Categories: Need to know

Ottawa officially in deficit

Finance department announces a $3.6 billion shortfall in March

by macleans.ca on Friday, May 29, 2009 12:59pm - 13 Comments

For the first time in over a decade, the federal government finished a fiscal year in the red. The finance department announced on Friday that Ottawa lost $3.6 billion in March, closing the books on a fiscal year in which it ran a $2.2 billion deficit. Finance Minister Jim Flaherty blamed the shortfall on sharp declines in personal income tax and corporate tax revenue due to the recession. At this time last year, the federal government posted a surplus worth $11.4 billion. Flaherty says he doesn’t expect Ottawa to post another surplus for four years.

CTV news

Tags: Canada

Terry

So we have 850 billion dollars in debt currently, if we take both levels of government, 482 billion if it is just the federal government alone. We still have a national debt worth 60%-64% of our GDP.

Our highest level of debt was 563 billion dollars in 1993, and we have managed to pay off 81 billion dollars over the past 15 years of largely economic growth. We are running 50 billion dollars of deficit this year, because apparently the 70′s and 80′s weren’t enough of a lesson for either side of the political spectrum as to why a Keynesian theory, a sense of entitlement to government funds, propping up corporate losers and an unwillingness to pay taxes are all idiotic.

Assuming optimistically that the deficit reduces by 10 billion a year as we recover, we’ll probably wrack up 90 billion dollars in the next two years beating our all time high for federal debt by 9 billion dollars. This in addition to fact that we have 1.3 billion dollars of personal household debt which means there isn’t much money to squeeze from the citizenry (at least the ones that are easy to squeeze, namely the middle class). If we keep running deficits, we will find ourselves worse off than we’ve ever been fairly quickly after that. I’m of the suspicious mind that until Canada collapses, we’ll be running up 500 billion dollar debts for every 100 billion we pay off.

We’re such morons.

madeyoulook

All the more depressing is that I believe, except for those NDP nutcases, Canadians got the message about the insanity of living off tomorrow’s wealth, and were on board with no-deficit, reasonable-surplus, debt-retirement plans. And Canadians would have understood the modest to moderate short-term deficit when the economy tanked and taxpayers turned to beneficiaries on a dime. But this? Continued bloat of government these past years? Billions we don’t have to shovel out the door without thinking clearly? Billions and billions to throw at execrable auto manufacturers who are shuttering plants and laying off thousands (correctly) anyways? This is indeed moronic.

And this is the country alleged to be in the best shape.

rumor

I’m not sure many people got the message that financing a modern social democratic state, if that’s what we want to do, requires higher tax rate, particularly higher progressive income tax rates, than we have been wont to allow. The Nordic countries are a good example in this regard. Financing the country doesn’t *necessarily* require extremely high government debt loads. Politically, however, it may.

Terry

Well, you can either have a state which provides less services but has a little more liberty and less services, or you can have a more intrusive welfare state. But everyone should realize that you can’t have both. Don’t spend more without raising taxes to cover it. I don’t care which side of the fence you are on, but you have to realize that every time you raise spending above inflation and population growth you need to raise taxes. If you don’t want to raise taxes but you want to spend money on something, you have to cut something else. Any time you raise spending without raising more revenue it is going to bite you on the ass eventually, even if you are posting “surpluses” that aren’t structural.

rumor

Well said. We can all differ on what the state should be providing, but everyone should recognize that greater spending requires requisite taxing. If that *is* well appreciated publicly, it doesn’t seem to be well reflected in voting patterns over (at the least) the last several decades.

MM

You know why this happened?

Because for years the Conservatives cried that Canadians were “overtaxed” because the Liberals kept posting surpluses. Now, never mind we still had debt, and those surpluses were used to being used to reduce that debt burden. No. Surpluses, apparently, were bad. They were ESPECIALLY bad if you posted a higher than projected surplus. That meant you were overtaxing Canadians.

Now, I need to point out here that I’m not making this up! Those of you with memories and objective minds should remember that every time the Liberals would post a higher-than-expected surplus, they’d be attacked from all sides. Never mind that paying down debt slowly reduced government’s costs, and put it in strong fiscal position to weather economic storms, or to reduce taxes slowly and responsibly as the debt burden eased.

So anyway, the Conservatives took care of that. From surplus to deficit as quick as a wink. Not even 2 full fiscal years in office and they blew it, and now the deficit will be $50 billion…if you believe the latest numbers. They tend to change rapidly.

So, I ask. Which was better? Government that makes conservative forecasts, beats them, and posts surpluses. Or governments that make fantasy-based forecasts, fails to meet them, and posts deficits? Deficits that apparently have to be revised every 6 weeks to account for, oh say, and extra $15 billion!

Yeah. “Conservatives” do a great deal of disservice to the word. The only truly conservative fiscal policy this country has seen the last 40 years was when Paul Martin was the finance minister. The Liberals started falling away from that path, but the Conservatives blew the books away with voodoo budgets. Poorly targeted tax cuts and spending increases meant to buy votes at the expense of Canada’s fiscal health.

Bruce

What an idiotic analysis MM, the Chretien/Martin Liberals created false balanced budgets and false surpluses by looting the EI Fund to the tune of $54 Billion dollars, cutting billions in transfers to the provinces for health care, education and social services, gutting the military, coast guard and fisheries enforcement and stealing billions from the pension funds of the public service, the military and the RCMP.

What about the $162 Million Taxpayer Dollars that Paul Martin’s CSL received via the pockets of Canadians? There should be an inquiry into that scam.

The current opposition parties screamed for this stimulus spending, are still saying it’s not enough, wanted the bail outs for GM and Chrysler($10 Billion Dollars), want EI to be easier to get(higher payroll taxes), while at the same time are decrying the defecit.

Nothing but hypocrites.

Bruce

“Dodge Says Canada Deficit Is Right, Must Be Cut Later

May 30 (Bloomberg) — Former Bank of Canada Governor David Dodge said today that the Canadian government’s deficit, which will exceed C$50 billion ($46 billion) this year, is right given the recession, though lawmakers must commit to cut it later.

“The Canadian federal deficit of 3 percent of GDP, in a year where the output gap is as large as it’s going to be, is certainly not inappropriate,” Dodge, a former deputy minister with the Finance Department, said in remarks at an economics conference in Toronto.”
http://www.bloomberg.com/apps/news?pid=20601082&sid=a7sjoD0SQkV0&refer=canada

Bruce

“must commit to cut it later” which the government has already committed to, because the stimulus spending is time limited, use it or lose it.

Luke

Published: Thursday, November 20, 2008
OTTAWA – Parliamentary budget officer Kevin Page told MPs Thursday that Canada’s deficit next year could be as high as $13 billion and that Conservative government decisions to cut the GST and raise government spending are to blame, not global economic events.

“The weak fiscal performance to date is largely attributable to previous policy decisions as opposed to weakened economic conditions,” Page wrote in his first report to parliamentarians on the government’s economic and fiscal position.
Bruce

Kevin Page couldn’t have been more wrong
Luke

Ya ok whatever makes you feel better.