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Deficit

Tuesday October 1, 2019

October 8, 2019 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday October 1, 2019

Promising back-to-back deficits isn’t political suicide in Canada anymore

St. Paul, 1997

The church of the balanced budget — inaugurated by Saint Paul in 1995 — has been losing power for some time now, even if it retains significant allure.

But with balance no longer universally accepted as the be-all and end-all, a more interesting choice has emerged for voters.

The first blow against balance came in January 2009 when Stephen Harper, who had once vowed never to spend into a deficit, was compelled to acknowledge that running a deficit wasn’t necessarily a bad thing — that sometimes it’s even the right thing to do.

January 26, 2009

In that case, it was the Great Recession that necessitated a quick influx of government spending. For the fiscal year of 2009-2010, the Harper government ran a deficit of $56.4 billion. Before they were done, the Conservatives ran six years of annual deficits, totalling $157.8 billion.

Still, it was considered heresy when Justin Trudeau announced in 2015 that a Liberal government would run three years of deficits to boost a sluggish economy. One newspaper described the plan as “political suicide.” Shortly thereafter, Trudeau’s Liberals won a majority.

November 2, 2016

Once in office, the Trudeau government pushed things further — first because of economic circumstances, then because of its own choices and priorities — resulting in deficits of $19 billion, $19 billion, $14 billion and $19.8 billion.

Harper’s deficits could be traced to his decisions to cut taxes — the GST in particular. Trudeau’s deficits had more to do with new spending on federal programs.

While running for the leadership of the Conservative Party in 2017, Andrew Scheer vowed to balance the budget within two years of forming government. But as the 2019 general election neared — and with budget cuts by Doug Ford’s provincial government angering voters in Ontario — Scheer lost some of his enthusiasm for swift deficit elimination. In May, he announced that a Conservative government would instead take five years to balance the budget.

April 13, 2019

The Liberal platform released on Sunday nudges the goalposts again. With promised new spending, a re-elected Liberal government would run larger deficits, starting at $27.4 billion in the first year and declining to $21 billion in the fourth.

The Conservative response was notable for what it lacked. Conservative finance critic Pierre Poilievre’s primary argument was not that the deficits were themselves immoral or fundamentally unsound. Rather, he claimed the deficits inevitably would lead a Liberal government to increase taxes — tax hikes the Conservatives claim Trudeau is concealing now.

That attack might resonate more if the Harper government’s deficits had triggered the same consequences.

Economists like Kevin Milligan argue that the current deficit is not a matter for great concern — that government debt is not like household debt, borrowing rates are low, the situation in 2019 is not what it was in 1995 and recent deficits have been relatively modest.

November 22, 2018

The debt-to-GDP ratio — the debt as measured against the entirety of the national economy — was 31.5 per cent in 2014-2015. The Liberals now project that, even after eight years of deficits, it will be 30.2 per cent of GDP in 2023-2024. (For the sake of comparison, the debt-to-GDP ratio was 66.8 per cent in 1996, when Jean Chrétien and Paul Martin were compelled to cut spending.)

In 2011, Harper’s Conservatives promised $1.6 billion in new spending, while Michael Ignatieff’s Liberals countered with a platform that included $5.5 billion in new initiatives, all of it covered by corresponding tax increases or spending cuts.

In 2019, instead of arguing within a box created by competing desires to both balance the budget and avoid broad-based tax increases, the platforms of the two main federal parties could be upwards of $20 billion apart.

That is not a small amount of money.

If the orthodoxy of the balanced budget has weakened, it has left room for a clearer choice. (CBC) 

 
 
Posted in: Canada Tagged: #elxn2019, 2019-34, Budget, Canada, Deficit, dragon, Justin Trudeau, promises, shopping, spending

Friday April 12, 2019

April 19, 2019 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday April 12, 2019

Ontario tightens purse strings, PCs don’t plan to balance books until 2023-24

May 17, 2018

Ontario’s books won’t be balanced within the Progressive Conservatives’ mandate, but the government’s first budget serves up an era of gradual belt-tightening with a side of booze.

The Tories peg the current deficit at $11.7 billion, and they don’t expect to eliminate the red ink until 2023-24. Drastic and widespread cuts that many had feared did not materialize in this budget, but the path to balance shows that much of the heavy lifting comes at the halfway mark to the next election, and after it.

March 27, 2009

The budget constrains spending growth – and shows cuts in post-secondary and social services – but is still nearly $5 billion larger than the last budget from the previous Liberal government, who the Progressive Conservatives often slam for their spending habits.

“We have developed a reasonable path to balance,” Finance Minister Vic Fedeli said. “Our path to balance in five years is a thoughtful and a measured approach to take … Our entire premise is to protect what matters most.”

The budget contains no new taxes. In addition to tackling the deficit, the government is also taking aim at the net debt – currently pegged at $343 billion – through ensuring surpluses and unused reserve or contingency funds go to paying it down.

March 20, 2004

As well, planned legislation would require the government to develop a debt burden reduction strategy, and make the premier and finance minister pay 10 per cent of their salaries for each missed reporting deadline for documents such as the budget and quarterly economic accounts. (Source: Global News)  

 

Posted in: Ontario Tagged: 2019-14, A place to Grow, branding, Budget, coat of arms, debt, Deficit, Doug Ford, Ontario

Thursday November 22, 2018

November 29, 2018 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday November 22, 2018

Fiscal update to lay out competitiveness plan, close loop on some Liberal vows

The federal government will release a fall economic update Wednesday that will seek to close the loop on some of its outstanding mandate commitments, leaving the door open for the Liberals to use next year’s budget as their 2019 election platform.

