VANCOUVER - Finance Minister Jim Flaherty looked mortified, the National Post was shocked, and the Liberal opposition demanded Flaherty be fired. But Canadian progressives actually had a kind word for the Conservatives' ballooning $50 billion deficit.
Marc Lee, writing in the Progressive Economics Forum, suggested that the media "chill out":
While it feels unusual for me to defend the Tories, I give them credit for letting that deficit grow rather than the alternative of cutting $17 billion in federal expenditures to keep to the budget's projection. The opposition parties cannot have it both ways, wanting both more spending through EI and a lower deficit.
Worthwhile Canadian Initiative criticizes both National Post editor Terence Corcoran and Fraser Institute economist Neils Veldhuis, quoting them at length and then observing:
Pretty scary stuff. Except that the entire argument is based on the hoary statistical trick of choosing a base year - in this case, 2003 - that best fits the story you want to tell. Readers are expected to assume that the world began in the base year and that what happened before the base year is not relevant. But it is.
Meanwhile, Flaherty's critics attacked the deficit on various grounds. Garth Turner, ex-Conservative, ex-Liberal, and ex-MP, now runs Greater Fool, a blog about the Canadian real-estate apocalypse. He wrote:
Politics aside, this represents the most rapid and intense deterioration of national finances in the country's history. The swing of more than $50 billion a year came partly through tax cuts some economists called reckless, partly because of big jumps in program spending and partly as a result of the global economic meltdown.
Deficits are a tax on tomorrow, so if you think today sucks, just wait. Of course, government over-spending will succeed in preventing a depression, a collapse in the financial system and social breakdown. But the price to pay is truly Faustian.
At The Shotgun, a right-wing blog, Janet Neilson approvingly cited the Fraser Institute's Veldhuis: "legal restrictions on government spending to keep it from getting out of control as it has in Canada and, to be fair, all over the world."
Meanwhile, US economist Nouriel Roubini sees "more yellow weeds than green shoots" in in the global economy, implying that a mere 50 billion 90-cent Canadian dollars won't help Canada recover any time soon.
Crawford Kilian is a contributing editor of The Tyee.
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OilbertaRedTory
3 years ago
the Con continues ...
... maybe Flaherty should ask his banking buddies to help us through his 'liquidity problem' the way he helped them for Thanksgiving election :
http://www.nationalpost.com/news/story.html?id=877989&p=1
... and again in the long dark nights of November :
http://www.thestar.com/news/canada/article/535392
Are you laughing or crying ?
Tbarnston
3 years ago
Disgrace
$50 B in the hole, and what have we got to show for it? It's a disgrace for so called progressives to be letting Flaherty off the hook.
The size of the defecit is a result of reckless tax cuts, and reckless military spending on a useless war. Had we kept taxes at 2003 levels and stopped the stupid war, we could be seeing real investments in this country instead of the wealth transfer to the corporate class which has been continuing unabated under Harper.
Fiat lux
3 years ago
The government doesn't have
The government doesn't have to borrow from private banks, then pay high interest on money it already, legally owns, because the Bank of Canada was set up exactly for the purpose of interest free loans to all levels of government.
If private banks are permitted to "create money" from the air for businesses, many of them foreign owned, so that they can come in and take oligopolic control of our economy, collectivize and enslave the public, the government should be able to "create money" for people's benefit.
But logic wouldn't fit in with the criminal ideology we're forced to live under and submit to.
Ed Deak.
Jeffrey J.
3 years ago
Fiat Lux
What he said.
Thanks Ed.
brg61
3 years ago
Story changes each week.
I can forgive the finance minister's $50 billion shortfall given the tough economic situation the whole world is in, but why was he insisting from January to just last week they were on target with his earlier and much lower defecit projection?
More evidence that this government isn't trustworthy.
Who even reads the National Post? I didn't know they were still operating. We can only hope Flaherty ignores their dogma.
Curt
3 years ago
criminals
Lyin Brian and now Stephie and Jimmy. They're all a bunch of crooks filling their own pockets (or safety deposit boxes out of country) and setting themselves up for Board of Director jobs like Brian.
50 billion! Unbelievable.
And EI is screwed by these guys and the predecessors also. If we don't have the opportunity to collect "our E insurance" when we need it, then why are we paying into it? This money is for workers, not General Revenue and should only be used for such. Total rip off and I should be able to cancel my "insurance" and if I become unemployed, I will deal with it.
Name
3 years ago
Well, Duh, Garth...
Turner shrieks: "Politics aside, this represents the most rapid and intense deterioration of national finances in the country's history...."
...well, perhaps in post-WWII history. But duh, Mr Turner - it's in response to the most intense financial crisis the world has seen since the Great Deprssion, so what did you expect - French champagne and imported strawberries for the rest of us, while rounding up the indigent and feeding them gruel?
And yes, the Ottawa Liberals and NDP are playing cheap politics with this -- playing right into and reinforcing narrow right-wing economic fallacies about conservative fiscal management being the only useful tool, regardless of circumstance, instead of taking the opportunity to acknowledge that the Tories are actually serving the best interests of the country and taxpayers by donning a more objective perspective that encompasses cushioning and stimulus via deficit spending as useful tools to mitigate and hasten recovery from a serious downturn.
These games may have deadly serious repercussions for BC as old Gordo watches and ponders whether to fess up to BC's similarly ballooning $2 billion deficit or to bury his head to try to maintain the old fiscal-prudence-at-any-cost fallacy and viciously slash everything from environmental protection to welfare, health and education to avoid taking eactly that sort of political pummeling.
This is a watershed moment and BC's NDP have an opportunity here to redeem themselves from some of their recent disastrous decisions by taking the high road and publicly committing up front to support Gordo if he decides to face fiscal reality and run a deficit in BC.
Rod Smelser
3 years ago
Name: You're right, but then there's the politics
This is a watershed moment and BC's NDP have an opportunity here to redeem themselves from some of their recent disastrous decisions by taking the high road and publicly committing up front to support Gordo if he decides to face fiscal reality and run a deficit in BC.
You're right. Ideally, the BC Govt should not be boxed into corner where they have to pursue a pro-cylical fiscal policy, though that appears to be Campbell and Hansen's intentions no matter what the NDP might suggest.
But there is the political constraint that a huge number of BC voters, and certainly many reporters, pundits and opinion makers, still worship the legend of WAC Bennett and have accepted the Grade One notion that deficits are always a sign of socialist/union profligacy. That's a particularly hard slope for the NDP to scale, and when every media outlet in town is prepared to skewer James if she tries to lead in the direction of counter cyclical deficits, the payoff matrix is pretty poor.
BTW, ... where are BC's university economists on this one? What are they recommending? Perhaps they too busy celebrating the carbon tax victory to pay much attention to provincial fiscal policy.
http://www.econ.ubc.ca/green/open_let.htm