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The incredible shrinking deficit

What will it take to get back to surplus?


 

Stephen Gordon and Kevin Page assess yesterday’s economic update. Somewhat relatedly, in a blog post last week, Scott Clark and Peter DeVries questioned the government’s projections.

When the federal budget is to return to balance is an interesting question, but so is how the federal budget will return to balance. As of July, the Parliamentary Budget Office still did not have the information it needed to complete an analysis of the spending reductions contained in the 2012 budget. In June, the PBO summarized the information it had obtained as follows.

Fourteen organizations submitted information by the May 10, 2013 deadline. Forty-six submitted information after the deadline, but before the preparation of this report. Thus, this analysis includes 60 of 82 federal organizations included in Budget 2012, Annex I.8

As presented in Figure 3-1, all provided a brief description of each initiative and corresponding staffing reductions. Some provided details regarding cash inflows and outflows. Few provided information regarding service level impacts, with several organizations indicating that these data are deemed to fall outside of the PBO’s legislative mandate

Only a partial, high-level analysis can be performed with respect to short-term implementation risk because details regarding cash outflows have not been fully provided. Similarly, no empirical analysis on long-term sustainability can be performed, given that very few data were provided regarding changes to service levels.

The matter of the PBO and what information it is entitled to have remains a matter for Parliament, and perhaps ultimately the courts, to settle. The ability of Parliament to fully scrutinize government spending is, on its own, an interesting question for the institution.

In addition to the savings announced in the 2012 budget, there were spending reductions announced in the 2011 budget and now the Harper government wants to freeze departmental operating budgets for two years. When all of that is done, will the federal government be providing the sorts of services it needs to provide? Will it be providing those services as well as it needs to provide them? Last year, the government cut 15,000 public service jobs. Last month, the PBO reported that since March 2010, over 20,000 positions had been eliminated. What will that mean for our collective governance?

Every so often some bit of news is made about something that has been cut or reduced. There is currently some consternation over the closing of nine Veterans Affairs offices. The environment commissioner recently raised concerns about cuts at Parks Canada.

There are perhaps two discussions to be had, or at least two sides of the same discussion. What to do with a surplus? And what was the impact of getting to that surplus? (And hanging over that is a discussion about how much Parliament should be able to know about how the government is spending public funds.)


 

The incredible shrinking deficit

  1. Hey just curious…any provincial police forces visiting the offices of any provincial premiers today? I guess not, because I remember when that used to be news.

    • This isn’t a news site…this is a blog.

      • This isn’t a news site

        Victory at last.

        • You weren’t aware of that?

          Says ‘Blogs’ right at the top of the site.

          Use stronger coffee John.

    • If you want news on provincial politics, here’s a pro-tip: Don’t visit a blog about the federal House of Commons.

      I don’t think it’s shocking that a blog dedicated to “the goings-on in and around Parliament Hill” doesn’t count TORONTO as being “around Parliament Hill”.

      • Just what a media-lickspittle-enabling latte-sipping elitist would say.

        BENGHAZI!

      • Fair enough! Does foot in the mouth Jim Karygiannis qualify as a “going-on”?

        • I’m not arguing that he doesn’t ever write about the provinces, I’m arguing that it ‘s a bit disingenuous to complain when he doesn’t.

          I’d also argue that writing about the sitting habits of SEVERAL provincial legislatures, and their respective Premiers’ use of prorogation, during a time when there is controversy surrounding the Prime Minister’s use of prorogation at the federal level, is a different kettle of fish (and much more connected to a discussion of federal politics and the goings on in Ottawa) then would be discussion of potential corruption or malfeasance in a single provincial government, on a file not directly related to interprovincial relations or federal-provincial interactions.

          It seems to me that comparing the legislative maneuvers of Premiers to that of the Prime Minister (arguably to the PM’s advantage) or the regulatory musings of multiple provincial governments on a file being debated at the federal level as well makes perfect sense on a blog devoted to federal politics. Talking about malfeasance in one particular provincial government seems different to me. Do you have examples of Wherry writing in Beyond the Commons about a single provincial government in relation to an issue or file that doesn’t really touch upon federal politics or federal debates?

          • It seems to me you’re full of it. All that bafflegab is a series of silly excuses.
            Yes, I do have examples of Wherry writing about all kinds of provincial matters. But since you’re too damn lazy and dishonest to find them yourself, why the heck would I bother listing them for you, so that you can then invent some other silly excuse? I’ve wasted enough time on you already.

