[SteelTown]

Ottawa projects four years of deep deficits
Spending up to $30 billion to jolt economy

December 18, 2008
Julian Beltrame and Alexander Panetta
The Canadian Press
http://www.thespec.com/News/article/484143

OTTAWA — The Harper government plans to run deep deficits totalling up to $30 billion in an effort to pump enough cash into the economy to lift Canada out of a painful recession, the Canadian Press has learned.

A senior government official said deficits totalling $20 billion to $30 billion will be “short term,” but wouldn’t give a specific time frame.

The estimate is more than double the projections contained in a Finance Department document released at the finance ministers meeting in Saskatchewan.

“We are prepared to run the deliberate, substantial, short-term budget deficits — plural — and the short-term budget deficit will be in the range of $20-$30 billion,” the official said. “We want ... to make sure that anybody who is out of work gets put back to work (and) contributes to the economy.”

The official said the lion’s share of the stimulus will go into public infrastructure spending for things such as roads and bridges and to retrain workers who have lost their jobs.

The Finance Department has projected a $5-billion shortfall next year, followed by another estimated $5.5 billion for 2010-11, prior to any new spending.

That suggests Ottawa is looking to spend $10-$20 billion in stimulus, probably over the next two years, an indication the government believes the economy needs aggressive action.

The new spending could also serve to undermine political opposition for the Jan. 27 budget, particularly from new Liberal Leader Michael Ignatieff, who has said he will wait to see what the government does before deciding whether to vote non-confidence.

While the new deficit numbers appear shocking in the face of 12 consecutive years of surplus budgets, they pale compared to the over $43-billion deficit eliminated by the Liberals in the 1990s. They are also small potatoes to the estimated $1-trillion US deficit being considered by the United States.

Even before the stimulus, Ottawa looked ready to run small deficits for at least the next four years, according to the department document.

While the department officially only projects two years out, applying the methodology used to the projections yields further shortfalls of $4 billion and $1 billion the following years.

And the document warns that the economic situation has deteriorated even more since the numbers were tabulated earlier this month, meaning both revenues and the deficit picture could be worse.

“In the department’s view, there is a risk that nominal GDP could be weaker than suggested by the most recent private sector survey and that the corresponding fiscal outcome would be more in line with the low scenario in the statement,” says the document.

If that were to occur, the deficit next year could approach $9 billion and be more than $10 billion the following year.

The deficits would occur even if Ottawa proceeds with the billions of dollars in extra revenue and savings through asset sales and cost cutting it has proposed in the doomed Nov. 27 economic update.

As the economy slumps, Ottawa gets lower than expected tax revenues from corporate Canada and from consumers and is forced to spend more on unemployment benefits and other social programs.

The government expects nominal gross domestic product — the value of goods produced — will be $20 billion less in each of the next two years than it expected, which it says will reduce government revenues.

Liberal finance critic Scott Brison said the new numbers are more realistic than those in the Nov. 27 statement and he asked Flaherty to drop plans to sell government assets in the current weak real estate market.

“If the government now realizes their rosy projections were unrealistic, it’s time for them to recognize their asset sale plan is unrealistic as well,” he said.

Flaherty would not be reached for comment today, but earlier he had described the economy as “difficult for Canada and Canadians.”

Today, Flaherty created a 12-person economic council headed by former B.C. finance minister Carole Taylor to advise the government in battling the economic malaise, which many economists say will be even worse that Ottawa is saying.

The finance minister also said that he and Bank of Canada Governor Mark Carney will meet with the CEOs of the country’s biggest banks in January to ensure they are taking steps to make more credit available to average Canadians.

“I expect (the banks) to make it evident to us that they are taking steps to make that more available in Canada,” Flaherty said at a news conference in Saskatoon.

[MolsonExport]

Go away, Flahertulence.

