Why are cuts being made? - Macleans.ca

Why are cuts being made?


In addition to lamenting the lack of transparency around the cuts, Scott Clark questions the reasoning for the Harper government’s budget cuts.

First, did the government cut spending because there was a fiscal crisis as there was in 1995? Apparently not, because there is no fiscal crisis. The government’s own numbers, provided in budget 2012, show that without the $5.2 billion in cuts, the deficit would still be eliminated over the medium term. The debt burden would fall, as would spending, as a share of GDP. Canada would continue to have the best fiscal performance in the G-7.

Second, did the government cut spending because they believed that the deficit contained a structural component that would not be eliminated without cuts? This has been a view of the PBO and 3dpolicy for some time, but it is a view that has been repeatedly rejected by the government. The government has continually shown medium-term forecasts in which the deficit disappears entirely as a result of economic growth.