2014 budget preview: Econowatch predictions

Is this really a ‘do nothing’ budget?

by Stephen Gordon, Mike Moffatt, and Kevin Milligan

Aaron Vincent Elkaim/CP

Aaron Vincent Elkaim/CP

Stephen Gordon

My understanding is this is supposed to be a “stay the course”—or, if you prefer—a “do nothing” budget. The government would prefer to wait until next year before announcing the sort of measures on which it would want to campaign in the next election. So an important goal of this budget is to get the government where it wants to be in 2015: in a position to announce a surplus for 2015-16. This surplus can then be used to finance either new spending and/or new tax reductions.

The problem is how to get there from here. The government likes to say that it is “on track” for a surplus in 2015-16, but that track has a fairly sharp turn ahead and it’s not clear how it’s going to avoid a fiscal derailment. Last November’s fiscal update projected a deficit for the current 2013-14 fiscal year of $17.9 billion, and the monthly numbers from the Fiscal Monitor are consistent with that projection. But that deficit is to drop by more than $12 billion next year.

I’m looking forward to figuring out how a stay the course budget is supposed to produce such a significant change in direction. Failing that, I’m looking forward to having Kevin Page explain it to me.

Kevin Milligan

My expectations are for a fairly smooth ride to budget balance in 2015-16. Revenues are growing with GDP; program expenses are staying roughly constant. This generates the budget balance improvement. Of course, if an unforeseen slowdown hits the economy, the path to balance will be more difficult.

While there may be political pressures to achieve a balanced budget, it is important to remember that the macroeconomic consequences of a deficit in this range are not large. Canada’s GDP is currently at $1.9 trillion, so today’s deficit of $17.9 billion is less than one percent of GDP. That level of deficit is sustainable in the long run, especially given the current trends for spending and revenues. If the government does decide to push this deficit to zero, the macroeconomic consequences of such a micro-dose of “austerity” are just not large enough to raise much concern.

As a mid-term budget, I don’t expect many new initiatives, as the boldest election-ready ideas will surely wait until 2015. Budget watchers do need to keep a careful eye on the details, however, since this government does not seem fond of putting bad news in easy-to-find places. One need only recall last year’s tariff increases, the consequences of which only became clear in the weeks following the budget through the work of Mike Moffatt.

On the tax side, the item highest on my wishlist is a commitment to tax simplification. Whether it is the confused and overlapping child benefit system or the ever-growing list of boutique tax credits, the compliance burden of our tax system continues to escalate. Moreover, the more complex the tax system becomes, the greater is the advantage for those who can afford to hire professional tax advisers. Complexity burdens both the efficiency and the fairness of our tax system.

Mike Moffatt

Overall, I am not a fan of the talk that this will be a “do nothing” budget. I don’t think it’s possible to spend more than $200 billion in a year in a do-nothing way. I have no way of knowing what will be in the budget; you don’t hear a great deal of budget gossip in the coffee shops and diners I frequent in London, Ont. I can, however, make an educated guess.

I take Minister Flaherty at his word that the goal is to balance the budget by 2015. With the economy not improving as quickly as the Bank of Canada hoped, that may prove more difficult than the Finance department had anticipated. That being said, I think they will be able to get there with the moves they are likely to make in this budget.

The challenge for the Tories is finding ways to raise revenues or lower expenses. There are challenges to both. On the expense side, a lot of money is tied up in items such as transfers to the provinces, which makes deep and quick cuts difficult. The government is likely to look at ways it can move capital expenditures forward, such as military procurement. Cuts to the size or remuneration of the civil service is another, though with staffing needs and severance packages there is only so far you can push this to save money.

The revenue side is even more difficult; as one Conservative MP told me when I testified to the House Standing Committee on Finance: “We’re the Tories—we don’t raise taxes!” I expect to see measures that raise taxes that do not appear as they are raising taxes. The changes to the GPT tariff program in last year’s budget were a prime example, with the government raising tariffs by roughly $350 million a year under the guise of “trade fairness.” The ongoing issue of GST on re-insurance contracts is another example that is getting very little press, mainly because it is so complicated. There will likely be more of these, including the leaked measures to crack down on charities engaging in political activities.

As always, there will also be some goodies in this budget. Your guess is as good as mine as to what they will be. My wish list would include infrastructure spending for Southwestern Ontario, along with the elimination of tariffs on consumer electronics (including iPods). The former seems far more likely than the latter.