[Canadian Mind]

Personally I liek the idea of increased spending. It is what we've been paying off the deficit for the last 10 years for, so that we have more wiggle room to spend money on infastructure and the like.

might aswell repair shit while the labour is cheap, all while providing jobs for those who otherwise would have none.

[DizzyEdge]

I like the idea of spending that has long term benefits... like infrastructure (especially transit), and in another article it was mentioned increased subsidies for increasing the energy efficiency of homes (my house was built in 1912 so no qualms with that!). What I don't like was the mention of tax cut cheques.. I get the feeling those will just pay off debt, go into savings, or, even if they were all spent, that would boost the economy what.. 2 wks?
If 30 bill needs to be spent, spend it as an investment. Use it to create jobs then those folks can use their own cheques to spur the economy

[Yume-sama]

Investing in infrastructure and giving jobs to Canadians would be a better use of billions of dollars than bailing out corporations.

And I agree that "stimulus" checks should be avoided. Unless we want the Flat screen TV industry to boom (and those aren't made in Canada) :P

[ssiguy]

By having prudent government budgets over the past 12 years Canada has far more wiggle room than most western countries.
I am a strong advocate of balanced budgets but there are times when the economy needs a boost and this is definatly one of those times.

Infastructure is the best solution as it results in long-term economic growth and increases quality of life. Also not only does it produce jobs which saves EI payments but more are paying income tax, GST/PST for goods produced and needed for the infastructure spending. While real estate and wages also become suppressed it is also the most advantageous time to do it as it is cheaper than when times are booming and labour and commodity prices are high.

[someone123]

Stimulus cheques are stupid. They are equivalent to a tax cut with some additional inefficiency.

Now is a good time to invest in major infrastructure projects that the country can afford to support over the long term, since labour and materials will be relatively cheap.

Randomly throwing money around is not a good idea. People also need to remember that the government started out in the 90s in a very unhealthy financial position. It would be fairly easy to wipe out the gains that have been made, and if that keeps happening with every recession then the federal government will end up throwing lots of money out the window over the long term. We shouldn't see our relatively good financial position as "wiggle room", it should be seen as an advantage to be preserved as much as possible.

[Canadian Mind]

I don't know where the cheques came from, but maybe i'm just blind. regardless, if i get one it's going directly into an ailing auto-industry stock. :)

What would you guys liek to see as far as infastructure upgrades, or other economic stimulus programs?

As far as infastructure upgrades go, over at www.canadaka.net someone suggested upgrading sewer systems country-wide. He only used his local cities in southern Ontario as examples were systems are old, rusting, and over-capacity. But I would imagine upgrades could be done elsewhere. While this isn't the tye of infastructure upgrade one would expect to pave the way for a powerful eonomy in the future, a fuctional sewer system would allow for a more sanitary, and therefore healthy environment Healthy workers are usually productive workers.

And after replacing the sewers one could repave the streets overtop of the ewers, meaning no more stupid potholes and the like in old city streets... for the short term. :P

As for highway upgrades, setup a national highway programs that would end up 4-laneing all major highways in this country and/or refurbish highways tht are already 4 or more lanes wide. Highways would include the Transcanada, Yellowhead, Deerfoot, whatever road they use between Regina and Saskabush, 401, etc.

Upgrade rail lines where neccisary, particularily along the mountainous west coast where trains seem to jump the tracks 2 or 3 times a year now. I also read somewhere in the vancouver forum about the New West rail bidge being limited to 65 trains per day at 11 miles an hour, which by 2025 woul be over capacity. why not fix that little old bridge up now?



Again, I'd like to hear your thoughts.

[niwell]

^Any city in Canada with large swaths of pre-1920 or so built-up areas could use a sewer upgrade. The poster boys for this are obviously Montreal and Toronto, which both have huge amounts of combined sewer lines, but I'm sure that there are many other cities in the country that do as well (Ottawa for instance). This would go a long way to improving overall environmental welfare in Canada's waterways and I'd be in full support.

