Case in point

As a followup point on the NDP's home heating plan, the discussion seems to have now turned in part to the Libs' version as noted by Kevin Milligan. And in comparing the two, I'd think it's worth noting that the home heating relief offered by the Libs - sending cheques of $125 or $250 only to households receiving the GST rebate - looks to be problematic from both an economic and a political standpoint.

On the economic front, the scheme offers an ideal example of arbitrary endpoints and benefit amounts resulting in perverse incentives. After all, a household A which earns $100 more on the year than household B might actually end up worse off if the two fall on opposite sides of the cutoff point.

But perhaps more importantly, there's no rational political explanation either for that warped set of incentives, or for the outline of the plan generally. If the problem for the season in question was abnormally high heating costs, how would that not be experienced equally on both sides of the income cutoff? And how would the imminent problem with heating costs justify paying the same amount to a single person living in an apartment in Vancouver making in a warm year as a single mother of three living in a house in Timmins in a cold year (to use the example given by RayK)?

As best I can tell, there's absolutely no principled answer to those questions; it's simply a matter of setting arbitrary cutoff points and benefit amounts on the assumption that some have to be put in place under the "give money to poor people" model. But it's far from clear that anybody was particularly well served by the plan - and worth wondering how things might have been different if the Libs hadn't been so eager to buy the argument that a government's role should be limited to that type of model.