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2014 budget preview: Econowatch predictions

  1. My prediction is that the Conservatives will declare the budget deficit is eliminated even if it isn’t, using one time asset sales, delayed spending and every other accounting trick they can think of to control the message about the state of government finances.

    • I think accounting gimmicks will be used – I bet next year the fed gov’t will use different accounting procedures, and bob’s your uncle, we will have fed surplus and pols can promise goodies to voters during election.

      • Hi Hester. You may be right. I think the political imperative to produce a balanced budget in Feb/Mar 2015 is so strong that we can be sure it will happen. What is unsure is whether it will happen ‘easily’ or ‘artificially’ using the kinds of tricks you mention. But I wouldn’t expect those tricks to emerge until the 2015 budget next year.

        • Thank God we have a Parliamentary Budget Officer..

          • you can thank the tories for that!

          • Had…

          • I was being sarcastic :-)

    • Suspension of the cbc for one year…just kidding. Their base would revolt if they tried to reinstate the public subsidy again.

      • No need to suspend CBC. Just stop the crown corp welfare and sell it.

        Let the new owners fix it as management is not a strong point of government. Essentially cut off the waste dependency that exists with CBC and others. Post office is another wealth sucker waiting to strike, so is Air Canada who announced $6.5 BILLION in new planes with no means to pay a dime of it as they lose money and have a junk status credit rating.

        Its all about tax as slavery, so Ottawa politicians can use our money as power to feed government corruptions and waste.

        • there preparing it for the next election. after the olympics and the fifa world cup CBC has no exciting sport programming till the next olympics. say bye bye next election

        • Air Canada is a private corporation, not a government or crown enterprise, hence beyond the purview of this (or any) government budget. So, in buying airplanes, they must be creating, in your quaint worldview, other people’s jobs.

  2. The only solution to the deficit….and the rising debt….is to outgrow it.

    No more cuts, and no tax raises….outgrow the problem with a larger GDP

    • That’s what Paul Martin said in 1993 when he first became finance minister. By 1995, he had changed his tune completely. It was then that he compared trying to outgrow the deficit with trying to run up a down escalator, and declared that massive cuts were needed. And massive cuts are what we got in the 1995- 97 budgets – and they worked. Economic growth actually slowed from 1994 to 1996, but the budget was balanced and them some, years ahead of schedule. All because they issued hard spending reduction targets and met them “come hell or high water”.

      • Well.. that and because we were entering the dot-com era and the bubble that create as well.

        • The boom in the US economy, which started several years before our own, along with the 65 cent dollar, definitely helped. It was fortuitous timing all round.

      • Anything that slows economic growth is stupid.

        Martin went berserk because the US compared us to a Third World Country…..however we’re right back in that mess thanx to Harper.

        • Martin also had the IMF breathing down his neck. The government undertook one of their monthly routine debt auctions but to the surprise of everyone no bonds were sold. This panicked both the Dept of Finance and the IMF who thought Canada was weeks away from a default. Martin was essentially forced into serious budget cutting.

          • You beat me to it. Exactly what I said below.

          • You have absolutely no idea of what you’re talking about. Canada’s bond rating dropped from AAA to AA. That’s a million light years away from a default. People who gave this the thumbs up obviously know little to nothing about economics as well…

          • No, you have no idea. He is absolutely correct. There was a t-bill auction that nearly failed in late 94. That scared the crap out of everyone in Finance, and had that auction failed (it was close) Canada could have been in default almost instantly. We wouldn’t have been able to refinance the paper coming due. David Dodge has said as much several times, it was scary enough that the government changed course.

            You’re making the mistake of assuming the 1990s were like today. It wasn’t like today where central banks just step in and buy government debt whenever they feel like it. That was taboo in the 1990s. It wasn’t called quantitative easing back then – it was called monetizing the debt – which was a very, very bad word among central bankers. If government paper didn’t sell, you had no recourse. Central banks would not step in to buy the paper. You were done. I don’t expect you to listen to this. You and Emily will just mindlessly repeat yourselves rather than learn anything, but that’s your problem.

          • Thanks for the right-wing crank conspiracy theory. It would be funny if it wasn’t so disgusting. But the fact is a government of a developed country does not default on its debt with a AA bond rating and less than 100% gross debt (40% net debt.) So please just STFU.

          • David Dodge does not peddle right wing crank conspiracies. Knock it off. If you want to be a child, go post on some kids website. What I’m talking about is part of the historical record.