Aside from this, I think the federal government needs to finally get involved in cities during this crisis. We need to spend money on infrastructure expansion in ALL forms. Our major cities are far behind those in terms of infrastructure contruction compared to the rest of the developed world, mainly due to our regional nature I suspect. This is clearly detrimental to the country as a whole. Major investments into Toronto, Montreal, Vancouver and Calgary would do wonders. Paul Martin was on the right track, but unfortunately when a new gov't gets into power, any previous causes tend to be shelved (see:green shift, despite what almost EVERY major world economist said). Money towards public transit and infrastructure repair in EVERY major city in Canada would do wonders.

As for the topic at hand, I'm glad Harper finally agreed to some sort of Stimulus... since so did EVERY other developed nation on Earth. I'm still pretty pissed at the months of denial and twisting of facts we've seen from the Tories. It's becoming increasingly clear that the election was obviously called due to the (at the time upcoming) economic crisis. I thought so at the time, but it's basically been validated since

[Doug]

I was hoping that Canada would sit on the sidelines and completely avoid economic stimulus, aka "make work". Throwing money at the wall and hoping some sticks is a very bad idea. Too bad Parliament wasn't prorogued for a year or two as doing nothing would be the best course of action.

[Doug]

Where are all the conservatives?


December 19, 2008 4:01 AM

Are there no fiscal conservatives left in Canada? Evidently not: The allegedly Conservative federal government is set to post a deficit of up to $30 billion over the next four years, rather than addressing the issues raised for government by the recession through reduced spending.

Now, we have Alberta's Progressive Conservative government, its conservatism clearly overwhelmed by its progressivism, predicting a technical deficit for the coming fiscal year -- again, with no apparent recourse to financial rigour.

Perhaps that's what one should expect from a party with an oxy-moron for a name, along with such fuzzy concepts as "technical" deficits: Deficits happen when government expenses exceed revenues, at which point governments typically borrow, or cut spending. That Alberta alone among the provinces has a Sustainability Fund to draw upon doesn't mean it is somehow not in the red. In other words, unless it's possible to be technically speeding or technically pregnant, Premier Ed Stelmach offers a distinction without a difference.

The sad truth is that considering how little politicians seem to recall the Trudeau era's galloping deficits, it is almost as if they never happened. This lesson should have become branded on Canadian souls: Once one starts deficit financing, it is extremely hard to stop, and the interest payments go on forever. Look at Ottawa:After 11 balanced budgets, servicing debt incurred during the 1970s and '80s remains--at $33 billion annually-- the single largest cost the federal government must meet, exceeding such budget behemoths as the Canada Health and Social Transfer to provinces, defence, Indian Affairs and Employment Insurance. Debt is worse than cocaine: The drug enslaves only the user, but the mathematics of compound inter-est mean our grandchildren will be paying interest in 25 years, on money borrowed to provide medical services 25 years ago to our grandparents.

Thanks to windfall resource royalties, Albertans had a second chance to forge a different future, and the merits of aggressive savings, coupled with moderate spending--a strategy urged on the provincial government from several directions--now seem self-evident. But past experiences were not internalized:What we got was moderate savings and aggressive spending, that doubled to an astonishing $37.9 billion in just the last eight years.

Thus, at the first whiff of trouble, mighty Alberta's leaders utter theDword.

And, with chutzpah worthy of Quebec's politicians, Finance Minister Iris Evans, having hiked provincial oilpatch taxes, lobbies federal Finance Minister Jim Flaherty to extend federal tax breaks--for the oilpatch.

As conservatives, we shake our heads at wasted opportunities, and the reluctance of supposed conservatives to grasp the spending-cut nettle, when it's the only right thing to do.

Heaven knows, the country needs some good examples from somewhere.

But don't look over here.

© Copyright (c) The Calgary Herald

[240glt]

Licia Corbella should have stayed with the Sun.

