Running Deficits

[elevennevele]

I've been holding off on the multitude of issues that surround this government. I will however take a bit of time from the family to share with the people of CC the most basic sign of how terrible this government is for this country.

The Harper Conservatives have only been governing this country for what? a couple years? They were handed down huge surpluses and conjunction with a market that has paid significantly for natural resources and oil. Both of which has rewarded this government for having done nothing as the surpluses where there when they took over, and it's not like Harper put what we have under Canadian soil.

Nevertheless, in the short period of time governing, Harper has already taken us into flirting with deficits. Now how irresponsible is that?!

If you ran you household like this you would risk losing the house. That is why sensible people try to build savings for when the times aren't so good. But what did this government do? It blew those monies in reserve simply to win over the votes of the electorate.

http://www.reportonbusiness.com/servlet/story/RTGAM.20080725.wdeficit0725/BNStory/Business/home


Fiscal update set for October

Reuters

July 25, 2008 at 1:39 PM EDT

OTTAWA — Federal Finance Minister Jim Flaherty told reporters Friday that the government plans to present its fiscal update in October.

“We're beginning to work on the fall fiscal update,” he said. We are on track and we usually do the fiscal update in October.”

The update is normally a snapshot of the government's financial position, but if the October statement contains new fiscal measures, it would be a confidence motion, giving opposition parties in the House of Commons an opportunity to bring down the minority Conservatives.

On Friday, the government said it posted a deficit of $517-million for April and May, the first two months of the fiscal year, as income from corporate and sales taxes fell sharply.

That compares with a surplus of $2.78-billion in the same two months of 2007.

You get what you vote for.

 

[elevennevele]

You know why Harper is so desperate for an election? Because it's not the concern that Canadians will hear of how bad this government is. Rather soon we will 'FEEL' how bad this government is.

Well, if they can't buy votes in Quebec, I guess they'll just offer them more sovereignty. We really should ask ourselves do we really need a government that will sell out this country for whatever votes they can get their hands on?

http://www.theglobeandmail.com/servlet/story/RTGAM.20080730.wautonomy0730/BNStory/National/home


Ottawa's autonomy talk empty rhetoric: critics

BRODIE FENLON

Globe and Mail Update

July 30, 2008 at 4:56 PM EDT

The Liberal opposition says the federal Conservative government's stated willingness to allow all provinces more economic autonomy – including the sanctioning of a labour mobility deal between Quebec and France – is nothing more than empty rhetoric.

“I think it's a cynical attempt to play to the nationalists in Quebec by using the word autonomous without actually doing anything,” Liberal Finance critic John McCallum said Wednesday.

Transport Minister Lawrence Cannon suggested this week that Ottawa is prepared to shift some traditionally federal powers to its provincial counterparts and will allow the deal between Quebec and the European country to be negotiated unilaterally.

But “France and Quebec have been working on this credentials arrangement and Quebec already has autonomy in that area of immigration so it's nothing to do with Ottawa,” said Mr. McCallum.

Mr. Cannon “seems to be trying to take some credit for it as if it is something novel or something that we should be grateful to Ottawa for.”

Green Party Leader Elizabeth May, meanwhile, said that “in the guise of accommodation to Quebec,” the Conservatives are saying they are prepared to weaken Canada as a whole.

“Yes of course Quebec has a particular status within the federation. For instance, the Quebec seat at UNESCO? Why not?” asked Ms. May.

“But to negotiate international treaties, one on one, with other nations goes beyond Quebec having a seat at the international table. This goes to the very core of ‘are you a nation or aren't you?'”

Speaking against increased autonomy for Quebec is a tricky road to walk for any opposition leader, particularly with two by-elections in that province already under way and a general election looming on the horizon.

But “if you see a country disappearing from under you and you can't say anything because you are afraid of appearing to be anti-Quebec, then you will lose your country by the time you know what's happening,” said Ms. May.

 

[lone wolf]

He got his record for the longest standing minority government. Seems now he has it, he's daring to take his lumps.

 

[L Gilbert]

Surplus is relative. Deficit is relative. What the gov't terms as surplus is money they have budgeted for spending and have fallen short of spending.
For example, if I budget for spending $10 on meals in town and only spend $8, I have a surplus. If I spend $12, I have a deficit.

From an article by David Frum:

The first number -- 67% -- totals the growth in the Canadian economy in the 1990s. Between 1993 and 2003, Canada's total gross domestic product -- the value of all Canadian-made goods and Canadian-provided services -- rose by two-thirds.