          • Part of your addled brain…

          • So Martin and Chretien turned their budgeting around 180 degrees just because Preston Manning was pestering them to? Had nothing to do with a failed bond auction? You missed one word in my comment: “… thought …”

          • Well, if you are Ron Waller and/or Emily, you just deny that the infamous T-bill auction ever took place. That way your fantasy narrative remains intact, and you can continue to believe whatever you want.

        • He went “berserk” because Canada nearly had a failed T-bill auction in late 1994. That would have put us in immediate default. Martin had an emergency meeting with bond rating agencies and the large bond holders in NYC in Jaunary 1995 to assure them such a close call would not happen again. The 1995 Budget was the result. Most of the cuts had already been identified in Marcel Masse’s program review the year before, but it was not a certainty that they would be implemented – until the near-disasterous T-bill auction forced their hand.

          • Well, what you said was a platitude. A generalization with little meaning or substance, and not at all backed by the historical record. Sig and I filled you in on some basic history. Most people have long forgotten the events of 94-95, so there’s nothing to be embarrassed about if you don’t know them. Maybe you’re too young to remember them. That’s OK. There’s no need to get defensive. But it’s always a good idea to inform yourself before commenting, and that way these little gaffs could be avoided. Cheers.

          • Actually I told you what the ‘historical record’ was.

            ‘Martin went berserk because the US compared us to a Third World Country.’

            Put your glasses on. And stop trying to patronize me.

          • Well, that’s part of the historical record. There was much going on behind the scenes, some of which sig and I discussed. Some of that was more significant that whatever the US called us. Like I said, no one can know everything. There is no need for defensiveness. Think of it as an opportunity to learn. Cheers.

          • You’re being defensive again, and for no good reason. If it’s your field then you should know all about the near failure of the t-bill auction and the effects that had on the decisions that were made by Finance over the next few months. But you did not mention that at all. So sig and I added it. You then became very resentful and defensive like we crashed your party or something. It was a strange reaction I wasn’t expecting. If you’re embarrassed, there is no need for it. You can’t always cover all the angles, even if it is your field. Sometimes people will add things, useful things, to the comments you make. When you respond with hostility it just looks childish.

          • Perhaps if you read the urls?

            And stopped being patronizing…………?

          • I read the links. And they support what I said. 1994 was a tough year for Canadian bonds and it culminated in the near failure of a t- bill auction late in the year. Everything in your links is consistent with what I said. This conversation is becoming very bizarre. I feel you are arguing with me but at the same time throwing links at me that totally reinforce the points I made. Now I don’t know what you’re trying to prove.

          • I’m not arguing with you. I’m stating what actually happened….and unlike you I have sources.

            You and Dave should get together.

          • And I too stated what happened and so did sig. Are you saying there was no failed t-bill auction? That it never happened? What the hell is wrong with you? That was a major event that caused a very abrupt change of direction in fiscal policy. It can’t possibly be “your field” if you don’t even know it happened. It just can’t be. It’s like claiming to be an expert on the Cold War and not knowing what the Soviet Union was. It was a watershed moment in Canadian fiscal policy and set the tone for the rest of the decade. Yet you don’t know it happened? And you want us to listen to you? This conversation has been completely off the wall WEIRD. I’m afraid you have some issues with needing to appear that you know everything, and you lash out to cover up your shame when you get caught out. Your bizarre behaviour has cured me of any further desire to converse with you. goodnight.

          • A ‘major event’ with no source. MmmmHmmm

            I hope it’s a promise not to talk to me anymore. I’d certainly appreciate it.

          • http://business.financialpost.com/2011/11/21/lessons-from-canadas-basket-case-moment/

            First paragraph.

            Finance officials bit their nails and nervously watched the clock. There were 30 minutes left in a bond auction aimed at funding the deficit and there was not a single bid.

            I heard David Dodge talk about it in a speech once years afterwards. He said that auction scared the bejesus out of everyone, and it was the moment when even the last holdouts at Finance Canada realized that the gig was up, and that massive cuts were the only way forward.

            Now you won’t be embarrassed anymore, because you know about it. You’re welcome and goodnight.

          • LOL some guys supposedly bit their nails and from that you’ve worked up a whole default scenario?

            Well you fit in with the Con crowd, that’s for sure. Twilight Zone, the lot of you.