Now Calgary's got two shitty papers.

[Doug]

Calgary has two contrarian papers - shitty depends on your point of view.

[240glt]

You're right, shitty is just a point of view.

But contrarian ? Right vs. right-right ? Nope.

[Kevin_foster]

Phew good thing it's ILLEGAL to run a deficit in Alberta. Oh wait.... who's going to jail then?

As for Canada; meh

[vid]

He is aiming for the biggest debt increase since Trudeau! :yes:

[WhipperSnapper]

city in Canada with large swaths of pre-1920 or so built-up areas could use a sewer upgrade.

It's actually the pipes from the post war boom that are falling apart in the GTA. Most of the combined sewer system was introduced during upgrades in the post war era as well. However, the system of underground overflow holding tanks the size of 10 storey apartment buildings has really improved on this short sightedness.

[DizzyEdge]

I was hoping that Canada would sit on the sidelines and completely avoid economic stimulus, aka "make work". Throwing money at the wall and hoping some sticks is a very bad idea. Too bad Parliament wasn't prorogued for a year or two as doing nothing would be the best course of action.

I'm more in agreement with 'speed up work', ie convert already planned infrastructure work which was planned to be done long term due to financing, into short term. I'm not so much for random 'hmm we have some money, what could we dream up to do with it' plans.

[ssiguy]

Trudeau started the deficit cycle but Mulroney brought it to an art form. He managed to double the deficit in just 8 years and took 12 years of Liberal rule to dig our way out.

Actually $30 billion over 4 or even 3 years is a relativly small amount. That only represents 2% of GDP over 3-4 years. Almost any other OECD would give their left nut to be in that position.

I will give Harper a congradulations {which has never happened before} in that he will nut be cutting spending by just downloading it to the provinces.

I think what the governments mean by "technical deficits" is that they are not operating deficits. Yes, the country would have deficits over the next couple of years but would be relatively very small but they will have several massive one-time expenses mainly The Big 3 Bailout and massive infastructure spending. Its like buying a TV with cash.........its costs money upfront but as no long-term effect on your subsequent household expenses.

If over the next 3 years our total debt grows by $30 billion due to inflation, eventual economic growth, and population growth it will no increase our Debt to GDP ratio. The amount is simply to small.................the US is a different situation completely.

Put this into perspective.............in '89/'90 budget year Mulroney created a $36 billion debt in just one year. We're talking $30 billion over 3/4 years in an economy twice the size. Also at that time debt servicing costs were 25% of gov't spending as opposed to today's 11%.

I'm suprised it's that small amount and if the money went to infastructure I wish it was higher.

[Doug]

^The problem is that deficit financing is like crack - difficult to get off, so don't even start.

[SteelTown]

Conservatives to table $40 billion deficit: CTV
Updated Fri. Jan. 9 2009 11:01 PM ET

CTV.ca News Staff
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090109/flaherty_recession_090109/20090109?hub=TopStories

The Conservatives are planning on tabling a federal budget with a $40 billion deficit, CTV News has learned.

The deficit would be the highest since the 1993 budget and $10 billion more than Prime Minister Stephen Harper indicated in a late 2008 interview with CTV.

Harper is now saying a prolonged economic downturn will require massive government spending -- for possibly as long as three to five years.

Harper is asking for co-operation in drafting the federal budget, less than two months after his highly-partisan fiscal update caused a political crisis in Ottawa.

"Now is the time for everybody ... to try and reach consensus if that's possible, but especially to try and work together -- federally, provincially, internationally, across party lines -- to deal with the problems that everybody knows are urgent and large," Harper said Friday.

Harper's new, friendly tone came on the same day as a poll suggesting that new Liberal Leader Michael Ignatieff has helped vault his party into a virtual tie with the Tories.

Harper said Canada will post one of its biggest deficits in years when the budget is tabled on Jan. 27.

