For instance, the Canadian government makes the trade-off on where to reduce funding; it can pull tax dollars from hospitals and put it towards something else if it appears that doing so would increase the likelihood of re-election.
But this isn't how money works.
Canada prints its own currency, it doesn't need to pull dollars from one place to fund something else. The government can actually fund everything and just print more dollars to make up the difference. Austerity isn't necessary.
So, why does it happen?
This heuristic can't explain why anything happens, but that's not what it's for? It's for raising the contradictions and forcing us to ask harder questions of systems, like: if a country prints its own currency why would it ever choose austerity?
There's still more work to do to answer that question and this heuristic is useless for doing so, it's really only a basic first step towards building a critique.
I still think it's extremely useful.