          • There’s plenty of documentation on this. Elyssa is fully correct. Martin got religion, finally. But only because of that t-bill terror. It also ended the cavalier way Chretien swanned around economics. Anyone unfamiliar with what transpired, such as EmilyOne, the poster provocateur, can even get a good sense by reading the week-to-week Maclean’s accounts of the day. The Canadian economy didn’t start turning around until Mike Harris took office and brought Ontario back to life, this despite the huge transfer cuts. Ontario needs that again, badly.

          • Harris rode the US export boom and cheap dollar, but his tax cuts and budgetary reforms did help investor confidence.

          • Lot’s of things happened back then, but Martin [CEO of a major corporation] didn’t decide to move because of one show sale.

            Ontario doesn’t need any more Mike Harris’s thanx, anymore than we need another Bob Rae.

          • So a country on the precipice of default becomes just “one slow sale” in your empty cranium? Nature abhors a vacuum hon. You should really try to put something in there. But even if you do, I’ll take David Dodge’s word over yours.

          • I too have heard David Dodge speak of this. You and Sig are absolutely correct. That was the moment when everything changed. There was a lot of disagreement in Finance before that happened. After that, the senior Finance bureaucrats formed a united front to urge Martin to act.

            There was a lot of frustration and bickering before then. Dodge was an early proponent of massive cuts. Apparently during one meeting with Martin shortly before the infamous auction, Dodge slammed his fist down on the table and said “That’s bullshit Paul!” To Martin’s credit, he never held a grudge, and ultimately appointed Dodge head of the BoC. He did a fine job there too.

            Can you imagine someone standing up to Harper like that? That poor bastard would be on the no-fly list, the WANTED for deportation list, and the sex offenders list before the day was out. :)

        • We are approaching third world, we just haven’t realized it yet.

          So is US but at a slower pace. No economy can run on electronic counterfeit no value fiat fraud money, ponzi debt forever. At some print the currencies will be valueless.

          Did you know BoC and US Fed create dollars faster than we consume sheets of toilet paper? That money dilution is in time going to make money a lower value than toilet paper…..as plastic and coin doesn’t wipe well.

          • We are not, and never have been, remotely close to Third World status.

            Nor are we ‘printing money like toilet paper’. Be serious for once.

            Roman coins were not tin either. Rome went through imperial overstretch and fell in 476 CE.

          • Speaking of nail-biting, mind your quicks would you? You’re unusually nervous and evasive tonight. You sure don’t like it when someone comes along and schools you.

          • The U.S. is going faster. That hurts us, too. The U.S. has tripled the money supply in 5 years to no benefit. Clinton was the set-up man for the mess but Obama has been purely incompetent, all rhetoric.

      • This “expansionary austerity” position is pure nonsense and has been thoroughly debunked in recent times.

        Fact is there were many factors involved; primarily, BoC monetary policy. In 1995, interest rates were jacked up to 8% to kill a bump in inflation. That slowed 1994′s recovery growth of 4.8% (from the 1991 recession, also caused by monetary policy) to 1.6% in 1996.

        After that there was a solid recovery from 1997 to 2000 (avg 4.5% GDP growth.) This was caused by the BoC lowering interest rates from 8% to 3% by 1997. The US Fed’s rate was 5.5%. This caused the dollar to drop from a steady 73 cents in 1997 to 63 cents by 2003.

        This in turn created 300,000 manufacturing jobs (killed with the meteoric rise of the loonie after 2003) and turned a 4% GDP current account deficit in the early 1990s to a 3% surplus by 2000 (now back to a 3% deficit.)

        In short, the economic boom was founded on loose monetary policy and US exports. Cuts in spending actually have a dampening effect on GDP growth.

        Today, we have cuts on top of cuts. Economic growth is anemic both here and the US. I doubt even the Randroid economists here would claim Harper’s spending cuts will produce an economic boom with the high GDP growth we had in the late 1990s.

        • No country has ever devalued its way to prosperity, yet you continue to paint this fantasy narrative of the 1990s as though that’s exactly what happened. Yes, the dollar went down, yes manufacturing picked up, it was called an economic boom. It was driven by an unprecedented tech boom in the US and an unprecedented stock market boom that enriched a generation of Americans with capital gains income. The C$ wasn’t “low” so much as the USD was up through the stratosphere. Then the tech boom ended and the USD fell, and kept falling. The BoC has zero control over the value of the USD. You’ve posted the same drivel a million times and you’re still clueless. Go form a separate forum with Emily somewhere. Neither one of you is willing to learn anything.

