The reason why I asked specifically about the Bush tax cuts was because its an example of attributing false causality (or at least the last tax cuts). The conservatives in America argue that the economy began to turn the quarter the final tax cuts were implemented, ergo the economy turned because of the tax cuts. (I've seen this graphically depicted several times and I will post it if I find it again.) This is highly unlikely since there is a lag anytime a new fiscal policy is implemented. Thus its certainly false for the Republicans to claim the last tax cuts ended the recession.
Recessions have a natural bottoming point, just like expansions have a natural topping point. What happens is that when the recession has both lowered costs and reduced inventory to a certain point, the investment cycle will begin again because the lower costs and reduced inventory will raise prospective returns. This investment will increase jobs, which will spur demand. (However, it is only clear that the bottom of the recession has occurred ex-post. And the amplitudes of this cycle have been lessening over the past few decades for several reasons, but due at least in part to better understanding of fiscal and monetary policy.)
This is important because one should not to mix up cause and effect. And it is also why its incorrect to plug and play a few numbers by adding and subtracting in an excel spreadsheet and draw any big conclusions, as anyone who has taken econometrics would testify.
To demonstate, take an extreme example. Let's say the NDP government increased the deficit by 3% to to buy a rocket from the United States so they could put it at Queen's Park so everyone could admire it. Would one then come to the conclusion that the economy would have been 3% less if they hadn't purchased that rocket? No.
I lived in Ontario during the beginning then again at the end of Rae's term, and what I recall at the beginning of his term was that he was increasing spending on items that wouldn't much alleviate the economic problems while jacking up the deficit. I believe he increaed civil servants salaries quite a bit, only then to rescind part of those raises through his "Rae Days." Now, there's nothing necessarily wrong increasing pay for government employees, but its not the best way to stimulate the economy when deficit financing. (Similarly, a poor way to stimulate the economy in a recession is to cut the estate tax.) That's what I meant earlier about respecting Rae later in his term since he acknowledged his mistake, reversed course and swam against the tide of his party for the good of the province.
Anyways, this is a far cry from Nova Scotia.
By "turning orange", I guess that means Nova Scotians will be cheering for Holland at the World Cup, eh?
