‘Increasing the adjustment for risk’

The Harper government delays balancing the books. Again.

by Aaron Wherry

In March, the Harper government announced that it would return the federal books to balance in the 2015-2016 fiscal year. Seventeen days later, the Conservatives changed their minds and promised instead to return to balance in 2014-2015. Seven months to the day after that, the Harper government has decided it can’t fulfill April’s promise and is going back to March’s projection (at the earliest).

Depending on how you count these things, this is either the third or fifth return-to-balance projection the government has offered in the last three years (first 2013-2014, then 2014-2015, then 2015-2016, then back to 2014-2015 and now back to 2015-2016).

Including Mr. Harper’s vow in 2008 that a government led by him would “never” go into deficit, this is the second time in three years that the Conservatives have made a balanced-budget promise during an election campaign only to abandon it after being reelected.




Browse

‘Increasing the adjustment for risk’

  1. Ideology just met up with Reality….Bang….Reality wins.

  2. PJ O’Rourke ~ Eat The Rich:

    Economics is an entire scientific discipline of not knowing what you’re talking about

    • J.K. Galbraith would have had something to say about that.

      • Virginia Postrel ~ Presidential Medal Of Ignorance:

        The U.S. government’s highest civilian award is the Presidential Medal of Freedom. It goes to people the President believes have made “especially meritorious contributions.” Why, then, did President Clinton recently give this prestigious award to John Kenneth Galbraith? The official citation says it’s because Galbraith “has made complex economic theories and processes comprehensible to a wide audience and highlighted the social and ethical impacts of economic policies.”

        In fact, Galbraith has spent his career peddling nonsense. His work, long scoffed at by serious economists of all political stripes, has been utterly discredited by the experience of the past several decades.

        His influential 1967 book, The New Industrial State, declared that Western corporate managers and Soviet planners were doing basically the same thing: maintaining the economic certainty that large-scale investment requires. Market competition is dead, he said, killed by technology and large-scale development …. 

        http://dynamist.com/articles-speeches/forbes/galbraith.html

  3. Did anyone really think the CPC could balance the budget by 2014 anyway?
    I mean, even the hackiest of partisan hacks couldn’t have thought it
    would be balanced by then.

    Projections on the economy, of course, are only projections.  No one can predict exactly how events – domestic and foreign – will play out, and how they will ultimately affect our economy.  Government’s can enact policies all they want, but have to be able to react to changing conditions.

    • I`m no hacky partisan hack, but I can see you are bang on in your second paragraph.

      There may have been a time in a simpler past when economists and governments could make accurate forecasts but in this complex, interdependent, and rapidly changing global world we now live in it is just not wise to place future numbers next to future dates.

      Just give us a competent government that promotes non-government job creation and growth  with wise tax policies, and for crissakes go easy on the stupid spending.

      • Maybe if Harper would slow down on the stupid spending then…

        • Hey, I wish all governments would eliminate stupid spending, but that would mean a few hundred thousand fewer government workers, not to mention all those unemployed lawyers and accountants.

          • I think first up Flaherty should fire those $90,000 a day consultants who were supposed to save us money. 

    • Was anybody expecting Harper to be this bad?

      I mean really, by 2016 we will be a full 200 billion more in debt then when Harper took over consecutive surplus budgets!

      That means that 1/3 of our national debt will have Harper’s mits on it, I’d say he approaching Trudeau levels with his spending!

      • So you were opposed to all that government stimulus spending ? Not many Liberals or NDP`ers were.

        Please tell us where you would reduce government spending now to significantly lower that 200 billion figure.

        • Umm.. lets see, Omnicrime would be the best place to start. Followed by Military procurement, third would be increase tax reveneues. Each point of GST is worth about 5Billion to the public treasury.

          In fact, if harper had just kept the gst at 7 points, you’d have 9 years at almost 10 billion dollars per year is about half of the 200 BIllion.

          But enjoy your 2cent savings on your tim hortons each morning, your kids will thank you for it.

          • OK, so I guess you were in favor of the stimulus spending but you would like to go back to 1990`s Liberal military spending and crime fighting measures and increase taxes at the same time—-good luck with that.

          • As opposed to a giant hole in our public finances?

            If Harper at least ran as a reformer, mini-bush I would have no problem, my issue is that he cried through the 90′s about government spending only to come to power and spend even more. And really, I’m not even that mad about the spending, but why cut the taxes with no hope of ever coming out of the increased spending?

            Its a disaster waiting to happen. Where will you be when the music stops?

          • I like increased military spending personally, but what was the problem with Liberal crime fighting measures again?  It seems to me that crime rates dropped pretty much every single year the Liberals were in power.  It also seems to me that crime rates have CONTINUED to drop since then, despite the fact that the vaunted Tory crime policies (which they talk, and talk, and talk about and yet which they killed themselves on THREE separate occasions when they prorogued Parliament) STILL haven’t been enacted.  

            Now, I’m HIGHLY dubious, but MAYBE the Tories’ increased spending on crime will make our crime rates drop even faster than they’ve already been dropping for well over a decade, which would be nice, but I’m still not sure that makes large increases to crime spending during uncertain economic times, when crime rates are already dropping under the current policies, the wisest use of money ever. It also wouldn’t shock me in the least if the Tory policies end up costing us more money, and yet we simultaneously start seeing crime rates going back up again.

            I half expect the next Liberal campaign four years from now to be a lot of candidates saying things like “Remember when we were in charge and there was a $13 billion surplus, crime rates were falling and not rising, and our front line fighter jets were capable of operating north of the tree line???”

            OK, so I threw a military spending dig in there too, lol.