          • The “unprecedented boom” that collapsed in the dot-com bust? Clearly you don’t know what you’re talking about. Illusory wealth that collapses like a house of cards is not something to be talked up. (How about those unprecedented MBSs of the 2000s!)

            China certainly devalued its way to prosperity (at least the prosperity of the oligarchs.) If you had any brains, you would know that no country ever *overvalued* its way to prosperity. (According the the OECD the proper value of the dollar is 81 cents US based on PPP. Just because they are both named “dollar” doesn’t mean they are supposed to be the same value!)

            Obviously, the BoC’s aggressive monetary policy had a significant effect on the dollar. Having a lower interest rate than the Fed put a downward pressure on it, just like having a higher interest rate today puts an upward pressure on it. Of course, the overvalued CAD and AUD are founded on resource-based economies having relatively strong growth during a resource boom due to the fact most countries are still suffering from the economic quagmire caused by the 2008 financial meltdown (caused by flaky right-wing banking deregulation.)

            In any case, none of your blather addresses any of the facts I made. Why not stop pretending you know the slightest thing about economics. You really are embarrassing yourself…

          • Much of it was illusory wealth, created by cheap credit. I’ll give you credit for realizing that much. You’re not usually that perceptive. Greenspan had interest rates way too low for more than a decade. In other words, he was conducting precisely the kind of cheap money policy you so favour. The rest of your post is gibberish, not worthy of aknowledgement. Come back when you’re a little better-informed. Reading Wikipedia doesn’t make you an expert on anything.

          • Too low for over a decade? Again you don’t know what you’re talking about. Greenspan lowered rates to cushion the blow from the dot-com bust in 2001. (Standard monetary theory says the money supply should be loosened after a market crash to prevent a severe contraction of the economy, like what happened during the Great Depression.) He began raising them back up in 2004 (where they reached 5.5% in 2006.) Then the economy collapsed starting in 2008 (where interest rates were lowered to 0.25% where they remain 5 years later.) Obviously 2 1/2 years is not “over a decade.”

            Greenspan was a free-market flake and personal disciple of Ayn Rand. He went down in history as a colossal failure because of his childish belief in the infallibility of the free-market tooth fairy. (Kind of like the Geek Squad at Maclean’s.) Central bankers are supposed to diffuse inflationary asset bubbles before they form and burst. Greenspan essentially believed there was no such thing as an asset bubble (because the free-market tooth fairy can do no wrong) which is why the 2008 housing and financial meltdown happened under his watch.

            I imagine you’re one of the free-market flakes who believes the US is heading for hyperinflation because of zero-bound interest rates and QE. Fact is, Japan has been stuck in a near-identical quagmire for about 20 years. Of course, that won’t stop the right-wing cranks from sticking to their zombie economics (hypotheses that should’ve been killed by the evidence but keep on shambling along in any case…)

    • Or depress the economy with lower value money. Its a fantasy that you can inflate and spend your way out of debt.

      EVERY nation/fiat currency that has tried it to date has failed. And it has been tried. Just that everyone who has has suffered for decades afterwards. Unemployment, high taxes, less hope, more social unrest…

      Roman Empire fell as its worthless tin money lost value. We are not going to escape reality, but the illusion is alive for now. But fate of reality always wins in the end.

    • Yes, good point. In the post-war era, we grew our way out of higher debt than we have now with big spending on social programs and infrastructure spending. In Canada we paid down debt from 100% GDP in 1945 to 17% by 1973. It’s now back up to 87%.

      All the conservative ignoramuses believe household economics and macroeconomics are one in the same. Of course a household doesn’t have an economy. Cutting government spending in a slump is self-defeating. It kills jobs and tax revenues in a vicious cycle. That is a proven fact.

      All the “expansionary austerity” nonsense has been thoroughly debunked. The UK’s post-2008 austerity measures, for instance, caused the country to have a deeper slump now than they had during the Great Depression. The same thing happened in all countries that tried austerity.

      • I call it Consplainin’…..

        Men telling women what it’s like to be a woman

        Whites telling Natives what it’s like to be Natives

        And…….farmers telling economists how the economy works

        • I don’t know what Elyssa does for a living but she sure humiliated you. Caught you with your pants down, blabbering about something you had no clue about. 24 hours later you’re still here doing damage control, trying to cover up the fact that you had no knowledge of the subject. Keep digging that hole – it’s good to keep busy. :)

          Why don’t the two of you just open your trailer windows and shout out to each other. It’ll save you some typing.

