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Left-wingers rush to Harper's aid in $50 billion deficit

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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