Deficit – Page 2 – mackaycartoons

Wednesday November 2, 2016

November 1, 2016 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday November 2, 2016

Fiscal update boosts Liberal infrastructure plans but offers no path back to balance

Justin Trudeau’s Liberal government is responding to the sluggish global economy with a fall economic update that puts a even greater focus on infrastructure spending than in its spring budget, while making it easier for private sector investors to add their money to the government’s already considerable funding pot.

While the projected deficit for 2016-17 has moved down to $25.1 billion from the $29.4 billion forecast in the spring budget, the new figure no longer has any kind of a safety cushion built in. Absent that cushion, the deficit has actually grown thanks to some $1.7 billion in new spending since last spring.

The deficit situation improves toward the end of the government’s five-year horizon, to $16.8 billion in 2020-21. The projected debt-to-GDP ratio — the key measure of the affordability of a government’s debt — by then returns to the 31 per cent mark, where it was in 2015-16 as the Liberal government took office.

Morneau told reporters his government made the right decision in preparing itself for what is happening to the economy.

But Interim Conservative leader Rona Ambrose said the Liberals’ massive spending has created no new jobs and has led to a stalled economy.

“They think this failed plan is somehow working, and they’re doubling down on it,” she said.

Repeating the party’s line that the Conservatives are the voice of taxpayers, Ambrose accused the government of “making lives more expensive for Canadians.”

“Canadians are worse off today than they were a year ago,” Ambrose said. “But instead of action, we hear excuses.” (Source: CBC)

Tuesday March 22, 2016

March 21, 2016 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday March 22, 2016

Ottawa’s deficit-spending budget

Who’d have thought that a government’s deficit-spending budget would garner such universal support?

Friday February 12, 2016

But most business groups, usually the shrillest of critics, are behind the Liberal government’s plans. This backing includes support from the Canadian Chamber of Commerce, Canadian Manufacturers and Exporters, economists at the big banks and several think tanks. And this, even though the budget may see a $30 billion deficit when unveiled in Ottawa Tuesday.

It says a lot about how the world has changed. In the past decade, many economic assumptions have been turned upside down. Many attitudes have also changed.

Who would have once thought that our central bank would be trying to stoke inflation, rather than crush it? Or that instead of worrying about rising interest rates killing the economy, we’d be worried that falling rates killing the economy? Or that it would okay for central banks to create trillions of dollars out of thin air?

Thursday February 18, 2016

This new consensus is really a capitulation. It says that, after eight years of manipulating interest rates, that policy hasn’t worked. No amount of pushing on that string has created growth.

So it’s time to pull lever number two, fiscal policy. You spend money you don’t have (but promise to pay back). You hope to stimulate demand so that businesses will follow along and economic activity will increase.

Central banker Stephen Poloz delayed cutting Canada’s key rate again in January from its lofty one half of one per cent for this reason. He wanted to see what Ottawa planned to do.

The frantic effort to get something going is as much about the future as the present. The concern is that when the next recession arrives — which inevitably it will — there will be nothing central banks can do. There’ll be no ammunition left in the rate-cut gun.

Most economic expansions last between five and seven years. The current one is weak, but is still in its seventh year. For the U.S., it’s the fourth-longest period of growth recorded.

There’s nothing to suggest any downturn is imminent, though early in the new year many wondered. Things are looking a lot better than they did then. A low dollar has perked up manufacturing. Retail sales surprised in the latest reading. American unemployment is low. (Continued: Toronto Star)

Friday February 26, 2016

February 25, 2016 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday February 26, 2016

Ontario’s budget deficit for 2016 shrinks

Ontario Finance Minister Charles Sousa announced Thursday that the province’s budget deficit has shrunk more than expected and that the Liberals are on pace to return to a balanced budget by 2017-18, even as net debt is set to increase in that timeframe.

Sousa said that the deficit is now down from the $7.5 billion projected at the end of last year to $5.7 billion, as stronger economic growth in Ontario boosted government revenues. The budget forecasts that Ontario’s economy grew 2.5 per cent in 2015, a much stronger level than the 1.2 per cent forecast for the national economy.

But net debt will go up as the government continues to borrow to fund projects, including a massive $160 billion infrastructure project over the next 12 years. Net debt is set to increase to $326.8 billion in 2018-19, from $296.1 billion in 2015-16, even as the Liberals are set to have a balanced budget by then.

The projection that Ontario’s debt will continue to rise and that debt-to-GDP will continue to hover near 40 per cent in the medium-term will not thrill debt rating agencies. Standard & Poor’s downgraded the province’s debt last year, while others such as Moody’s Investors Service have placed a negative outlook on provincial bonds.