          • LOL one of the farmers is little upset is he?

            Go poke a cow or summat

          • Sunnyvale Trailer Park Economics Association annual meeting

            Host: Emilyone (association president)

            Guest speaker: Ron Waller.

            Mr. Waller’s presentation will be called “The Myth of the December 1994 Canadian T-Bill market – a Truther sets the record straight.”

            Smoking permitted.
            Chewing tobacco in designated spitting areas only.
            BYOA (bring your own ashtray).

          • I’m just going for the free grits, biscuits & gravy breakfast.

          • LOL I’m just sorry for Rick in all this…..he’s gonna have to keep slogging away, cuz as the Spring Temp….you are a total failure.

          • It still smarts, I know. But think of it this way Em, Alyssa taught you something. Against all odds, and against nearly insurmountable resistance, you actually learned something. You had no clue what happened in the debt markets in 1994. It was a total blank for you. That much was obvious from your reaction when she introduced the subject. First you tried to change the subject and distract with links you hadn’t even read yourself (since they proved her point), then you outright denied it, and enlisted your nephew Ron Waller to help. But even though you will never admit it, you proved to us that you’re never too old to learn something new. I found it inspiring. :)

            And there’s that LOL again. Elyssa? Remember what I said about her LOLs? That’s when it’s time to leave her hanging there. Nice job.

          • LOL are you still whining?

            Sorry, it won’t help you re-elect Harp.

          • If she’s dumb enough to think Google search results are incontrovertible evidence, don’t expect learning.
            Blather, rinse, repeat.

          • she’s on another thread right now claiming that because she “thinks globally” she can predict the future where economists can’t. I’m not making it up. go look at Tasmsin’s latest blog piece.

          • She should write for the Onion, except it is good.

          • What exactly are the facts of the December 1994 T-Bill market? Certainly not what you ignorant cranks have been taught to believe. (Where’d you get your information? The Manning Center for Democracy?)

            Again, as I have stated earlier, the idea that Canada was on the verge of default with a AA bond rating and less than 100% gross debt/GDP (40% net debt) is ridiculous to anyone who knows anything. We were in better fiscal shape back then than the US is now — and they are only at risk of default because flaky right-wing crackpots such as you and the other idiots here (unless it’s all one person with multiple accounts…)

          • I got my information from David Dodge and from Jean Chretien, who have both mentioned the near-failure of the t-bill auction in late 1994 as their cue to action. They were terrified Canada couldn’t raise money anymore if they didn’t act. It happened to New Zealand in 1984, so it’s not like there was no precedent. I don’t know why I respond to you, since you can’t be civil, and resort to constant name-calling.

  3. No, no, no… a balanced budget and we all get a bounteous
    garden and 70 virgins … right ?

      • Under promise, over-deliver.

  4. If we really wanted more jobs and a competitive job market, we would have an option for less governemtn and less taxes on our ballot.

    Lets stop denying the obvious facts, jobs are created by the affordable exchange of goods and services.

    Leave us with more of our own money, remove hidden taxes on food, clothing to make life more affordable, and we will have the money to spend on each others jobs.

    But with non-value added government talking so much, we don’t have the value money left over to drive jobs. Sort of why all job programs really fail in the end, you tax people more to buy a job, then we have less to spend on someone else’s job.

    To government, the only solution they know is more government and more taxes. When in fact the reason we have had bad economic times since 2006/7/8 is that government isn’t the solution, its the problem.

    • No, the reason we have problems is the massive debt created in the 1970s by Trudeau. By 1984 we were almost toast as a result. His Hail Mary was the MacDonald Royal Commission. Free Trade came from that. GST came from that. Selling Air Canada and CN Rail brought in money and saved those two operations. Between 2004 and 2011 we had minority government which is always more expensive (as it was in the 1960s). Since 2011 we’ve government getting things done and fixing what needs it. The trade deal with Europe will position us as the go-to country for anyone wishing to sell to both the US and Europe without trade barriers (or many of them). In the mean time, the discipline is in not spending money we don’t need to spend. Incentives to not spend budgets are already paying dividends.

  5. I get a kick out of these pundits. Are they brainwashed with their own BS or crooked deception?

    Here is the real debt scenario for Canada. $600+ billion for feds, they don’t count CPP shortfalls of $300 billion like the USA does. Add in CHMC uncollectables and the like, add in governemtn pension shortfalls, add in crown corp debt and debts like Air Canada, Ottawa alone is over $1.2 trillion in debt. Add in Ontario, Quebec and provinces including shortfalls, hidden debts, we are well over 2 trillion in total governemtn debt, cities extra.