        • That’s an article about the provinces stepping in to a void that the feds have left open. Multiple provinces enacting or thinking of enacting legislation that some people think should be enacted at the federal level, and in the context of what pundits argue that the federal NDP should argue for at the federal level is pretty clearly, to my view, an article about federal-provincial relations and the jurisdictional complexities, and interprovincial differences on a file that is arguably of national concern. That’s hardly the same thing as talking about potential corruption within a single provincial government.

  2. Standard Liberal Partisan Hack Response:
    1. This is all a lie. There will still be a deficit in 2015, you just watch.
    2. If there’s no deficit in 2015, then there will still be something called the “structural deficit”. So, really, there will still be a deficit.
    3. In any event, the Conservatives were big screwups for bringing us into deficit in the first place — and the fact that the Liberals and the New Democrats et al. urged the Conservatives to to a sh*tload of stimulus spending and emphatically voted in favour of said stimulus spending is absolutely irrelevant. Even raising that point means you’re a sheep-like, dimwitted Conbot. And you’re probably from Alberta too. And Albertans are bad, as we all know.
    4. We should immediately start spending this surplus on things that progressive Liberals would like us to spend it on. In fact, we should start spending that money now. And if the Conservatives refuse to start spending money on things that progressive Liberals like, then they’re big heartless meanies. Assuming there is a surplus, which is not admitted but is specifically denied.

    • That’s a lovely strawman.. does burning it keep you warm when you’re cold and lonely at night?

      • Why don’t you go pay a visit to Nick Taylor Vessey’s article on the deficit-surplus issue, and the comments there? The Liberal Partisan Hacks are already trotting out these very arguments. Perhaps you should take that “straw man” issue up with your brethren there.

        • Yes, because an issue should ONLY be one side. The side you’re on, no other opinion is necessary because you’re Conservative and you know better.

          • Well, it’s certainly true that you never, ever see Liberal-friendly opinions expressed on these comment boards. Or NDP-friendly. It’s just pro-Conservative, 24/7. Thank you for standing up for diversity of opinion and tolerance.

        • Except they’re not, and you’re lying.

          • No, you’re either lying or suffer from serious reading comprehension deficits. People are insisting over there that this is all a ruse, that Flaherty is lying, that we will in fact have a deficit in 2015, etc. Oh yes, and the budget cuts that have been made are evil, and we should be spending money on other stuff, and so on. As usual, everything the Conservatives do is the sh*ts, no matter what.
            You know, I almost never agree with Rick Omen, but he’s right about one thing — the Conservatives could cure cancer, and progressive partisan douchebags would still find something wrong about it.

          • Should be pretty easy to link to the posts saying we’ll have a deficit then… let’s see it, liar.

          • Jesus Christ, are you on hallucinogens? I just went over to that thread to double-check, and I didn’t even get all the way through the thread: rubberman, saying this “surplus” is all “smoke and mirrors”, Andrew Por C or whatever claiming it’s false, and neuroticdog weighing in in a similar vein, i.e., Flaherty lied back in his Ontario days, so anything out of his mouth is ipso-facto false, and so on. Go away, you’re just being obtuse, lame and evasive.
            And there’s good old Keith, right below, spouting the same bitter progressive party line.
            It’s funny — it’s almost like people like you would prefer that this government run deficits (although of COURSE you would complain about that). But if there’s even a hint that this government might go into surplus, that gets you REALLY angry and bitter. Perhaps because you’ve spent so much capital claiming that the government would never balance its books.

          • So no, then, you haven’t found anybody who says that there will still be a deficit in 2015.. gotcha.

          • Thwim, quit being so obtuse and/or outright dishonest. There are multiple posts in that thread from people asserting that any “surplus” in 2015 would be “fake”, “smoke and mirrors”, that “no surplus exists” and so on. By making such statements, it only logically follows that you are asserting that, rather than there being a surplus in 2015, there will in fact be the opposite of a surplus, i.e., a deficit. Or are you saying that all of those posters are saying that there actually WILL be a surplus in 2015? Because if you’re saying that, then I can only conclude that you are brain-injured.
            Oh yes, and I see that JanBC has trotted out the ole “structural deficit” point, as per my prediction.

          • Why don’t you try to convince us that what Flaherty offered up is feasible. Go on, get in the game.

          • Huh? Jan, I leave that kind of stuff — i.e., deficit/surplus/fiscal forecasting — up to the experts who are actually qualified to do it. You know, actual trained economists and financial experts. I’m not predicting or positing anything here.

