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Tuesday, May 26, 2009

Surprise, surprise: the deficit is going to be bigger than expected

Finance Minister Jim Flaherty is starting to prepare Canadians for bigger deficit numbers than the government predicted when it tabled its budget in January.

This isn't surprising - or shouldn't be to anyone who's a fan of public choice. We should expect to see (and I've predicted) the same thing happen to the McGuinty government's projected deficit in Ontario, and to any other government expecting a deficit this year.

Realistically, and thankfully, Canada's debt-to-GDP is the smallest in the G7, so borrowing is cheaper for us than it is for most. That doesn't mean that expanding or continuing budgets are excusable, though.

For all the rigmarole surrounding Ignatieff's assertion that Ottawa is going to have to raise taxes (or make spending cuts, but thankfully the Tories didn't attack him for that half of the comment), he's right. Getting out of deficit isn't going to be easy or painless for Canadians, and as much pressure as possible needs to be put on the Conservatives to stop piling up the debt so that they don't have to be the ones to make the cuts.

UPDATE: Finance minister Jim Flaherty now says that the deficit will be $50 billion this year, up from the original estimate of $34 billion. This alone will raise the five-year deficit up to $102 billion, barring unexpectedly high economic growth over those years. I have a hard time believing it will happen but realistically no one knows.

Posted by Janet Neilson on May 26, 2009 | Permalink


Hey we've got pension funds to bail out. You don't expect GM to pay the outrageous union pension benefits they got talked into all by themselves now do you. And you don't expect the union to reconsider that it may just be strangling the goose that laid the golden egg.

Posted by: Farmer Joe | 2009-05-26 10:52:20 AM

Surprise surprise. So the government underestimated expenses and overestimated revenues? Who knew?

Posted by: Charles | 2009-05-26 11:58:21 AM

Time to axe the CBC - $1b saved right there.

Then no axe the $1b to Toronto's transit system, and no bailouts of Ontario's corporations.

Posted by: Zebulon Pike | 2009-05-26 2:51:58 PM

Thank God the coalition government was stopped. What a difference it made!

Posted by: Robert Seymour | 2009-05-27 3:34:20 AM

Well I don't know about you guys...but I think we've been had...again. But be sure to get out there and vote. Pick a blue criminal or a red criminal...and vote vote vote.

Posted by: JC | 2009-05-27 4:03:00 PM

I'm not surprised at all, in fact I'm pretty sure Harper knew we were already in deficit when he broke his own fixed election date law to try and get a majority against weak Dion. He wanted to scoop a majority while he thought he had a chance so that nobody would get a chance to see the books that Flaherty had already been busy cooking.

He was lying during the debate, to try and cover up the fact that they had already put Canada into deficit, and squandered the huge surplus that the Liberals handed them. Tory idiot policies of increasing spending while lowering taxes(especially for the most wealthy)has put us where we are today. The conservative party is probably the least fiscally responsible of all the parties.

We won't really know how bad the tories have fucked Canada's finances up until we give them the boot and get a look at the books.

Posted by: DrGreenthumb | 2009-05-30 11:34:41 AM

lol--Harper has his sheep where he wants them! He is spending money like a drunken sailor in a ho-house, broke every promise he ever made, from income trusts to honest, transparent government, and everything in-between, including acting to curb abortion and outlaw same-sex marriage, and cut immigration, and yet his sheep keep on bleating. Where they gonna go with their vote? Nowhere! Fortunately, the rest of Canada is not a one-party state like Alberta! Heave ho and send these Harper hillbillies back to filthy, dirty oil tar pond Alberta, where they can whine away their time.

Posted by: ali_roger | 2009-05-30 1:12:57 PM

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