Tuesday, October 13, 2009

And in this corner, coming in at tens of billions dollars, we have the deficit....

The deficit will be HUGE. I don't mean big when compared to recent years. I mean big when compared to some of those beasts we learned to despise in the mid- to late-90s. Put another way, we have not slipped into the red...we have plunged into it.

Over the next day or so, I want to talk about this change in our financial situation. Some points to consider:

  • How did this occur? Is it all because of the stimulus measures (i.e. Canada's Economic Action Plan), or did things like pre-crisis government spending and tax cuts contribute to this?
  • How bad is the situation?
  • How can we get out of it?

This last bullet is important to me. The plan to eliminate the deficit will ultimately reflect views on the role of government. For many economists, expecting pure economic growth (and resulting tax revenues) to put Canada back in the black is not reasonable. If they are right, it comes down to choices.

  • Should government spend less? If so, where?
  • Should government tax more? If so, where?

Our political leaders do not really want to discuss either option, for fear of attack and a drop in support. Why alienate voters now?

Well, this voter would prefer to know heading into an election what the plan is and we will get there.

What about you? Views, thoughts? Let me know...

1 comment:

  1. I think there were a number of problems that came together at the same time to magnify the deficit that we see.... I think the govt should cut their spending levels: transfers (especially overfunding in quebec), pet projects.. overall budget cutbacks and efficiencies need to be made.

    I do not they should tax more, or less - we need to maintain our income to pay down the debt (which I do differentiate between from the deficit). I would be actually concerned with getting the job done... but being in a precarious minority position... doesnt allow one the luxury to irritate the voters...


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