          • Are you saying that I don’t read what ‘actual trained’ economists
            are writing? Again, feel free to quote some who think Flaherty’s projections are realistic. I’m open to correction, so go for it.

          • I confess! I said I’ll need independent corroboration. But that’s because when “Red is the new black” Flaherty was in charge of Ontario’s books, they were reporting a surplus that was actually a deficit. Apparently, he wasn’t familiar with minus signs.
            The missing $3.1 billion doesn’t instill a lot of confidence either. And Harper keeps getting caught in lies.
            I’m not saying they won’t succeed; I’m just saying they’ll need to offer a high level of proof to overcome their honesty deficit.

      • No, that’s what the sheep are for.

    • I’m pretty sure liberals will say something like soon after you were elected in 2006, before the recession hit and well before they asked for stimulus spending, you had already squandered the surplus you were left with when they handed you the keys to this place.

      • Umm, actually the world-wide economic meltdown hit in 2008. Prior to then, we were in surplus. Canada finished 2008 — including 3-4 months of worldwide economic meltdown — with a modest deficit of around 5 billion. The big deficit hit in 2009, when we and the rest of the Western World were dealing with said meltdown, and as a result of the stimulus spending package which the Liberals and New Democrats were baying for and which they voted in favour of. Here are some facts for you:

        http://www.cbc.ca/news2/interactives/canada-deficit/
        I agree, though, that prior to the fall of 2008, the Conservatives had ramped up spending and they had cut the GST, a policy I never personally supported. Still, if they bring us into surplus in 2015, I don’t see why Liberal partisan hacks have to be so churlish and petty about it.

        • Maybe because the accumulated debt has to be paid back sometime, and better planning would have meant less debt?

          • I don’t disagree with you there. As I have said repeatedly (but apparently it flies straight through progressive partisan ears), I opposed the GST cut.
            And it’s pretty damn funny, Conservative-haters making themselves out to be debt reduction hawks, when their Liberal and NDP brethren spent the entire Mulroney regime years opposing every single debt and deficit reduction measure that the Mulroney government ever proposed. The only thing that turned Chretien-Martin around on the issue was the fact that international financial markets were threatening to pull the plug on us and send us down the drain.

          • Mulroney? Debt reduction? Did I just slip into a parallel universe? Like all conservatives, he talked the talk but failed to walk the walk. What the opposition said was irrelevant, given he had a majority.

          • I agree with you that Mulroney failed to accomplish anything significant in the way of debt or deficit reduction. Basically, he chickened out, and he deserves to be rightly criticized for that. But the fact of the matter is, any time his government proposed anything in that vein, the Liberals and Dippers screamed bloody murder. There’s also the fact that the Canadian, and world, economy headed into the crapper as a result of that First Gulf War-era recession, which was quite severe, and there was also Bank of Canada Governor John Crow’s high-interest rate policy, which greatly hurt any efforts at debt and deficit reduction, because interest payments were forming such a large proportion of government expenditures.
            That being said, objective, non-partisan economic commentators and historians now generally agree that Mulroney’s government did set the table for what Martin was able to accomplish shortly after 1993, mainly of course by implementing that GST that Liberals spent years maligning and which the Liberals promised to get rid of (and which turned out to be a huge cash cow for Paul Martin). But it turns out the Liberals were lying about that “we’ll get rid of the GST” thing. I understand from the partisan Liberals who populate these comment boards that somehow, the “takeaway” from all of this is that Liberals are virtuous and awesome, and that conservatives are beneath contempt in every single respect.

  3. So that’s where the missing billions went….we got us a shell game here.

  4. Has a surplus ever occurred under Flaherty’s tenure as Finance Minister, provincially or federally?

    • Umm, yes, prior to fiscal 2008, during his initial years as federal finance minister.
      Next.

      • Is that the one he inherited?

        • Yes, we were in surplus when he became finance minister.

        • There is a new surplus or deficit each year. You cannot inherit a surplus, each year has a different result at the end.

          • You can create a structural deficit, which is what Harper did. And it carries forward.

          • So we’re not going to have a surplus in 2015 then?

          • So you’re sure we are?

          • No, I’m not. I cannot see into the future. Apparently progressive, Harper-hating partisans can, though. It’s one of the many gifts that they constantly remind us that they possess.

  5. Hi Emily,
    Long time since I checked out Mac leans et al
    I see you are still expounding on the Liberal party and poo pooing the Conservative party. Get a life and just thank goodness that Canada is doing awesome.

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