Here's the problem -- when there is a recession government should spend to help Canadians.
I don't think the Conservatives spent wisely or fairly but I do not disagree with the premise of spending. And that would have led to a deficit regardless.
Yes, not making a needless GST cut or spending on pet projects while things were still good would have made the deficit less serious but we'd have one nevertheless.
So now we are stuck with a deficit and have to fix it.
http://www.thestar.com/opinion/editorials/article/750424--the-structural-deficit
Chronic deficits in Ottawa helped to launch the Reform party, Stephen Harper included, on to the Canadian political scene in the 1980s.
In office, however, Prime Minister Harper has been in denial about deficits, perhaps because he inherited a large surplus from Paul Martin and the Liberals. In the 2008 election campaign, Harper promised his government would "never" run a deficit. And now that the federal deficit has hit a record high of $56 billion, Harper dismisses concerns that a large portion of it might be "structural" – that is, it won't be eradicated simply by the return to economic growth. "I don't think that should be a serious problem," Harper said in an interview this week.
On the contrary, says Kevin Page, the parliamentary budget officer, an independent watchdog. In a report released yesterday, Page says there is, indeed, a large structural deficit and it is growing. He predicts it will reach $18.9 billion in the 2013-14 fiscal year. Significantly, the government forecast a year ago that the budget would return to balance in that very year.
Assuming Page is right – and there has been no recent budget forecast from the government to contradict him – Harper faces two options: raise taxes or cut spending. He has already ruled out a tax hike, and he has said he won't touch transfers to the provinces or to individuals, which make up the bulk of federal spending. That suggests the rest of the federal budget – from the armed forces to national parks – will face massive cutbacks. But Harper doesn't concede that; he talks only of the need to "discipline" spending.
3 comments:
I think you are loosing site of the big picture. It is private debt and not public debt that is by far and way the bigger threat. Indeed, it was private debt crisis in the US that landed us in this situation in the first place.
The 1990s approach to deficit reduction, deficits being first and formost a consquence of a war on inflation, has made us more vunerable this time around. The cost of housing, tuition, childcare etc. are growing a hell of a lot faster than the Paul Martin and Stephen Harper's of the world are able to cut taxes.
Of course, things could be worse. This is the situation in the States as described by Harard's Elizabeth Warren. http://www.youtube.com/watch?v=akVL7QY0S8A
thanks Korby -- good post!
I agree with Koby - private debt - and the consequent drop in consumer spending to address private debt - are far greater threats to the economy.
Harper, meanwhile, will cut government services to the bone, and further. As he has always wanted to. A lot of this has already started, quietly, behind the scenes.
The Liberals have not announced a recovery strategy, and nobody knows whether Ignatieff would raise taxes, cut spending, or jump off a bridge.
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