    Yep, two trillion in debts, delinquent paper and shortfalls. And its growing at a huge rate, and why governemtn has to print (electronically counterfeit) money to buy its own debts, as no one savvy and legitimate is buying this debt for return rates below real inflation+taxes. If you or I did this, it would be like us photocopying money to lend to ourselves….fraud….

    The reason we have poor employment environment is just like Detroit, we are a debt-tax inflated economy of debt fraud and uncompetitive as we have too much governemtn and debt to support. Leaves less money in peoples pockets, less value money in our pockets so we spend less on each others jobs.

    Isn’t that we don’t get paid enough, we are paid int he top percentiles in this world, its that that the spending value after hidden and realized taxes is so high we are a tax inflated economy with poor purchasing power….so less affordable exchange of goods and services and less jobs.

    Hey, tax me more with taxes and devalued money, I spend less on someones job. No evading that reality.

    • Did you invent this crackpot “other people’s jobs” economic theory full blown in the echoing corridors of your own cranium or is there is single credible authority on whose behalf you are relentlessly proselytizing?

    • Air Canada is privately owned, not government owned.

      But your thrust is right. Balance budgets, pay down debt and get control of the behemoth. Selling more government assets would make a huge dent, if enough could be sold: land, buildings, technology, dud subs, etc. But unlikely to make huge dent and we still need to build bridges, fix sewers and tunnel subways to keep our economy healthy.

      The biggest impact would be to dump the Liberals from Queen’s Park, immediately retro-tax all of the FIT contracts (keep the micro-FITs, more or less) and force down the price of electricity which is squeezing the jobs out of Ontario and killing the country’s economy despite many bright spots in the other provinces and territories.

  6. 1967 a Big mac Meal Deal was 89 cents. Today it is $8.90….our kids will see $89.00 in the future.

    Devalued money for more taxes is the current agenda. Its obvious our governemtns and leaders cannot control waste, corruption, inflated contracts and pander buddy deals….with our money and grand kids debts.

    We have become blinded by the sins and greed of debt to the reality that we have lost our morals and ethics as a nation. We even tax disabled, retirees, vets and poverty level workers….in realized and in hidden taxes….like tax-slaves of state we have become.

    • You do realize that in 1967 a barrel of oil was about $3, right? OPEC drove inflation for the next 15 years. Now $100 for a barrel seems acceptable. Trudeau fumbled the entire 1970s, economically, pushing the debt to huge levels. We’re still paying for his incompetence.

      The easiest way to affect the tax burden is to cut spending. We boosted military for Afghanistan, we can hold off on new trucks and tanks for awhile. Reduce the number of bases. Reduce recruiting. We can cut a $ billion a year just like that. Cutting CBC also makes sense. They’re very expensive for the little value-added. Keep one radio network and sell the TV operation; save on locations, equipment and personnel. Should be worth savings of $500 million the first year. Rogers is renting a big CBC studio in Toronto build their hockey central command. That’s income. More of that is possible, but sell off assets not needed. There are plenty of TV networks now.

      You’re right, cut taxes wherever possible. But the “disabled, retirees, vets and poverty level workers” pay very little if any in taxes any more. We have raised the threshold for paying tax so those below it don’t pay. Those with multiple pensions may pay, but if you earn it above a certain level, it’s taxed.

      Accelerate the reduction of civil servants. We’re definitely over-staffed and with computerization many are redundant. Government shouldn’t be asked to do everything. Once that gets through skulls, the costs of government will drop, existing debt will decline as a burden and tax rates can go even lower, freeing the market economy to reward efficient producers.

      • “Trudeau fumbled the entire 1970s, economically, pushing the debt to huge levels.”

        Ignorant cranks coming out of the woodwork. Trudeau left power with the same debt/GDP as he came in with. Of course, central banks raised interest rates to 22% in the early 1980s, which caused debt-servicing costs to skyrocket. (Not Trudeau’s doing…)

        As for real GDP growth, it was higher under Trudeau than any prime minister who came after him. It has been the lowest under Harper (who has done nothing but squander the advantages he inherited from others — and pathetically attempt to take credit for them…)

  7. My prediction is that the budget will contain very little. But it won’t stop the NDP and Liberals from demanding more spending from the government lest it bring on the end of the world.