"We're working under the assumption this is going to be a tough time," he told reporters at a press conference in Montreal on Friday afternoon.

"This will be one of the biggest budgets in a long time. It will be a comprehensive budget to deal with a range of, not just economic challenges, but economic opportunities. We'll assume that we'll probably have to look at a period of three to five years of such action."

Liberal leader responds

Ignatieff told reporters in Halifax after a town hall meeting that "it's their budget, not our budget" and that he'll wait and see what the Tories put forward before agreeing to support the package.

But he did list a number of Liberal priorities for the budget.

"Are you going to protect the vulnerable? Are you going to get infrastructure targeted in the right way? And are you going to invest in the economy so we can get out of this (economic downturn) faster?"

Earlier on Friday, Finance Minister Jim Flaherty said this year's federal budget will have a "substantial deficit" to deal with the effects of the "synchronized global recession."

At a press conference in Thornhill, Ont., Flaherty also called on the private sector -- particularly banks -- to step up and help fill a "credit gap" to mitigate the effects of the economic slowdown.

Flaherty did not say how big this year's deficit would be, but he told reporters that his staff was crunching the numbers and could have a better idea of the figures next week.

He noted, however, that the deficit will be "substantial," while cautioning the Conservative government won't undertake large long term deficits.

Unemployment concerns

Flaherty also said he expects the budget to infuse funds into infrastructure projects and help Canada's jobless.

"We're going to have substantial job losses," he said, noting new statistics that showed that Canada's unemployment rate is already rising.

Statistics Canada reported Friday that the jobless rate jumped to 6.6 per cent -- a hike of three-tenths of a per cent.

Harper said he's concerned about the jobless numbers here in Canada and the U.S., which reported that it lost more than 500,000 jobs last month.

"Obviously, the figures today are troubling. Every time a Canadian loses his job this is something that really does pre-occupy us," he said.

"What I think is more troubling are the figures in the United States which really do indicate the period of difficulty we are entering in terms of the global economy."

Flaherty said Ottawa is now working out plans to help out-of-work Canadians -- including ways to ease access to educational and retraining programs.

"All important matters to help Canadians get through what is going to be a difficult year in respect to employment," he said.

Ignatieff said the Liberals will take a close look at how the Tories deal with unemployment issues.

"They're saying, 'let's invest in training.' But I don't think they're doing enough on the (Employment Insurance) side at all."

Ignatieff called EI 'a test' of the Tory budget.

Flaherty also called on Canada's banks to loosen consumers' access to credit. Earlier this week, he announced a working group to address the issue.

On Friday, he continued to push banks and credit unions on the matter, telling reporters that Canadians have in the past "stepped up to the plate" to support the banks.

"Our view is that they should work with us," he said.

It's a call that Flaherty has made repeatedly this week as he prepares his budget. But bank officials have countered that despite some tightening credit access, "it's business as usual" in Canada's lending sector.

But Flaherty noted that there are significant credit gaps, citing the auto leasing market as an example.

"We're prepared to work with the banks to do whatever we have to do to increase the availability of credit," he said.

"Quite frankly we need the banks to fill (the gaps)."

Pension worries

The federal government is also asking Canadians about what they want for corporate pension plan regulations.

Many private pension plans have lost much of their worth after the 2008 financial crisis put stocks into a freefall.

Currently, federally-regulated pensions with a deficit get five years to ensure their plans are fully funded.

Flaherty has said he would like extend the repayment period to 10 years, but some experts say it may take 15 or 20 years for companies to repay their pensions with the magnitude of the losses.

[vid]

Every day the fucking thing gets bigger. :rolleyes:

[Slug]

The Conservatives pretty much were given a free check from the coalition on this one. What are they gonna say now, they would of spent more? Kudos on the big corps who ran out of ways to keep their profits going at outrageous rates, when it came time they conned the govt to pay or else.

They have us by the balls now.