Where did that extra production go? That's the question answered by the second number, 45%. The lion's share of Canadian economic growth in the 1990s was pocketed by government, especially the federal government. Between 1993 and 2003, federal revenues rose by 45%, or almost $60-billion.


That too is no kind of record. Government revenues rose much, much faster than those in the late 1960s. But when the economy is growing very fast, governments can raise more and more revenue with steady or even declining tax rates.


The rising revenues of the 1990s, however, were achieved not by lightly taxing a booming economy but by heavily taxing a struggling economy.


The third number in my series -- the number 31 -- suggests just how heavily Martin's tax program weighed on individual Canadians. Between 1993 and 2003, disposable after-tax income rose by only 31% per person in Canada.


Sadly, for most Canadians, that 31% increase felt even smaller than it looks. Remember: Over those same years, the value of the Canadian dollar collapsed. So Canadians may have earned more and more -- but they could afford to buy less and less.


Back in 1989, when the Canadian dollar still traded near its historic norm, the average Canadian took home about 90% as much as the average American. A decade later, he or she took home only slightly better than 75% as much as the average American.


In short: Canada prospered in the 1990s. Individual Canadians did not. And because Martin attacked investment as well as consumption, Canada's poor economic performance threatened to continue far into the future.


Paul Martin claims that he saved the Canadian government's finances. That claim is largely justified. He did eliminate the federal budget deficit. He even accumulated huge budget surpluses -- surpluses that allowed his Cabinet colleagues to start spending again. But he saved the government's budget by savaging the family budget. He protected the government's future solvency by compromising every RRSP-holder's future security.


Canadians did not like paying taxes. But they understood that the federal deficit had to be brought under control and that medicare cost money. Finance Minister Paul Martin promised a "balanced approach" to Canada's budget problems. That certainly sounded reasonable -- more reasonable than anything they were hearing from the Liberals' divided and fractious opponents. So they grumbled -- but they paid.


They paid once in taxes. They paid a second time in reduced government services.


They paid a third time when the government accepted the depreciation of the purchasing power even of the dollars they were allowed to keep. And they paid a fourth time in the form of slower growth in the value of their RRSPs.


Canadians paid in good faith. They paid assuming that they were doing a public-spirited thing. They paid to lift the burden of debt from their children and grandchildren. They paid believing that their federal government would use their money wisely and responsibly. Even if they did not quite trust Jean Chretien to steward their money, they trusted capable, honest Paul Martin.


And when the sponsorship scandal erupted, they realized they had been played for fools.


That winter vacation you didn't take? Some Liberal advertising executive in Montreal took it. That new car you couldn't afford to buy? You did buy it -- only somebody else is driving it. Those RRSP contributions you couldn't make? They're slushing around in the Prime Minister's national unity emergency fund.


And capable, honest Paul Martin? He says he didn't notice a thing. The money was filched from right under his nose. He overlooked the abuses at the time, and even now he has no idea where the money went or who took it. But don't blame him! Nobody is more upset at the disappearance of your vacation, your car, your RRSP than he is. Really. And though it was regrettably not possible for him to get to the bottom of the scandal before he called the election, he solemnly promises a full accounting sometime after he is safely returned to office.

Between Harpy, aPAULing Martin, ChRETIeN, Bullroney, etc. I am baffled as to why Canadians haven't said, "Enough", and kicked the whole works out and started from scratch.

 

[elevennevele]

Surplus is relative. Deficit is relative. What the gov't terms as surplus is money they have budgeted for spending and have fallen short of spending.
For example, if I budget for spending $10 on meals in town and only spend $8, I have a surplus. If I spend $12, I have a deficit.

Yes, and I'm sure Gilbert you too would be just fine if your spouse left you with your credit statement showing a relative deficit to it.

"Oh don't mind the overdrawn account honey! I just had a more expensive meal once again which we really couldn't afford. Especially with all the plant closures that has left you jobless. Gee, I guess it's a good thing I made all those cuts to our kids after-school programs, ha ha. Oh honey, it's all good. Hugs and kisses."




.

 

[scratch]

Yes, and I'm sure Gilbert you too would be just fine if your spouse left you with your credit statement showing a relative deficit to it.

"Oh don't mind the overdrawn account honey! I just had a more expensive meal once again which we really couldn't afford. Especially with all the plant closures that has left you jobless. Gee, I guess it's a good thing I made all those cuts to our kids after-school programs, ha ha. Oh honey, it's all good. Hugs and kisses."




.

Math does not work.

