and trade, the two areas where Canada's economy is vulnerable, the government is doing very little.

Read more: The 12 most important things you need to know about the federal budget

Opinion: The boat for a return to a balanced budget in Ottawa has sailed (subscribers)

As expected, gender equality was a major theme of the 2018 federal budget. The budget includes new measures aimed at encouraging greater participation of women in the work force, along with a program to encourage more men to take paid parental leave.

Mr. Morneau has argued, and argued again on Tuesday, that we should avoid being knee-jerk in our response to shifts in American policy. He makes some good points. Details of the U.S. tax changes haven't been fully hammered out, which makes them hard to respond to.

Mr. Morneau also points out that while business groups have been calling for a corresponding Canadian corporate-tax cut, business groups are always calling for tax cuts – as a former Bay Street stalwart, he should know.

But playing it cool can easily shade into complacence. The Liberals risk crossing that line.

The U.S. will have a lower average corporate-tax rate than Canada once its reforms are fully implemented, and has lowered income taxes for the wealthy. The Trump administration has wiped out a huge part of our competitive advantage in attracting investment and investors.

Meanwhile, NAFTA negotiations are in a parlous state, with the U.S. President reportedly losing his temper at his Mexican counterpart during a phone call ahead of official talks in Mexico City, and again accusing Canada of getting the better of the U.S. on trade.

Facing the dangerous prospect of an investment exodus over taxes and investors' concerns about where free trade is going, not to mention the wide-ranging economic pain that losing NAFTA would inflict, the government could have tabled a contingency budget, aiming for the best and preparing for the worst.

It could have regained part of our tax advantage by shaving a couple of points off the corporate rate, or by letting businesses expense capital investments more quickly, as recommended by the centrist C.D. Howe Institute (not for nothing, a think tank Mr. Morneau used to lead).

The government could have boldly scrapped high tariffs and supply management on dairy, a perpetual hindrance in trade negotiations (not to mention a thorn in the side of Canadian consumers).

And it absolutely should have made a more serious effort at bringing down the deficit, to give the country more fiscal wiggle room in case of economic disaster.

Instead, the government has made a populist pitch to distinguish Canada from the U.S., rather than to compete with it. Far from turning down the heat on trade, the Liberals plan to spend $191-million over five years on the softwood lumber industry, largely to defend it against U.S. trade complaints.

And on taxes, the budget focuses on extracting more from the rich rather than luring investors: New changes will make it harder to earn large sums of money through passive investments in your small business while claiming a preferential tax rate.

It's true that one advantage of this approach is that it's relatively easy on the pocketbook. Corporate-tax cuts and compensating farmers for the end of supply management would spill a lot of red ink.

Indeed, the U.S. deficit and debt burden will balloon thanks to the Trump tax cuts; our deficit and debt burden are projected to gradually decline over the next five years – although not nearly as fast as they should have in a strong economy.

Mr. Morneau is walking a fine line. He is right to note the irony that the loudest yelps for balancing the federal budget have come from some of the same people who are calling for corporate-tax cuts.

Still, the fact is that the government is doing neither. Given the economic turbulence coming out of Washington, that's irresponsible.

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