[samne]

In just 3 months, The conservatives said NO deficit to $40 billion deficit...does anyone remember all this?

[Mister F]

In just 3 months, The conservatives said NO deficit to $40 billion deficit...does anyone remember all this?
People just want stability - the Conservatives can do anything they want right now and people will still support them.

That said, pretty much every economist around the world advocates deficit spending in a recession to stimulate the economy. Deficits when times are good are a bad idea, but now is when they're needed.

[SteelTown]

Ottawa could wipe out decade of debt payments

Updated Wed. Jan. 21 2009 5:50 PM ET
CTV.ca News Staff
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090121/budget_watchdog_090121/20090121?hub=TopStories

Canada's parliamentary budget watchdog is warning that the federal government is at risk of wiping out the last 11 years of debt payments due to the massive deficits forecasted for the next five years.

Parliamentary budget officer Kevin Page issued the economic and fiscal brief in advance of the highly anticipated Jan. 27 budget, in which the Conservatives are expected to table a $40 billion deficit.

Page estimates that Canada will rack up at least $46 billion in debt over the next five years, and possibly as much as $105 billion.

Canada has paid down about $105 billion in federal debt since 1998.

Liberal finance critic Scott Brison said the report highlights the Conservatives' fiscal mismanagement.

"The Conservatives' irresponsible spending and inability to protect Canada's economy in the event of a recession have diminished our ability to respond to the current economic crisis and demonstrates their mismanagement of the economy," he said.

Making matters worse, is that that $46 billion in debt is "status quo" debt - and does not include the massive economic stimulus package that the Tories are expected to table next week. That package is expected to be in the $20 to $30 billion range.

The pre-budget report is only estimating a $13-billion deficit in this year's budget, far below what Prime Minister Stephen Harper has indicated.

Page told CTV's On the Hill Wednesday nearly all forecasts for 2009 predict a retraction in the Canadian economy.

Page's report also says that an economic rebound is not expected until 2010, which leaves open the potential for more economic stimulus packages in the future.

The report says that Canada is headed for a structural surplus of about $6 billion a year because of permanent tax cuts and new spending by the Conservatives.

"Rough estimates indicate that the Government has a structural surplus of about $6 billion -- though more work needs to be undertaken in this area," the report says. "Thus, any permanent fiscal actions (e.g., permanent tax cuts or permanent spending increases) exceeding $6 billion annually would likely result in structural deficits, limiting the Government's ability to manage future cost pressures due to, for example, population ageing."

Page warned that Canada needs to "stay away from structural budgets."

"We need to be mindful of some of the longer-term issues," he told On the Hill. "There's an aging demographic that is going to put a lot of pressure on our finances five, 10 years out."

"We want to maintain as close as possible a structural balance."

[Canadian Mind]

For the sake of envigorating the economy, blowing a decade's worth of surpluses of economic stimulus is better than losing decades' (note plural) worth of supluses due to a shit-fucked economy. This is why we pay down the national debt in good time, so we have the freedom to spend in hard times.

[miketoronto]

Leave it to the Conservatives to ruin the good thing the Liberals had going.

The deficit is not about the economy. It is about the Conservatives making poor choice before this crisis and now.

The faster this gov is brought down the better.

[Canadian Mind]

I want to see how Iggy performs as an opposition leader before throwing support behind him. 6 months to a year should be enough time to give us a general idea of his capabilities and isn't a long time for the conservatives to fuck shit up.

[NetMapel]

Where the hell are they spending all the money ? I don't see much improvement in terms of government services yet the deficits just keep getting bigger and bigger. Sure the tax revenue source probably decreased but I doubt it's to the degree of billions as suggested by the article. Where's all these money going to ???

I don't mind money spent on infrastructures if it can be used in the future to help our economy and increase surplus. I will have to wait and see where all the damn money is going to. Holy shit.

