Sunday, April 20, 2014

Fact #16: Rob Ford takes credit for keeping global interest rates low


It's true. Rob Ford says that his $1 billion savings claim is backed up by Roberto Rossini, Toronto's Chief Financial Officer. Rossini published a briefing note on March 27th, 2014, that broke down $972 million in "savings" over the past four years, which on the surface appears to back up Ford's campaign slogan.

However, as numerous observers have pointed out, the memo proves that the vast majority of Ford's "savings" are based on council saying no to department requests for more money (but not actually cutting their budgets), double-counting or incorrectly counting expenses as savings, and including savings over which Ford had absolutely no influence.

One of the latter areas is "Debt service cost reduction due to lower interest rates", which totaled $36 million in 2012. That's over 10% of the total cost savings identified for the year. By including this figure in his total, Ford is basically taking credit for keeping global interest rates low for longer than the city expected.

Why should I care?

While it's certainly nothing new for a politician to take credit for things they didn't do (and avoid responsibility for things they did), Ford takes this habit to a whole new level. The $1 billion thing looks good on the side of a movie prop fire truck, but it's completely dishonest to those who thought Ford was serious when he claimed to be cutting the gravy train. The interest savings is not the biggest item on Ford's savings fantasy list, but it's the clearest example that he either has no understanding of budgets work and/or just doesn't care about what he says as long as it sounds catchy.

On the other hand, maybe Ford actually was responsible for prolonging quantitative easing in the United States, leading to a depressed bond market and an extended period of historically-low interest rates that reduced borrowing costs for the city. In that case the Bank of England screwed up royally by hiring Mark Carney. Clearly, they should have gone with the Sage of Etobicoke. And if Rob said he was committed to staying on as Mayor, they could have always hired Randy.

How do I know you're not lying?

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