Why are cuts being made? - Macleans.ca

Why are cuts being made?

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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.