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Kevin O’Leary is still confusing debt with deficits

Either Kevin O’Leary just doesn’t care enough to get it right, or he thinks there’s value in talking about Trudeau’s “trillion-dollar deficit”


 

For at least the third time in less than a month, Conservative leadership candidate Kevin O’Leary has confused debts with deficits.

On January 18, during his first interview with CTV after joining the Conservative leadership race, O’Leary went after Trudeau and the Liberal’s broken promise of balancing the budget by 2019: “[Trudeau’s] told young Canadians that he was going to come in and balance the budget in 2019, and we were only going to go $10 billion in deficit. He’s now saying we’re going $1.5 trillion in deficit.”

Less than a week later, on January 24, he tweeted about Trudeau’s trillion-dollar deficit.

Oleary tweet

That drew the mockery of many, including O’Leary’s former Dragons’ Den co-star—and now one of the most prominent critics of his leadership bid—Arlene Dickinson.

O'leary Dickinson tweet

Then on Sunday, in an interview with the conservative news site The Daily Caller, O’Leary tripled-down on his warning that Canada’s deficit will cross the 13-digit threshold in the coming decades: “When I saw that Trudeau…is planning to run deficits for 38 years and end-up in a one-and-a-half trillion dollar deficit, there’s not a chance in hell I would let anyone do that: are you kidding? I’m going to fire him; he’s the worst manager of an economy I’ve ever seen.”

Granted, a lot of people get confused between debts and deficits, so let’s just state the difference: When the government spends more in a year than it generates in revenue, the result is a budgetary deficit; debt, on the other hand, is the accumulation of those annual deficits, plus interest charges.

And O’Leary sometimes does get the terminology right. “Basically, if you’re a young Canadian now and Trudeau puts this country into $1.5 trillion in debt, you will never have the opportunity that I had as a young Canadian,” he told Maclean’s last month.

Coming from any other political candidate, such regular gaffes would indicate a shaky grasp of finance, let alone an utter carelessness with language. But O’Leary has cast himself as the numbers guy in the Conservative race, the successful businessman with the financial chops needed to get the economy on track. Despite a reputation for grossly embellishing his business success and wealth, it’s inconceivable that he doesn’t know the difference between a deficit and a debt.

Which leaves us with two scenarios: either O’Leary just doesn’t care enough to get it right, or he thinks there’s value in talking about Trudeau’s “trillion-dollar deficits.” As we’ve just witnessed in the U.S., a political lie repeated enough times can find footing.

When O’Leary does get the difference between debts and deficits correct, he isn’t pulling the trillion-dollar debt figure out of thin air. It’s drawn from a background paper prepared by the federal finance department and released in December. The goal of the paper, its authors wrote, was to examine “scenarios that could occur based on current trends and policies and a reasonable set of demographic, economic and fiscal assumptions.” The paper also projected, by the way, that Canada’s economy would quadruple in size to $8.6 trillion over the next 40 years, and that the projected debt of $1.5 trillion would, as a share of GDP, actually fall from more than 30 per cent today to 17 per cent.

The Finance paper was an amusing if ultimately pointless exercise in gazing into a crystal ball and trying to imagine what the economy will look like by the mid-century mark, given the infinite number of variables at play (war, financial crises, technological change, geopolitical earthquakes). What it was not, despite O’Leary’s many assertions, was any sort of long-term fiscal “plan” for the Trudeau government.

Look, Trudeau told Canadians a double whopper during the election campaign, when he promised his government would run deficits of no more than $10 billion a year, and that he had a plan to return Canada to a balanced budget by the time of the next election. Not even a year into his government’s first mandate, that charade was blown up, replaced with the forecast for an accumulated $130 billion in deficits over the next seven years and absolutely nothing in the way of a plan to bring Ottawa’s finances back into balance.

