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Tuesday, January 27, 2009

$85 billion deficit: The Canadian budget

Federal Finance Minister Jim Flaherty has released the budget, and the spending is gargantuan. It is monstrous. It is ginormous. The Conservatives are projecting an $85 billion dollar deficit over the next five years.

From CTV: "We must do what it takes to keep our economy moving, and to protect Canadians in this extraordinary time," Flaherty said. "Making new investments is more challenging in such a time; but it is also more necessary than ever."

I wonder... can I call it an "investment" the next time I pay my toll traveling along the 407? Or does that just count as regular-old "spending"?

Here are some of the details, again from CTV:

The surprise move of the day was the roughly $2 billion per year in income tax cuts. Those cuts will extend to $20 billion over the next six years.

The tax changes will include a slight increase in the basic personal exemption and raising the upper limit on the two lowest personal income-tax brackets.

Business tax cuts were also included in the budget, $2 billion over six years.

Government spending will jump dramatically in the budget -- up 11 per cent in the 2009-2010 and three per cent in the year following.

EI benefits will also be extended five weeks for the next two years.

Other measures in the budget include:

* $12 billion for infrastructure spending towards roads, sewers and universities, $1 billion for "green" infrastructure, and $1 billion for clean-energy research.
* $1.5 billion for job training
* $7.8 billion for social housing and home renovation, including a one-year only Home Renovation Tax Credit of up to $1,350 per household.
* $2.7 billion in short-term loans to the auto industry.
* More than $1.4 billion for aboriginal schools, health, water, housing, community services and training.

Posted by P.M. Jaworski on January 27, 2009 in Current Affairs | Permalink

Comments

Harper should have fallen on his sword. At a minimum he might have left with some dignity intact. He might even have destroyed the Liberal Party.

Posted by: Matt | 2009-01-27 3:18:56 PM


Harper has sold out. Its one thing to toss a carrot...

Posted by: Cruz | 2009-01-27 3:52:50 PM


I don't think he could of destroyed the Liberal Party. The Liberals just had a leader who wasn't popular across the country. Harper has really destroyed himself lately with lies about the economy. Because others in his party are not allowed to speak up on issues, the Conservatives have dug themselves into a large hole.

Posted by: Bob Peloquin | 2009-01-27 3:55:23 PM


To Arms! The Conservatives are coming To arms all...

Well it sure seems like the enemy has arrived.
Liberal or Conservative the whole thing should be seen as criminal in nature. Tyrants.

Posted by: JC | 2009-01-27 4:29:12 PM


Why the hell did I vote Conservatives if I was going to get a Liberal budget?!

Posted by: Pete | 2009-01-27 4:53:24 PM


Why the hell did I vote Conservatives if I was going to get a Liberal budget?!

Posted by: Pete | 2009-01-27 4:53:24 PM

That's easy Pete, Since the Lieberals have moved slightly over the horizon to the left, they've left a lot of room near the center. And since nature abhors a vacuum, the CONservatives have been kind enough to move a long way left....left of center in fact. We no longer have a right of center party and the closest thing to the middle is...yep! The Libertarians.

Posted by: JC | 2009-01-27 6:50:38 PM


There are smart political moves Harper could have made without throwing a spending orgy. Significant raises to the basic exemption, cuts to GST and cutting red tape for businesses and developement come to mind.

Now if the government falls on the budget, he doesn't have much of a defining message to run on. Given the choice for a real Liberal and a fake one, voters don't generally make the choice Harper is hoping for (unless the Liberal leader is completely inept.)

Posted by: Janet | 2009-01-27 8:01:09 PM


That's exactly right Janet.

Posted by: JC | 2009-01-27 8:13:53 PM


Janet: Totally agree that there are better moves they could have made, and I thank you for being one of the few to actually offer a few suggestions instead of just saying what they've done wrong. Personally, I would have liked to see the loosening of the EI rules coupled with some sort of structural mechanism that would have helped guarantee that EI surpluses could never be appropriated by future governments for other purposes. Imagine how much more room they would have for temporary relief if the EI surpluses of the past decade had been quietly sitting in an airtight trust fund gathering interest, waiting until a predetermined and, more importantly, pre-defined level of downward economic movement kicked in. But, hindsight is of course 20-20 of course. Plus, the legal mechanism would have to be pretty damned well-designed to prevent any government-of-the-day from being able to dip into the fund. Still, if you're going to gave an unemployment insurance scheme, you have to make sure the money is there when it's needed. I also would have preferred more emphasis on an injection of cash into a general "infrastructure fund" with well-defined criteria for applicants, rather than announcing cash giveaways to various pet projects in the budget itself. Let the dollar amount be the same, sure, but communicate some assurance to the taxpayers that there will be a mechanism in place to prevent spending on "bridges to nowhere". As for the bailouts to private industry, I would have preferred a bailout fund with well-defined criteria for applicants, mechanisms for accountability, and the possibility that in the unlikely event that the fund isn't actually drained at the end of a set period of time that the leftover money would go to tax cuts. This budget would have been easier to digest if they had built in incentives for prudence and thrift. After all, if by some amazing stroke their stimulus actually works, then it would follow that the economy would pick up enough that the various players would no longer need the taxpayers' help, right? Many of the programs of the New Deal tried to build-in at least some level of obligation on the part of the recipients, after all.

Posted by: anonymous | 2009-01-27 9:17:43 PM


Can someone explain why it costs 4 billion to keep EI premiums the same?

Posted by: Faramir | 2009-01-27 10:54:16 PM


When will we have the option to have a person as our prime minister who actually gives a dam about canada or canadians !!! Where is our Obama !!!!

Posted by: Patricia | 2009-02-10 2:51:51 PM


Hello,
Can anyone tell me if there any other renovation or home or environmental improvemenats than the 15%?
I am converting my septic tanks (qty 2) to the city mains here in Burlington.

Posted by: robert colt | 2009-02-21 3:07:01 PM



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