Thursday, January 29, 2015

An Unmitigated Disaster


Jim Stanford writes that the sound a fury about a balanced budget is about politics, not economics:

Running spending cuts since 2011 now total more than $14-billion a year. Canadians experience real consequences from those cuts every day: shuttered veterans’ offices, deteriorating statistical data, questionable railway and food safety, ridiculous waits for statutory benefits and more. Federal government employment has plunged by 47,000 jobs since 2011 – explaining much of Canada’s lousy job-market performance. These sacrifices were not necessary. Worse yet, the government is throwing away the savings with its tax-cut agenda.

Indeed, if the government truly believed that balancing the books was the most important priority, we could be back in the black right now, never mind next year. Before opening the cookie jar in October for income-splitting and other giveaways, Ottawa was headed for a $3.3-billion surplus for the fiscal year ending March 31. Falling oil prices knocked $1.2 billion off that balance, according to the PBO, leaving a $2.1-billion surplus. But the government spent $3.2-billion on the immediate first-year cost of the tax cuts – pushing itself back, incredibly, into deficit. Without the tax cuts, the budget would already be balanced, even with low oil prices.

Harper's claim that only he could provide prudent fiscal management of the nation's finances was -- and is -- just election hoopla. And it distracts the public from the real problem:

The bigger issue is how much was needlessly sacrificed in pursuit of that balanced budget – and how quickly the Conservatives squandered the results of those sacrifices when it politically suited them.

The government’s focus on eliminating the deficit at all costs was misguided and destructive, and undermined the economic recovery. We should stop worrying whether next year brings a small surplus or a small deficit. It doesn’t matter. What does matter is why so much was sacrificed in the single-minded pursuit of a supposedly overarching goal – that the government quickly threw away for short-term political benefit.

The Harper years have been an unmitigated disaster. Mr. Harper is doing everything he can to distract voters from reaching that conclusion.


UU4077 said...

So, according to the PBO, the budget balanced itself. Until Mr. Oliver got involved.

Owen Gray said...

If you watch carefully, UU4077, you can see the strings being pulled whenever Oliver speaks.

Hugh said...

They've had big deficits every year since 2008. Govt can't keep running deficits indefinitely. The big problem in the world today is way, way, way too much debt.

Owen Gray said...

The argument is about how to get rid of the debt, Hugh. You can bring debt down by stimulating the economy. The Americans have done that. We've gone the other way.

And now the chickens are coming home to roost.

Hugh said...

Owen, I have to disagree. You cannot bring down debt by stimulating the economy. That just puts us deeper in debt. Eventually we won't be able to pay the interest. At that point we are bankrupt.

The US economy is still sinking in debt, over $18 trillion now.

Owen Gray said...

I don't think it's quite that simple, Hugh. As Stanford points out, the Harper government has withdrawn billions from the economy.

One of the reasons we are in debt is because the Harperites have "starved the beast" by lowering taxes. Increased economic activity generates increased tax revenues. Despite their claims to the contrary, the Harperites have decreased both economic activity and tax revenue.

At the same time, wealth has coagulated in the hands of a few. That's a recipe for massive debt -- and for massive economic failure.

Anonymous said...

Harper is an abysmal failure in every aspect.

Harper has given Canada to foreign ownership. He has brought over, thousands and thousands of foreigners to take Canadian jobs. Foreigners send their wages back home. The money from our resources and foreign wages, all go out of Canada.

Many companies have been pulled out of Canada causing huge job losses and loss of revenue.

Premier Clark's whopper campaign lie, there are to be 100,000 LNG jobs for BC and Canadians. There were to be hundreds needed, for her six figure wage mine jobs. All lies, deceit and cheating to win.

I just see all of the money leaving Canada and very little money coming into Canada.

Owen Gray said...

Harper and Clark are caught in their own resource trap, Anon. It's an old mistake -- which neither leader has learned from.

mogs moglio said...

Since all debt is made by computer transactions we can simply cancel it and start over. Other countries have done this but Stephen Joesph Harper's government has a deep commitment to keeping Canada and Canadians Economic Slaves to the worlds 1% and internal and international banksters.


Now this Palast guy is a real investigative journalist that had to go solo because of his hard hitting journalism I believe the man like I believe you Owen.

He exposed the truth about The Exxon Valdez and The BP Gulf explosion and so many other crimes against humanity I don't have time or space to list I'm humbled by the fact he has not been assassinated or poisoned for digging so deep into the dark and dirty recesses of "The Establishment"?

Enjoy the link...


Owen Gray said...

There is a way to write off debt, Mogs. But, in an interdependent world, simply cancelling debt can have catastrophic consequences.

It will be interesting, for instance, to see how Greece and the European Union conduct themselves over the next few months.

mogs moglio said...

Um this from Palast who knows way more about this subject than you or I combined:

"There’s Life after Euro

Many nations do quite well without the euro. Sweden, Denmark and India do just fine without the euro—and so does Turkey, which had the luck to be excluded from the euro-zone. As long as Turks stick to the lira, even Turkey’s brain-damaged Islamo-fascist President Tayyip Erdoğan cannot destroy their economy.

Can Greece just dump the euro? They have happy precedents to follow. Argentina was once pegged to the US dollar much as Greece is tied to the euro today. In 2000, Argentines, hungry and angry, revolted. Argentina ultimately overthrew the dollar dictatorship, the IMF diktats and the threats of creditors, and defaulted on its dollar bonds. Free at last! In the decade since, the Argentine economy soared. Yes, today, Argentina is under attack by financial vultures, but that is only because the nation became so temptingly wealthy.

I was in Brazil when its President Luiz Inácio Lula da Silva told the IMF to go to hell—and rejected privatization of the state banks and the state oil company, rejected cutting pensions and thumbed his nose at the rest of the austerity nonsense. Instead, Lula created the bolsa familia, a massive pay-out to the nation’s poor. The result: Brazil not only survived but thrived during the 2008-10 world financial crisis. Despite pressure, Brazil never ceded control of its currency. (It is a sad irony that Brazil is only now faltering. That’s the fault entirely of Lula’s successor, President Dilma Rousseff, who is beginning to dance the austerity samba.)

Austerity: Religion, Not Economics..."

Read the article you are of like mind and yes Owen there is a better dance than the Harperite & IMF Word Bank dance of austerity.

Owen Gray said...

I lost your other comment, Mogs. Can you re-send it?

mogs moglio said...

No Owen not because I don't love you but once I trigger the send button I can't get it back perhaps it was not important eh?

Owen Gray said...

I get two copies of each comment, Mogs -- one before I publish it and one after I publish it.

I thought I had already published your comment. I apologize.

mogs moglio said...

No apologies necessary Sir.

mogs moglio said...

And why do we owe this much money to private foreign and domestic bankers in the first place? Listen to Rocco Galati:

Here are people actually putting their money where their mouth is [COMER] and hired Constitutional Lawyer Rocco Galati who by the way was responsible for having Harper's choice of a Quebec judge slapped down. He petitioned The Supreme Court of Canada to have Harper's choice Nadon barred.

"Galati is the lawyer who successfully challenged Prime Minister Stephen Harper's appointment of Federal Court of Appeal Justice Marc Nadon to the Supreme Court of Canada."---> From:

Soon I'm going to start my lawsuit against the so-called "Harper Government" targeting Steve himself for violations against The Canadian Constitution The Canadian Bill of Rights and Steve's worst peeve The Canadian Charter of Rights and Freedoms.

Rocco will be my main man.