            The Tories are traditionally great at campaigning on fiscal responsibility, but their most recent history of governing involves slashing taxes (including slashing the WRONG taxes, like cutting the GST instead of deeper income tax reductions, and giving out niche tax breaks to any group who might think of voting for them) while simultaneously increasing spending, and creating deficits.  The Liberals, meanwhile, are traditionally great at campaigning on spending, but their most recent history of governing is one of controlling spending, keeping consumption taxes while cutting income taxes, and creating surpluses.  Now, there are a thousand ways that things are more complicated than that, but regardless, I’m not sure why I should put any faith in the government’s estimates as to how quickly they can get the deficit under control, considering that this is the same team who said we’d never go in to deficit again, and who’s leader said that if we were going to have a recession we’d have already had it, on a day that turned out to be AFTER the recession had already begun.

          • @Lord_Kitcheners_Own:disqus “…said that if we were going to have a recession we’d have already had it, on a day that turned out to be AFTER the recession had already begun.”

            Well.  At least he got that part right.

    • I could be considered a hack by some but I try to stay open-minded.

      However, I do recall that when Paul Martin was Finance Minister and made sure to put aside a contingency fund, that allowed Canada to withstand the contagion from the Latin-American and Asian currency crises back in the 90s.  All while continuing apace to eliminate the deficit and pay down the debt.

      The stability we are currently enjoying vis-à-vis our banking system is due to Paul Martin NOT listening to likes of a Stephen Harper back in the 90s.

      If only the media had pressed Harper on this issue during the election … oh, wait, they weren’t allowed to because they were only given five questions per day and one had to go to a local reporter to ask about the local hockey team and any others were drowned out by Conservative supporters.

      • Do you think there would have been any incentive or encouragement for Paul Martin to balance the books in the 90`s if those 52 Reform Party members had been NDP`er`s ?

        • Yes. Our finances were a mess by the time the PCs got the boot (and yes, it’s true Trudeau started it and Mulroney inherited a big debt at a time of high inflation & high interest rates, but regardless of the cause it was a mess), so it would have had to have been done no matter what. Failure would have been both economically and politically costly.

          In the meantime though, even before the recession that Harper the economist couldn’t recognize,Flaherty had erased the surplus and while he was saying the books would balance, many said he’d engineered a structural deficit. So we were already digging ourselves a hole when the bottom fell out.

          Harper’s cabinet is one of the largest in history (if not the largest). The bureaucracy has ballooned on his watch. Despite all his claims while in opposition, a fiscal conservative he most definitely is NOT.

          • I think you are underestimating the influence that opposition parties can have on the government even majorities.
            I think a large block of NDP`ers and Bloc members could have  pressured the Martin-Chretien government to continue racking up massive debt.
            I also think the opposition influenced the Harper government to go on a spending spree the past few years.
            I don`t blame the opposition for our deficit situation but I do wish there was a more consistent effort to pressure the government to reduce spending.
            If the Liberals could come up with a plan to balance the books sooner then the Conservatives, people would support that. Harper would see that and become more fiscally conservative.

          • BS. The only way to balance the books faster than Harper says they will (which anybody with any sense understands they won’t) is to raise taxes. And even if that was a good idea right now, the moment anybody speaks of it, the Harper crowd and a good chunk of the population which generally doesn’t pay attention anyway screams bloody murder.

            Right now having a deficit is the right play. Once the economy starts recovering, that’s when you start dealing with the deficit by cutting services and raising taxes.

          • You are right in your last paragraph.

            Now, convince your Liberal Party to incorporate that into a financial statement. Why not ?  What have they got to lose ?

      • To compare the “currency crises ” to today’s economic situation is rediculous. The 90′s were the most properous economic times for the country ever! If you can’t build a surplus when times are good then you shouldn’t be in office. The Harper government has done good job of handling tyhe situation. I find it hilarious that people actually think that any of the other parties would have run a smaller deficit then the conservatives.

        Just for the record, as a manufacturing busines owner I have seen first hand the results of various economic downturns. There is no precident in my own lifetime that compares even relatively closey to the current global situation. Put things into perspective people!

        • But Harper had us in deficit before the crisis hit.  How was that prudent? 

  4. As I’ve said in a recent post, I doubt Flaherty and his ideological sidekicks care if they ever balance the books. Their long term intent is to smallify government by reducing its revenue streams in perpetuity if they can, so the only way to balance the books would be to reduce the scope of government. If doing that proves too politically or constitutionally treacherous (or inhibits their pork barrelling), they’ll just stretch the deficits out into the further horizons indefinitely, all the while promising to eliminate them some day.

    As Ontario finance minister, Flaherty yapped about eliminating deficits here, too, (the Harris Cons even made deficits illegal) but they left one behind to the tune of several billions when they were finally kicked out by the electorate.

    Same game, bigger stage.

    • Creating the useful crisis, again.

  5. If there’s one thing to take out of that report it is that you can stop worrying if you should lock in your variable mortgage any time soon.  The government’s plan relies heavily on low interest rates for years and years.  In fact it says that next year they are expecting to sell 10 year government bonds for even less than they did this year.  I know a lot of boomers are looking to find safe places for their money when they downsize their homes, but you would think they’d also want to buy fincial instruments that are outpacing current inflation levels.

  6. Is it a good time to buy stocks Steve?

    • The TSX is up 15.6% since he first said there was some good buying opportunities in early-mid October 2008.

      • I was being half hearted in my comments. Steve came across as being callous when he made the initial comment. Most people aren’t savvy enough or have the wherewithal to invest in the market.

        • With the wherewithal being the far more important bit.

  7. building new jails and putting tens of thousands of people who could be working IN those jails will be sure to get rid of our deficit….

Your email address will not be published. Required fields are marked *