 

[dj03]

If you ran you household like this you would risk losing the house. That is why sensible people try to build savings for when the times aren't so good. But what did this government do? It blew those monies in reserve simply to win over the votes of the electorate.

A government that continually runs large surpluses is as incompetent as a government that continually runs large deficits.

I expect a reasonable government to run small surpluses or deficits (preferably offsetting), that tells me they are either properly investing in government programs, taxing the population an appropriate amount or both.

The Alberta government and the federal Liberal government are/were terrible about this. When oil prices were sitting north of $120 bbl the Alberta government based their budget on oil valued at around $75 bbl, this artificially creates a huge surplus which: is bad optics nationally; starves government programs of proper funding; over taxes the population.

By making the tax cuts they did, the federal Conservatives kept billions of dollars in the economy at the exact time that it was needed. While our economy will inevitably suffer somewhat because of the downturn in the US, these broad tax cuts are helping to cushion the hit and are a much more stabilizing than the US solution of sending cheques to everyone.

On a more partisan level, these tax cuts have also put the Liberals in a tricky position, they can't afford to reinstate the programs the Conservatives cut, or introduce more, without incurring large deficits or raising taxes. That is why Dion has come up with the carbon tax and we shouldn't forget that when the GST cuts happened he said he would consider reinstating them, he might claim to offset them with income tax cuts, but he will need additional money if he wants to do anything to the left of centre.

 

[scratch]

A government that continually runs large surpluses is as incompetent as a government that continually runs large deficits.

I expect a reasonable government to run small surpluses or deficits (preferably offsetting), that tells me they are either properly investing in government programs, taxing the population an appropriate amount or both.

The Alberta government and the federal Liberal government are/were terrible about this. When oil prices were sitting north of $120 bbl the Alberta government based their budget on oil valued at around $75 bbl, this artificially creates a huge surplus which: is bad optics nationally; starves government programs of proper funding; over taxes the population.

By making the tax cuts they did, the federal Conservatives kept billions of dollars in the economy at the exact time that it was needed. While our economy will inevitably suffer somewhat because of the downturn in the US, these broad tax cuts are helping to cushion the hit and are a much more stabilizing than the US solution of sending cheques to everyone.

On a more partisan level, these tax cuts have also put the Liberals in a tricky position, they can't afford to reinstate the programs the Conservatives cut, or introduce more, without incurring large deficits or raising taxes. That is why Dion has come up with the carbon tax and we shouldn't forget that when the GST cuts happened he said he would consider reinstating them, he might claim to offset them with income tax cuts, but he will need additional money if he wants to do anything to the left of centre.

Harpo + Bri + Consevatives equate debt. Always have. Always will.

 

[dj03]

Harpo + Bri + Consevatives equate debt. Always have. Always will.

Were talking about the first two months of the fiscal year, I wouldn't push the panic button quite yet.

 

[Lester]

Every Government since I can remember be it con or lib has run a deficit- a 500 mill deficit isn't that much when next year we could have another surplus of 500 mill. it is important to get rid of the debt though, the savings on interest snowballs and you get larger surpluses that allow you to pay down more debt. We could be in a lot worse shape(USA) but high commodity prices and a dropping US dollar have cushioned the blow- I really don't give a rats ass who's in power as long as they make decisions based on the good of the Country.

 

[scratch]

Every Government since I can remember be it con or lib has run a deficit- a 500 mill deficit isn't that much when next year we could have another surplus of 500 mill. it is important to get rid of the debt though, the savings on interest snowballs and you get larger surpluses that allow you to pay down more debt. We could be in a lot worse shape(USA) but high commodity prices and a dropping US dollar have cushioned the blow- I really don't give a rats ass who's in power as long as they make decisions based on the good of the Country.

Super Les!
:smile::smile::smile:

 

[elevennevele]

Yes, I remember the angle regarding Federal Monies. George Bush used to use the line, "It's your money." Then he would blow it all too. It's a concept that has been fed to the gullible that whatever monies the government has which are extra, they have to spend it all immediately, or hand it back so that the government walks a break even mark until the next budget. Sounds risky or financially shallow to me. How about reasonable surpluses for tough times and spending wisely with a clear vision for the benefit of the society? Some tax breaks when all is peachy and the roads don't need fixing for a good while because we live in a society and government spending amounts to our basic quality of life in that society. Rather than spending in earnest because money happens to be there to spend which is what the current idiots did.

With that said regarding wasting monies, I've never seen the Americans to the south of us more victimized by their government in all my life.

