The structural deficit that dare not speak its name - Macleans.ca

The structural deficit that dare not speak its name

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Stephen Gordon sees yesterday’s budget as an implicit acknowledgement of a structural deficit.

Many commentators have suggested that the structural deficit was created by increased spending, so spending cuts are the appropriate remedy. I don’t see how this hypothesis fits the data, and the fact that the necessary spending cuts have yet to be specified suggests to me that there’s no expensive new program that can be blamed for the structural component of the deficit.

It’s much easier to tell a story (here and here) in which the cuts to the GST are the cause of the federal structural deficit.