March, 1, 2018

The document will also include Finance Minister Bill Morneau’s long-awaited plan to help Canada compete for investment dollars, which many warn has become increasingly difficult following major tax and regulatory changes in the United States.

Morneau has faced pressure to lower Canada’s corporate rate, but the government has signalled it will focus on targeted measures to accelerate investment rather than across-the-board tax cuts.

The document will likely be the Liberal government’s second-last opportunity — besides the spring budget — to deliver major policy announcements and its political pitch in package form before the October 2019 election.

February 12, 2016

As for fiscal responsibility, the official said the fall statement will show that Canada’s annual projections for the federal deficit and the debt burden will continue to slide downward on trajectories similar to those outlined in the 2018 budget.

The Liberals have faced regular criticism from the Opposition Conservatives for abandoning their 2015 vow to run only modest annual shortfalls of no more than $10 billion and to eliminate the deficit by 2019.

Instead, the Liberals have posted deficits of more than $18 billion in each of the last two years.

As its guiding principle on fiscal responsibility, the government has focused on lowering the country’s debt burden — as measured by net debt-to-GDP — rather than balancing the books.

The debt-to-GDP ratio fell to 31.3 per cent in 2017-18 from 32 per cent in 2016-17. The government has predicted the ratio to fall to 30.1 per cent in 2018-19 and continue sliding each year until it reaches 28.4 per cent in 2022-23. (Source: CTV News) 

 

Posted in: Canada Tagged: Bill Morneau, Canada, debt, Deficit, economic, federal, Finance, Justin Trudeau, Liberal, spending, update

Friday April 27, 2018

April 26, 2018 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday April 27, 2018

Auditor’s deficit allegations could be bad news for all parties

History, like politics, has a way of repeating itself. Especially at election time.

February 18, 2017

In opposition 15 years ago, Ontario’s Liberal Party smelled a rat. They accused the Tory government of the day of cooking the books.

Playing the reformist card in the 2003 campaign, Dalton McGuinty’s Liberals proposed that all future pre-election budgets be reviewed by the auditor. Upon winning power, McGuinty ordered a special audit that uncovered a deficit of more than $5 billion “hidden” by the previous Progressive Conservative government.

Fast forward to 2018. Now, the PC opposition is accusing the governing Liberals of playing with numbers — and this time, the auditor general of the day, Bonnie Lysyk, is on their side.

December 11, 2014

Lysyk held a news conference Wednesday to declare the Liberals are understating the true deficit by $5 billion.

The law of unintended consequences has a way of catching up to you. All that Liberal reformist zeal from 2003 is now fresh ammunition for the PCs as they accuse McGuinty’s successor as of fudging the numbers.

There is nothing new in the auditor’s latest report. But in auditing as in politicking, timing is everything. Which makes the Liberals electorally unlucky.

Few paid the auditor much heed two years ago when Lysyk suddenly declared she was reversing the accounting rules established by previous auditors: Accumulated surpluses in major public sector pension plans could no longer be counted as budgetary assets, as they had been since Tory times.

The effect of her ruling was to produce a gaping multibillion-dollar hole in the government’s accounting framework at the very moment they were striving to meet a 2017-18 target for deficit elimination. The government convened an outside panel of accounting and pension experts, who declared that Lysyk couldn’t have it both ways: Just as pension shortfalls count as a liability on the balance sheet, a pension surplus should count for something — not nothing, as the auditor insisted.

Lysyk still wouldn’t budge. But Bay Street didn’t bite, ignoring the auditor’s alarm bells. Credit rating agencies also looked at the books but didn’t buy into her alarmist assessments. (Continued: Hamilton Spectator) 

 

 

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Posted in: Ontario Tagged: accounting, auditor general, Bonnie Lysyk, Budget, Deficit, Kathleen Wynne, Ontario, partisanship

Friday April 6, 2018

April 5, 2018 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday April 6, 2018

Federal infrastructure plan behind schedule: PBO

The Parliamentary Budget Officer says federal infrastructure spending created up to 11,000 new jobs over the past year and added 0.1 per cent to Canada’s GDP, falling short of Liberal government projections as the program falls behind schedule.

Parliamentary Budget Officer Jean-Denis Fréchette also cautions that rising interest rates are starting to offset the positive economic effects of infrastructure spending.

The PBO released a report Thursday that examines the impact of what the Liberal government calls its first phase of infrastructure spending. The plan was announced in the 2016 budget and initially promised about $12-billion over five years for projects that are primarily focused on repairs of existing assets. The PBO report looks at how spending from that budget – and top-ups announced in the 2016 fall update – will be spread over nine years, bringing the total to $14.4-billion.

In an interview, Mr. Fréchette said the amount of economic stimulus and employment created from the first phase of spending is relatively modest when compared with the promises made by the Liberals.

Thursday’s PBO report said phase 1 infrastructure spending added 0.1 per cent to Canada’s GDP in the 2016-17 fiscal year and 0.1 per cent in the fiscal year that ends March 31.

The 2016 budget included estimates from the Department of Finance that the announced infrastructure spending would boost Canada’s GDP by 0.2 per cent in the first year and 0.4 per cent in the second year.

That hasn’t happened, Mr. Fréchette notes. (Source: Globe & Mail) 

 

Posted in: Canada, Ontario Tagged: Canada, day care, debt, Deficit, election, infrastucture, Justin Trudeau, Kathleen Wynne, Ontario, pharmacare, promises, servicing, spending
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This website contains satirical commentaries of current events going back several decades. Some readers may not share this sense of humour nor the opinions expressed by the artist. To understand editorial cartoons it is important to understand their effectiveness as a counterweight to power. It is presumed readers approach satire with a broad minded foundation and healthy knowledge of objective facts of the subjects depicted.

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