The reality is it is good to have monies in reserve. That way if ever there is a national crisis, whether it's by some huge natural disaster, or a global economic meltdown, or whatever, the Federal Government can then deal with the situation so that Canadians are cushioned to an extent. And why would we not want that? After all, 'It's our money'. We live in a society which really is only as good as the welfare of the 'whole'. Even in our personal lives it's good to have savings. The reasons work just the same with government but on a larger scale. 'Waste' is what we should be more concerned about.

With all the risks now associated with today's world, whether it is political, environmental, economic, this was the worst time for Harper to have blown the surpluses. The sh't hasn't hit the fan yet with how the economic downturn in the USA is going to affect us up here.

All in all, they spent the money like drunken sailors when times seemed good and in only such a short time (couple years and a bit?), they've left Canadians vulnerable to a looming economic storm. For what?! To pander to votes from Quebec, or wherever they can hope to spend for those votes?

And it sure doesn't help that we have to blow billions on an occupation that so far hasn't given much of any return for us or the Afghans beyond the return which these vampire politicians try to milk when they parade the welfare of these peoples lives beyond the reality of the larger picture.

A government that continually runs large surpluses is as incompetent as a government that continually runs large deficits.

I expect a reasonable government to run small surpluses or deficits (preferably offsetting), that tells me they are either properly investing in government programs, taxing the population an appropriate amount or both.

Yeah, I'll take large surpluses over any large deficit. I highly doubt I'm alone on that one. Could have spent some of that on our health care system rather than to pander for votes. The great experiment has already been played out and it failed. The USA had surpluses before Bush and the citizenry was getting rich all the same. Even when the bubble popped, people were still ok. It isn't the catastro'fuk we now have the sad misfortune to witness of our southern neighbours.

Societies wherever they are in the world need a government that is both fiscally and socially responsible to it's citizenry. A balance. That is what is necessary if we, as people, chose live together under a common flag.



.

 

[scratch]

Yes, I remember the angle regarding Federal Monies. George Bush used to use the line, "It's your money." Then he would blow it all too. It's a concept that has been fed to the gullible that whatever monies the government has which are extra, they have to spend it all immediately, or hand it back so that the government walks a break even mark until the next budget. Sounds risky or financially shallow to me. How about reasonable surpluses for tough times and spending wisely with a clear vision for the benefit of the society? Some tax breaks when all is peachy and the roads don't need fixing for a good while because we live in a society and government spending amounts to our basic quality of life in that society. Rather than spending in earnest because money happens to be there to spend which is what the current idiots did.

With that said regarding wasting monies, I've never seen the Americans to the south of us more victimized by their government in all my life.

The reality is it is good to have monies in reserve. That way if ever there is a national crisis, whether it's by some huge natural disaster, or a global economic meltdown, or whatever, the Federal Government can then deal with the situation so that Canadians are cushioned to an extent. And why would we not want that? After all, 'It's our money'. We live in a society which really is only as good as the welfare of the 'whole'. Even in our personal lives it's good to have savings. The reasons work just the same with government but on a larger scale. 'Waste' is what we should be more concerned about.

With all the risks now associated with today's world, whether it is political, environmental, economic, this was the worst time for Harper to have blown the surpluses. The sh't hasn't hit the fan yet with how the economic downturn in the USA is going to affect us up here.

All in all, they spent the money like drunken sailors when times seemed good and in only such a short time (couple years and a bit?), they've left Canadians vulnerable to a looming economic storm. For what?! To pander to votes from Quebec, or wherever they can hope to spend for those votes?

And it sure doesn't help that we have to blow billions on an occupation that so far hasn't given much of any return for us or the Afghans beyond the return which these vampire politicians try to milk when they parade the welfare of these peoples lives beyond the reality of the larger picture.







Yeah, I'll take large surpluses over any large deficit. I highly doubt I'm alone on that one. Could have spent some of that on our health care system rather than to pander for votes. The great experiment has already been played out and it failed. The USA had surpluses before Bush and the citizenry was getting rich all the same. Even when the bubble popped, people were still ok. It isn't the catastro'fuk we now have the sad misfortune to witness of our southern neighbours.

Societies wherever they are in the world need a government that is both fiscally and socially responsible to it's citizenry. A balance. That is what is necessary if we, as people, chose live together under a common flag.



.

Well said and true.

 

[wallyj]

April and May are the two months of the year that the gov't is usually in deficit because that is when most income tax refunds go out. This is not surprising. But if Dion and the rest think they can do better,pull the plug. I am sure that Canadians would love to pay more for energy,and have the GST move back to 7% or even higher.

