Deficit 'permanent and it won't go away,'

[HeresyLives]

Wednesday, January 13, 2010 8:24 AM

Deficit 'permanent and it won’t go away,'
budget watchdog warns
Jane Taber

1. The "geek math" is in. Ignore what Prime Minister Stephen Harper and his Finance Minister, Jim Flaherty, say about the deficit. It is structural, says Kevin Page, the controversial Parliamentary Budget Officer.

“Even Mr. Flaherty is saying five years out you are still running deficits,” he told The Globe this morning in an interview. “Implicitly even Mr. Flaherty is saying if he’s got deficits for five years out, he’s got a structural issue. You can’t grow your way out. It’s economist geek math. Structural means … it is permanent and it won’t go away.”

http://www.theglobeandmail.com/blogs/bureau-blog/deficit-permanent-and-it-wont-go-away-watchdog-warns/article1429339/

AND now the actual report:

Jim Flaherty faces $18.9-billion structural deficit, watchdog says

Jim Flaherty led the charge toward lower corporate taxes, but a new report by the Parliamentary Budget Officer says these and other Conservative tax cuts now leave Ottawa short on cash it plans for a return to balanced books.

Cutting corporate taxes and the goods and services tax rate were key early measures taken by the Finance Minister during the Conservative government’s first term in office. Mr. Flaherty said lower corporate taxes are key in attracting international investment and convinced some provinces to do the same.

Those cuts were coupled at the time with increased spending on transfers to the provinces, followed by recent deficit spending to spur the economy through the recession.

Now that the government is beginning to chart its course to erase the deficit, a new report by Parliamentary Budget Officer Kevin Page is pouring cold water on some of Mr. Flaherty’s key assumptions as to how that can happen.

First, the Finance Minister is counting on economic growth as a key factor that will increase government revenues over the coming years.

Don’t count on it, Mr. Page says.

http://www.theglobeandmail.com/news/politics/jim-flaherty-faces-189-billion-structural-deficit-watchdog-says/article1429569/

[Spazito]

1. This is deja vu, it is following the last Conservative government,...

Mulroney's reign, which almost bankrupted Canada. It took almost 5 years for the Liberal government to climb out of the hole and begin generating surpluses. I can only hope Canadians don't ignore this as long as they did when Mulroney came close to putting us in a 'third world' status economically.

[HeresyLives]

2. That's the most depressing thing about it.

Everything we went through to clear the deficit, start paying down the debt and get to surpluses last time...all gone. We're right back where we started.

Some financial managers these guys turned out to be. Harper and his Masters in Economics has failed miserably.

Worse yet, Harper will use this as an excuse to get rid of every social program he doesn't like, which is all of them, and will probably try to privatize healthcare.

Well, he said he thought the Feds should be severely financially restricted, and power returned to the provinces, so maybe by his lights he didn't fail after all.

[daleo]

3. He accomplished his mission

Conservatives like deficits. They can give money to their friends, discredit government and ensure there are no improvements to social programs with deficits. It is a fallacy, partly media generated, that Conservatives are against deficits.

[HeresyLives]

4. That's what worries me.

Seems like they're out to wreck the country. It's hard to imagine they could be this stupid without KNOWING what they're doing.

Incompetence or deliberate?

[daleo]

5. There is a book about this (it is about the U.S. situation)

I believe it is called "The Wrecking Crew" and it makes the case for this very convincingly.

Here's a blurb:

http://us.macmillan.com/thewreckingcrew

[HeresyLives]

6. Thank you!

I order books once a month, and this has gone to the top of my list.

[Spazito]

7. Yep, Norquist stated what Conservatives are all about...

"My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub."

Starve the treasury so it cannot provide any social programs and return society to the days of the aristocracy, that is their goal whether it be Canadian conservatives or elsewhere.