    Meanwhile, journalists will find little things to nit-pick and play up divisions between the government and opposition.

    And life will go on.

    • Yes, that is about right. There will be the usual 4 or 5 microphones right outside of the HoC for opposition Leaders to tell Canadians what they think of the budget. Let’s follow Mr Mulcair as he goes from #1 to # 5 microphone:

      1. This government is incompetent, they are still running a deficit.

      2. This government does not care about the middle class, the cuts to spending are terrible.

      3. The Senate….growly face, finger pointing at the sky

      4. Keystone is the worse thing ever done by the Tories, it will kill every human being on the planet within 25 seconds of operation. Answering a journalist ”Am I for or against? That’s beside the point”.

      5. This government has no new idea. An NDP government would lower taxes, raise spending across the board and kiss your children every morning.

  8. “Budget watchers do need to keep a careful eye on the details, however, since this government does not seem fond of putting bad news in easy-to-find places.”

    Plus one for the best use of understatement I’ve seen in a while :)

  9. Can someone fill me in here? Is EmilyOne always like this? Because that is the weirdest conversation I’ve had in all the history of the internet.

    • LOL yes, I’m always like this….especially when people like you jump the shark.

      • I wasn’t talking to you werido. I was asking the others. I can’t be the only one whose noticed your – er – peculiar preoccupation with being a know-it-all.

        • Oh heavens no! There’s a whole Con gossip group dedicated to just that down in the dungeon…..I’m sure they’ve been waiting for you.

          So I’ll add your name to the list. Ciao.

        • Your first ‘caio’. Congrats. Come back any time. Your opinions are well thought out and Emily already hates you, which means you’re OK in my books.

        • EmilyOne never lets facts get in the way of her (or his) diatribes, or the rationalizations after the fact.

    • Yes, she is always like this. Except when she is worse. And that is often.

      I’ll tell you what I tell all the newcomers: The only correct response to Emily is to insult her. You might think that’s harsh now, but you’ll see. You totally humiliated her tonight by introducing something she had never heard of. You can see how frenetically she tried to discredit you and distract from your point by simply refusing to address it. She threw out some nonsensical links, accused you of not being able to read.

      You did a nice job until you got into the back-and-forth. Next time, when you know you’ve got her (and you’ll know as soon as she lashes out and posts her first link that – by the way – almost invariably contradicts what she says and supports the other person’s argument), just let her hang there for awhile. After that, your only posts should be one line insults and taunts.

      • Well I have no intention of resorting to insulting her every time I respond to her. That sounds childish and nasty. If anything, I’ll ignore her from this point on. She’s clearly not interested in what anyone’s opinion but her own, and if there’s one thing I can’t stand it’s an ignoramus who tries to pass herself off as the opposite. There’s enough trailer trash out there in the real world. I’m not talking to trailer trash online.

        • Marry me.

    • Dissent is bigotry.

      • And disagreement is misogyny. Welcome to Macleans Alyssa. :)

        • Con cranks have to recruit people to back them up in here? How pathetic. (Well not as pathetic as white-trash reverse racism.)

          • White-trash reverse racism? Look, I know I’m sometimes hostile towards Emily, but that certainly is not a racist response to her white trash roots. I don’t even call it white trash out of respect for her heritage. I always say trailer trash. See how respectful I am? Not a trace of racism against trailer trash. Not me.

          • I make one mention of Black Metal, and you play the race card.
            That’s so hateful.

    • The weirdest conversation I had with Emily was about the fact that tradesmen were not needed anymore because of advances in automation and computer technology .Sure the next time her toilet is plugged up with sh-t she can call “Cyper Flush” or “Robo-Plumper”.

      • Yes I remember that. She also said that there are lots of jobs out there for sociologists, psychologists, etc.

  10. Job losses higher taxes more lies and how is going to cost money nicely I’ll tell you who to vote for out of all of them none if they have their way listen to the song by Tracy Chapman don’t you know the talking about a revolution and minimum wage slavery any for private banks thanks Jim go get yourself a new pair shoes

  11. Silly question about current economic theory but how do you get infinite growth in a finite system? Is this the same as ideology vs reality?

    • Since many improvements to living standards can be had with very little – if any – resource input, (i.e. technology and knowledge gains) it is possible, at least in theory, that the system is close to infinite. Close enough that we may never have to find out precisely where the limit is.

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