[Canadian Mind]

Where the hell are they spending all the money ? I don't see much improvement in terms of government services yet the deficits just keep getting bigger and bigger. Sure the tax revenue source probably decreased but I doubt it's to the degree of billions as suggested by the article. Where's all these money going to ???

I don't mind money spent on infrastructures if it can be used in the future to help our economy and increase surplus. I will have to wait and see where all the damn money is going to. Holy shit.

Dude, the budget hasn't even been released yet, so how the hell are we going to see benifits from prgrams that while earmarked, have'n' started to recieve their money yet? :slob: It'll be atleast 6 months after the budget is approved that we may start to see benifits when infastructure projects begin to come online.

And most the reason why the budget surpluses shrunk was the conservatives lowering taxes, particularly GST. there wasn't alot of new spending So the average working man might have seen an extra couple hundred bucks in his pocket per year from the GST cuts.

[trueviking]

all they had to do was maintain government spending to the same level that it was in the last year of liberal government, tied to inflation of 2-2.5% per year and they would be able to afford a $30 billion stimulus package without going into debt.

nevermind the lost revenues of $12b from cutting the GST.

the cons governed the last 3 years as if the good times would never end and the economy would experience record growth year after year....they cut revenues to the bone and spent like drunk sailors in their panic to get a majority....now the economy dips for a few months and a decade's worth of debt repayment and fiscal responsibility is flushed down the toilet.

i dont understand why the liberals are not harping on this...the conservatives make it sound as if they are victims of outside forces and nothing could have been done about it....adding $35 billion to government spending annually was wreckless and is directly responsible for the deficit that we will now face....ignatieff should be saying that every day.

[someone123]

Weren't the Liberals desperately wanting a budget deficit and more random spending without having any clear plan for the money? So now post coalition fiasco etc. the Conservatives are forced to cave and the opposition complains about it?

I agree that Ignatieff should be given time to prove himself as a party leader before becoming prime minister. The Liberal party should have chosen him over Stéphane Dion to begin with, or in the worst case replaced Dion after poor election performance.

[trueviking]

there wasn't alot of new spending

2006 federal spending increases: $13.8 billion (7.5%)

2007 federal spending increases: $10.6 billion (6.9%)

2008 federal spending increases: $10 billion+

total: $34 billion+...every year added to federal spending.



http://www.enterstageright.com/archive/articles/0507/0507cdnmilitarybudget.htm

http://www.taxes.ca/blog/archives/2008/08/federal_spendin_1.php

[trueviking]

Weren't the Liberals desperately wanting a budget deficit and more random spending without having any clear plan for the money?

So now post coalition fiasco etc. the Conservatives are forced to cave and the opposition complains about it?


you cant blame the fact that the government has to come up with an economic stimulus package on the opposition...even with a majority they would have to do that....the fact remains that they were so fiscally irresponsible that any action now requires massive debts to be incurred...had they simply maintained spending levels we would be able to afford a large injection of money without borrowing it.


http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/05/07/john-williamson-s-advice-to-deficit-hawks-don-t-worry-about-tax-relief-but-keep-your-eye-on-growing-government-spending.aspx

[someone123]

Wouldn't the heightened spending level already amount to an "injection" of cash, or couldn't the existing spending at least be somehow restructured to invest more in infrastructure or whatever is deemed more important?

It seems kind of weird to me to suggest that the economy requires extra spending regardless of what the government had previously planned (and possibly regardless of what the money is spent on, depending on who you talk to).

I do agree that in general the federal government simply collects too much relative to the services it provides. Value for money is the real measure of performance, not whether or not the federal government is running a surplus, and none of the parties have proven terribly capable of delivering it so far.

