Tuesday February 14, 2012
By Graeme MacKay, The Hamilton Spectator, Tuesday February 14, 2012
How Ontario’s ‘stimulus’ spending led to disaster
The fiscal mess in Ontario is now common knowledge across the country, thanks in part to a sensational report from the Conference Board of Canada demonstrating that unless the government slashes spending and/or raises taxes, health care and education will have to be decimated. The report was no surprise to people who tracked Premier Dalton McGuinty’s march into Keynesian fiscal stimulus spending.
If we can’t expect politicians to take the blame for following the Keynesian deficit-spending policies advocated by their economic advisors, shouldn’t we turn to the economic experts to get them to explain themselves? The same people who supported and advised the McGuinty Liberals — and the Obama Democrats, the Greek and Portuguese politicians, the French and Canadian governments — to run up spending to rescue the economy will spend the next decade telling governments how to get out of the mess they helped create.
Ontario’s current circumstances create a perfect opportunity to confront the economic establishment and lay blame for the fiscal disaster that is Ontario. Government spending has been soaring for years. It all looks good if growth rates stay strong. Where were the dire economic warnings through the last decade that the expansion in government activity cannot continue without hitting a wall?
A table on Ontario’s spending habits (above) captures the disconnect between the government and the people. While the personal income of the people dragged at 26% growth, government spending soared more than 60%.
On Wednesday, former TD Bank economist Don Drummond will deliver a set of tax and spending options to the McGuinty government, a road map on how the province can resolve its fiscal problems. (Source: Financial Post)