Reaction to yesterday's budget has been predictable. On the Right, Andrew Coyne writes that the budget is "one for the 1970's to address problems from the 1980's." On the Left, Andrew Jackson -- of the Broadbent Institute -- writes, "The Budget reinvests significantly and appropriately in many important programs broadly in line with the promises made in the Liberal platform." And former parliamentary budget officer Kevin Page writes that the budget announces "big policy initiatives," but is "short on fiscal prudence."
Page admits that some of the big promises have been kept. But he worries about the future:
Put in perspective, the increase in federal direct program spending is large (representing one per cent of GDP). This budget is not like previous Conservative budgets. Budget “winners” include First Nations and veterans. While the Conservatives’ stimulus budget in 2009/10 was based largely on temporary measures, the Liberals’ newly announced measures represent ongoing spending. Like recent Conservative budgets, however, there was precious little to address military procurement issues. This can was kicked down the road again.
The government has put forth some big policy initiatives but they are failing short on fiscal prudence. There are a number of red flags that merit closer attention and analysis. The budget and its presentation is premised on growing the middle class. However, there is no diagnostic or definition of the middle class in the budget.
Perhaps that's because everyone likes to think of him or herself as middle class. And, while it is true that there appear to be very few defined constraints, the government has based its revenue predictions on $25 oil. I suspect that revenues will exceed projections considerably. And, like Paul Martin, Justin Trudeau will claim that his government has exceeded expectations.
The big questions remains: Will the budget really stimulate the economy?
Image: globalnews.ca
20 comments:
.. I have to see myself as running near bottom of the middle class.. and hardly qualified to comment on a federal budget.. but at least from. my limited view, the current budget is not a toxic omnibus budget, laden with hidden trapdoors, eviscerating environmental law, touting evangelism or designed by Big Energy.. and threatening key chain species, fresh water, climate.. or privacy.
My current observation ? Where is the illustrious economist Stephen Harper to comment on this budget? Or Ray Novak, or Laureen? And to have Jason Kenney suddenly loom into the discussion crying about not enough anti terror spending.. is wondrous hypocrisy .. as his complicits under Harper funneled such funds via John Baird to Tony Clement for fake lakes and gazebos..
My hunch, salamander, is that historians will view Harper the Economist as a joke.
Why do we want to stimulate the economy? If the plan is to reduce overall GHG emissions don't we need to shrink the economy?
That was the Harperian argument, Hugh. Reducing GHG emissions, he said, damaged the economy. There's another argument: Shifting to green sources of energy can cause economic growth.
I think future historians will view him as a traitor to the human race.
Canada is the only country in the western world to so obsess over a budget. It's a strange phenomenon.
True, Dana. We look upon it as revelation from on high.
Whatever they write, I can't see them as being laudatory, astone.
http://www.theglobeandmail.com/news/politics/morneau-pins-budget-success-on-gdp-growth/article29362073/
Summary:
Our debt level is huge and getting bigger with annual budget deficits.
If we grow the GDP we can reduce the debt to GDP ratio.
We will grow the GDP by adding more debt.
Growth also increases government revenues, Hugh. Marginally better growth should mean marginally better revenues -- which can be used to pay down debt.
I don't think the budget will "stimulate" the economy, but it will help families stay afloat until things get better. I was happy the moment there was increased funding for First Nations. It should have been more especially when it comes to children's health, but its a start.
Moreau's changes to E.I. are good. Now he just needs to go further. E.I. keeps people, small businesses, and towns afloat when their economy hits the skids. It isn't an answer, but that money does get spent in the community.
What is unclear is the grants for children, will parents be able to keep that money if they are on welfare or will provincial governments be able to claw it back?
I thought spending on infrastructure created more jobs for people working on infrastructure projects who then pay taxes. Besides it's nice for the rest of us to know the bridges won't fall on our heads. There's plenty of infrastructure in Canada that needs updating badly.
Tax cuts over the past ten years have meant that lots of regularly scheduled maintenance has been put off, ffd. If you don't fix it, it falls down.
E.I. injects money immediately into the economy, e.a.f. We need that kind of stimulus. But we also need to do some long term planning around issues like public transport. Europe and Asia are way ahead of us on that score. And public transit would be good for the environment.
Should the investment in the infrastructure prove successful; whatever Government succeeds this one will reap the benefit just before they introduce an austerity budget to soothe the 1%
Either is works, and growth pays off the investment, or we bring the GST back to sustainable levels. If we look at Germany we have a lot of tax headroom and still have a sustainable society.
We still have quite a bit of headroom, Steve. We forget what Oliver Wendell Holmes said about taxes. They are "the price we pay for civilized society."
I can see that happening, Anon. I hope it doesn't.
Right now our debt load is sustainable because of very low interest rates.
Those low interest rates are resulting in growing debt levels.
So we shouldn't expect the interest rate to rise, ever.
And we can expect growing debt and non-growing economy.
Why would the economy grow, given demographics and resource scarcity?
It depends on how resources are shared, Hugh. Henry Ford understood that, if he paid his workers more, they would buy the automobiles they produced.
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