[Doug]

^Exactly. Increased spending, which was mostly in the form of transfers to the Provinces, and tax cuts are already delivering a stimulus. There is no need for more and Canada is missing a huge opportunity to move a few rungs up the comeptitive ladder. It would be best to engage in some modest restraint to at least reduce the magnitude of the deficit (ex. hiring and wage freezes, reduction of contractor base, temporary freezes on transfers to other levels of government and individuals, small role backs to public service beenfit plans etc.) and sit on the sidelines while the Americans and Europeans blow their brains out. This recession is necessary. It was caused by excessive growth in credit and the only solution is deleveraging, not a zero net sum transfer of debt to governments. All "stimulus" does is defer a solution to the problem and prolong the pain along the lines Japan early 1990's to now.

[Canadian Mind]

Just heard on the news that the deficit is going to be 34 billion this year, and thirty next, with approx. 19 billion of the 34 billion being additional stimulus.

[SteelTown]

Tories will run $34 billion deficit, says official

Updated Thu. Jan. 22 2009 2:53 PM ET
CTV.ca News Staff
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090122/Ottawa_Deficit_090122/20090122?hub=TopStories

The Conservative government plans to run a budget of $34 billion next year, according to senior government sources.

Combined, the total deficit over the next two-years will equal $64 billion, the official added.

However, the Tories plan to pull their budgets back into the black over the next five.

"That's how long it will take to get out of deficit," said CTV parliamentary correspondent Graham Richardson, as the news broke Thursday afternoon.

"We've come a long way from balanced books."

Richardson noted that the deficit figure has been leaked early so that Prime Minster Stephen Harper and Finance Minister Jim Flaherty can concentrate on selling the budget's economic merits next week.

The Tories plan to table their budget, which will include billions of dollars for kick-starting the economy, in Parliament on Jan. 27.

"They've taken the big number and put it out before the budget," Richardson told CTV News

[harls]

Combined, the total deficit over the next two-years will equal $64 billion, the official added.

However, the Tories plan to pull their budgets back into the black over the next five.

Good luck staying in power for the next 5 years.

[Canadian Mind]

I liek the budget, and judging by recent poll numbers there were enough canadains who supported the consevatives projected budget to keep them in power. So the next move now will be Iggy's

[trueviking]

^Exactly. Increased spending, which was mostly in the form of transfers to the Provinces, and tax cuts are already delivering a stimulus. There is no need for more and Canada is missing a huge opportunity to move a few rungs up the comeptitive ladder. It would be best to engage in some modest restraint to at least reduce the magnitude of the deficit (ex. hiring and wage freezes, reduction of contractor base, temporary freezes on transfers to other levels of government and individuals, small role backs to public service beenfit plans etc.) and sit on the sidelines while the Americans and Europeans blow their brains out. This recession is necessary. It was caused by excessive growth in credit and the only solution is deleveraging, not a zero net sum transfer of debt to governments. All "stimulus" does is defer a solution to the problem and prolong the pain along the lines Japan early 1990's to now.


the increase in spending over the last 3 years was not 'mostly in the form of transfers to the provinces'....i will find the link again, but it was not a big percentage...even so, spending is still spending and it was irresponsible to incease it so much without cutting somewhere else, if that was their priority.

i agree with you on the rest of your post (amazing)....it seems we are getting swept up in the spending hysteria....we should just hang tight, modest spending in critical places....it has become like christmas eve for everyone, waiting in line to sit on santa's lap asking for their present.

[Canadian Mind]

New kit for the military would be nice. Would save lives in Afghanistan and alot of our 30-40 year old vehicles (M113, Leopard 1), or just general pieces of shit (LSVW, G-Wagon, MilCOT), need to be replaced with newer equipment. Afghanistan has also shown alot of weaknesses in our vehicles which are either new or considered adequate, such as the LAV III, G-wagon, MilCOT, and John Deer Gators, and need to be updated or replaced.

For the record, G-wagon is fun as hell to drive, but it isn't a front-line vehicle, better suited as an echelon-support vehicle.

And I think money invested in infastructure projects now while costs are slightly lower would also be a good thing. Anything else is just a waste.