But that’s the point. O’Leary doesn’t need to concoct a fake narrative of trillion-dollar deficits to hold the Trudeau government to account for its shoddy fiscal record. By doing so, all he does is raise questions about his own grasp on finance, or the political depths to which he’ll stoop.


 

Kevin O’Leary is still confusing debt with deficits

  1. S’alright…..all the Cons on here do that too.

    ‘Alternative facts’ you know.

  2. That O’Leary can’t differentiate between a debt a deficit would be funny were he not running for a leadership position as a Conservative no less. One is a flow concept (deficit) and one is a stock concept (debt) and are similar to the difference between income (flow) and wealth (stock).
    But here’s another thing he won’t know (nor most Canadians) what percentage of our national (federal) debt is foreign owned? One kind we owe to ourselfs and the other we owe to foreigners. There is a very real difference between the two and the burden placed on future generations. Take an economics course Kevin.

    • Personally, I think O’Leary is deliberating confusing debt and deficit for shock effect. The man ran actual businesses, so it’s inconceivable to me that it could be accidental. So, he doesn’t need an economics course, he needs a course on ‘truth in advertising’.

  3. You could certainly be right but I doubt it. Many people running a business don’t know the difference. I taught the subject (economics) and I also ran a business. I never made as much money as Kevin did, but I have encountered lots of business people who don’t know the difference between the two. He’s not alone in this regard. If he did know the difference, he would have just switched the two words and he would have had the same impact but we’ll maybe never know?

  4. This guy is making a mockery of our political system just to promote his own brand, if he looses, he raised his profile, if he wins, it will make the rest of the cons look like fools. He(O’leary) is a Carpetbagger, definition, a political candidate who seeks election in an area where they have no local connection. The guy lives in Boston, the place he calls his home. He is kind of Mike Duffy, he has a cottage, in cottage country, Ontario. Like when Duffy had a cottage in PEI, or was that a home,Hmmm.

    • Hmm, yes, now it’s obvious where the False News originates.

  5. The meaning of fiscal responsibility

    http://www.progressive-economics.ca/2011/08/12/mmt-what-it-means-for-canada/

    ….if we have the resources, money is no obstacle to a government that issues its own flexible exchange-rate fiat currency. It is not saying that creating money magically creates goods and services. It is saying that it is nonsense to think affordability for such a government could be about money rather than resources. It shows that assertions questioning the capacity of the FEDERAL government to pay for programs, usually prefaced with the call for ‘‘adult conversations’’, and couched in terms such as fiscal sustainability, solvency, and unfunded liabilities, are red-herrings that will lead to needless reductions and privatizations of public programs in health care, elder care, pensions and so on.

    For example, in the debate over how to address the aging population, it should be obvious that the only way to address this issue is to increase future productive capacity. This involves the application of real resources now to research, infrastructure development, education (including in areas relevant to servicing an aging population), etc. So while more resources will probably be needed in the future to attend to a larger cohort of elderly people, it does not follow that if the government “saves” money now, this will somehow help to address the needs of the aging population in twenty years time, say. Indeed, why on earth would cutting spending now increase the availability of the real resources required in the future: workers, buildings, energy, or metals and plastics for joint replacements?

  6. I am not sure who is the least intelligent. O’leary for not knowing the difference between deficit and debt or me for buying his losing investment funds. At least I can learn from my mistakes.

    • O’Leary’s OUSA fund has done nearly a 14% return since its inception in mid-2015. That’s fantastic! It’s a large CAP blended fund with big name companies like Apple, Microsoft, Pfizer, P&G, etc. It’s done well for me, but truthfully it’s my only O’Leary investment and I really don’t have a lot of my overall portfolio in his investments.

  7. I remember watching Harper give a schooling to the stooges in parliament explaining federal debt vs national debt (public debt). I thought he was going to face palm and lose it when he had to explain debt vs deficit. Maybe they should vet our MPs for basic financial knowledge.

  8. I’m pretty sure Matel could have told you that he doesn’t know sht from shinola

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