Ontario’s deficit will also be helped by $1.1 billion gained from the sale of Hydro One, as well as growing cash injections from the federal government, which will hit $24.6-billion this year and rise to $26.6-billion by 2018.

Sousa dismissed the idea of further debt downgrades, however, saying a declining debt-to-GDP ratio would be welcomed.

“I believe credit agencies are going to look at this budget and realize that we’re achieving what we said we’re going to do,” he said during a news conference.

The government has said it has a target of reducing net debt-to-GDP to its pre-recession level of 27 per cent, though it gets no where close to that level in its projected forecast, with net debt-to-GDP hitting 38.5 in 2018-2019. The ratio is expected to peak at 39.6 per cent in 2015-16, remain level in 2016-17 and only begin to decline in 2017-18.

The government is projecting that total revenue in 2015-16 will be $2.2 billion higher than the 2015 budget had factored in, due to “higher asset optimization” and more tax revenue as a result of a stronger Ontario economy. (Source: Financial Post)

Friday February 12, 2016

February 11, 2016 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday February 12, 2016

Trudeau shies away from Liberals’ balanced-budget vow, cites fading economy

Prime Minister Justin Trudeau is backing away from a campaign vow to balance the public books before the end of his government’s four-year mandate — a promise that was central to the Liberal election platform.

Liberals then, 2003

As a result of a weakening economy, the government’s upcoming 2016-17 budget plan will show a deficit larger than the Liberals’ promised $10-billion shortfall cap, Trudeau told Montreal’s La Presse newspaper.

Just how big that deficit will be remains unclear.

If the economy continues to deteriorate, it will be difficult for the Liberals to live up to their pledge to balance the books in 2019-20, Trudeau said in an interview published Thursday.

Less than two months ago, Trudeau insisted that the Liberal plan to make good on that key balanced-budget promise was “very” cast in stone.

The doubts raised by Trudeau offer a glimpse of the fiscal pressure faced by the Finance Department as it crafts the government’s first federal budget, expected late next month.

“If we look at the growth projections for the next three or four years, it will be difficult (to return to balance),” Trudeau was quoted by La Presse as saying.

“But everything we’re doing is aimed at creating economic growth. When predicting the level of growth four years in advance, governments often miss the target.”

During the fall election campaign, Trudeau promised to keep deficits below the $10-billion mark in 2016-17 and 2017-18 unless the economic situation got radically worse.

“Yes, we will go over $10 billion,” Trudeau told La Presse. “By how much? We are in the process of examining that.”

In recent months, the Canadian economy has sputtered in large part due to the steep drop in commodity prices.

On Wednesday, a National Bank of Canada report said the country’s fading economic prospects could put the Liberal government on track for $90 billion in deficits over its four-year mandate. (Source: CBC News)

In related news, Zoolander 2 will be released in theatres on Friday.

Saturday August 29, 2015

August 28, 2015 by Graeme MacKay

By Graeme MacKay, Editorial Cartoonist, The Hamilton Spectator – Saturday August 29, 2015

Justin Trudeau alters election equation with deficit-spending gamble

Justin Trudeau has just broken this election campaign wide open. His Liberals have chucked the balanced-budget pledge, at least in the short term, to promise economic growth instead. And now Mr. Trudeau gets to offer a different economic policy.

2009

It makes the Liberals the interventionist party, the only party willing to tell voters they’d spend substantially more in the short term in a bid to get a slow economy rolling.

2008

It’s in part an effort to outflank NDP Leader Thomas Mulcair, who won’t make those kinds of promises. Many Canadians want a more interventionist approach: A Nanos Research poll released Wednesday found 54 per cent say they support a new round of deficit spending to boost the economy.

But it is a big gamble with a charged political symbol, the deficit. Mr. Trudeau is walking right into Conservative Leader Stephen Harper’s accusation that he’d increase the national debt. Still, the economy is the issue, and the Liberal Leader has altered the election equation.

1997

Until now, all parties had accepted they were constrained by more or less the same shackles: balanced budgets, and roughly the same tax rates, give or take a small shift of the burden toward one group or another.

That meant big money wasn’t available. Parties could shift a few billion dollars around, and then claim their child benefits or child care or tax breaks were the best plan. But one major option – using the federal treasury in a bid to boost economic growth – was more or less off the table. It takes billions and billions to have any real hope of nudging growth in an economy the size of Canada’s.

Now, Mr. Trudeau has thrown off the restraints and said he’ll run deficits of up to $10-billion a year for three years in order to allow for a multibillion-dollar increase in spending on infrastructure, raising it from $5.1-billion to $10.2-billion next year. He’s gone where no other leader will go. (Source: Globe & Mail)

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