 

[Tonington]

Even still, $3.8 Billion is a pretty big swing from the previous year. You can't chalk that up to income tax refunds when taxes went down...

It's really still to early to hit the panic button just yet. Wait until October when they have more figures.

 

[dj03]

Yeah, I'll take large surpluses over any large deficit. I highly doubt I'm alone on that one. Could have spent some of that on our health care system rather than to pander for votes.

Spending it on our health care system would have been just as much pandering for votes as giving tax cuts.

The reality is that the Liberals ran massive budget surpluses for years rather than provide increased stable funding to health care, the Conservatives took over with a different plan and used that surplus for tax cuts.

If the Liberals had properly budgeted, including more funding for health care, than the Conservatives would have had to cut that spending in order to deliver the kinds of tax cuts that they did, and that would have been very unpopular. Now the Liberals are going to have to increase taxes if they want to increase funding for social programs, that leaves them with the unpopular decision to make.

 

[Tonington]

There is nothing popular either, about running a deficit after 10 consecutive surpluses. Cutting taxes and increasing spending--which was warned of by many economists in the past budget for this very reason-- could also mean the Government has some tough choices to make, unless they want to start a consecutive string of deficits.

 

[dj03]

There is nothing popular either, about running a deficit after 10 consecutive surpluses. Cutting taxes and increasing spending--which was warned of by many economists in the past budget for this very reason-- could also mean the Government has some tough choices to make, unless they want to start a consecutive string of deficits.

For years, Canadians got use to large deficits and Chretien corrected that perception in the mid-nineties but now we have swung in the opposite direction tolerating continued large surpluses.

One large surplus would be one thing, but continued large surpluses show that either we are being overtaxed, programs are being underfunded or both.

Canadians need to be weened from the "large surplus = good" mentality, just like they needed to change their toleration of large deficits.

This means some years we may run a small deficit and others we run a small surplus, it is too early to tell what it will be this year.

 

[Tonington]

I said nothing about "large surpluses."

It's good for you and I to have a savings account where we leave room for the unknown, and it's no different for running a country.

In any event, there is nothing wrong with large surpluses. There is a lot of infrastructure and equipment in this country that needs upgrading/replacing. We can pay down the national debt. We can invest savings into funds for rainy days. The list is long, much larger than what is achieved with deficits. In any case, as the money is spent and the priorities change, tax cuts are always good. But spending and cutting to the point of break even isn't a winning formula. Don't know about your household, but that doesn't fly in my family.

 

[dj03]

I said nothing about "large surpluses."

It's good for you and I to have a savings account where we leave room for the unknown, and it's no different for running a country.

But this should be part of your budget in the first place. I know I will receive X amount of income in a month and Y amount in expenses, from there a prudent person plans what to do with the rest which might include savings and debt repayment, which should not result in a massive surplus or deficit every month...if that happens than this person clearly does not know how to budget.

Occasionally, some unexpected extra cash comes in, other times an unexpected expense pops up, both might cause an unexpected surplus or deficit in your budget, but these are one time things, and not consistently happening.

In any event, there is nothing wrong with large surpluses. There is a lot of infrastructure and equipment in this country that needs upgrading/replacing.

The reason for this is because governments did not properly fund things in the first place and ran large surpluses which they used for one time spending on projects which were popular at the time.

Our military is a perfect example, while the government ran huge multi-billion dollar surpluses, our soldiers were stuck using old, outdated and sometimes dangerous equipment.

We can pay down the national debt. We can invest savings into funds for rainy days. The list is long, much larger than what is achieved with deficits.

As mentioned, debt repayment should be part of a good budget to begin with and it is generally considered better to pay off debt rather than set up savings accounts as you are likely to save more money on interest by focusing on the debt than you would get investing.

In any case, as the money is spent and the priorities change, tax cuts are always good. But spending and cutting to the point of break even isn't a winning formula.

Well of course it is a winning formula because debt repayment is already part of the budget. If you pay off $15 billion in debt and then have to borrow $500 million to fund a small deficit, but have managed to put $10 billion in tax cuts back into the economy, everybody wins even if partisans at year end decry the $500 million deficit while ignoring the fact we are $14.5 billion better off than we were last year and more money was kept in the economy.

Don't know about your household, but that doesn't fly in my family.

My family doesn't get income from taxes, we work for it...how did you get your deal (ie. don't compare government budgets to private family budgets, they aren't comparable beyond a very basic level).