Flaherty hints at tax cuts as consumer confidence dips

[jdobbin]

http://www.ctv.ca/servlet/ArticleNews/stor...02?hub=Politics

As retailers begin to tally up results from their year-end sales and forecasters agreed that the first part of 2009 will be painful, the government is looking for ways to stoke consumer confidence.

Finance Minister Jim Flaherty said Friday he's reviewing options for putting more money in people's pockets through tax cuts as part of a multi-billion dollar stimulus package that will include infrastructure spending and help for laid-off workers.

Guess we will be seeing an even greater deficit.

Problem is if Harper has another tax cut, he will just have that much more to pay off later on. He'll either have to cut spending or raise taxes later on. Since he has shown that he can't do either, he seems content on letting the deficit go to the moon.

[August1991]

Finance Minister Jim Flaherty said Friday he's reviewing options for putting more money in people's pockets through tax cuts as part of a multi-billion dollar stimulus package that will include infrastructure spending and help for laid-off workers.

Let me cut to the chase here: Tax cuts. Please, now.

"Shovels in ground" will take months or years. OTOH, a change in the base exemption will affect every Canadian next month in their bi-weekly deposit.

When unemployment is around 6%, the best stimulus package is a tax cut.

GOVERNMENT IS ALREADY TOO BIG.

No more government spending, please. If you want to be Keynesian, cut taxes.

[/end of rant]

Guess we will be seeing an even greater deficit.

Government deficits don't matter. Government spending does.

Some day, you and others may understand this critical nuance.

Edited January 3, 2009 by August1991

[punked]

Let me cut to the chase here: Tax cuts. Please, now.

"Shovels in ground" will take months or years. OTOH, a change in the base exemption will affect every Canadian next month in their bi-weekly deposit.

When unemployment is around 6%, the best stimulus package is a tax cut.

GOVERNMENT IS ALREADY TOO BIG.

No more government spending, please. If you want to be Keynesian, cut taxes.

[/end of rant]

This is supply side bull shit. I thought we learned from the US model a consumer based economy does not work.

[bush_cheney2004]

This is supply side bull shit. I thought we learned from the US model a consumer based economy does not work.

When did we learn that? After shipping so much production across both borders?

What kind of economy do you propose instead?

[jdobbin]

Government deficits don't matter. Government spending does.

Some day, you and others may understand this critical nuance.

Harper certainly doesn't. He can't control his spending. Problem is that now he has no cushion for tax cuts without going into deficit.

Some day, you and others will realize that I was right all along that Harper was a freespender and that deficits do matter when they come as a result of that.

Edited January 3, 2009 by jdobbin

[punked]

When did we learn that? After shipping so much production across both borders?

What kind of economy do you propose instead?

Well you see if your economy is based on 75% spending on things from outside your country the only way you can sustain is by borrowing more money. Well someday you need to give all that money back and you know it. I have been saying this is a dumb idea for years.

[August1991]

This is supply side bull shit. I thought we learned from the US model a consumer based economy does not work.

No, the Soviet model is a freaking success. BTW, what cat did Deng Hsiao Ping choose?

---

Sorry, punked, the American free market model delivers. The NYSE has outlasted various Popular Republics and most if not all European constitutions.

The "supply side bullshit", as you describe it, has survived the test of time. You're barking up the wrong tree.

[punked]

No, the Soviet model is a freaking success. BTW, what cat did Deng Hsiao Ping choose?

---

Sorry, punked, the American free market model delivers. The NYSE has outlasted various Popular Republics and most if not all European constitutions.

The "supply side bullshit", as you describe it, has survived the test of time. You're barking up the wrong tree.

You are right a government which collects no taxes always does best. Europe there is a better model to look at I am not talking Soviet nothing I am however saying usually paying for the things we want (Military, Health Care, Harper buying Quebec support) is nice.

Edited January 3, 2009 by punked

[bush_cheney2004]

You are right a government which collects no taxes always does best. Europe there is a better model to look at I am not talking Soviet nothing I am however saying usually paying for the things we want (Military, Health Care, Harper buying Quebec support) is nice.

Many EU nations actually have a hire debt to GDP ratio than Canada or the USA. I'm not feeling the better model.

[punked]

Many EU nations actually have a hire debt to GDP ratio than Canada or the USA. I'm not feeling the better model.

You realize the GDP is made up of what you spend. So if you buy 75% of products from outside your country with the debt you borrowed to do it it is all counted as GDP? Right?

But I will play your game here are some countries lower on the the list then the US.

United Kingdom

Switzerland

Poland

Sweden

Turkey

Denmark

Czech Republic

Ireland

I mean the lowest country on the list is Estonia That is how you measure success? Estonia? REALLY????

Infact the US is one of the highest on the list.

Also I am not sure when many came to mean 4 there are 4 European countries higher then the US and Canada and they aren't higher by much. Problem is you trying to live in the Clinton era but you really live in the Bush era.

http://en.wikipedia.org/wiki/File:Public_d...p_world_map.PNG

Edited January 3, 2009 by punked

[bush_cheney2004]

I mean the lowest country on the list is Estonia That is how you measure success? Estonia? REALLY????

Infact the US is one of the highest on the list.

Also I am not sure when many came to mean 4 there are 4 European countries higher then the US and Canada and they aren't higher by much. Problem is you trying to live in the Clinton era but you really live in the Bush era.

http://en.wikipedia.org/wiki/File:Public_d...p_world_map.PNG

Oh, in other words, your position isn't so solid after all. Japan is running a 175% debt/GDP ratio.

Whatever I'm living in, you are doing the same.

[punked]

Oh, in other words, your position isn't so solid after all. Japan is running a 175% debt/GDP ratio.

Whatever I'm living in, you are doing the same.

Japan has not recovered from the 1990s when its economy went into the toilet. It had an interest rate of 0% for 6 years and still has one below .5% becuase of the terrible economic blow delivered to it. It has one of the largest per capita debts of any country and has had to keep its dollar artificially low to keep its manufacturing sector. That is who you want to be Japan? Go for it, I think Canada is better off looking else where for examples.

Edited January 3, 2009 by punked

[bush_cheney2004]

Japan has not recovered from the 1990s when its economy went into the toilet. It had an interest rate of 0% for 6 years and still has one below .5% becuase of the terrible economic blow delivered to it. It has one of the largest per capita debts of any country and has had to keep its dollar artificially low to keep its manufacturing sector. That is who you want to be Japan? Go for I think Canada is better off looking else where for examples.

I don't want to "go" anywhere.....just pointing out your folly. The US doesn't need any steenkin' examples.....that's how we roll. And your hitch is firmly attached because 80% of exports go south.

[punked]

I don't want to "go" anywhere.....just pointing out your folly. The US doesn't need any steenkin' examples.....that's how we roll. And your hitch is firmly attached because 80% of exports go south.

What folly Japans 175% is becuase all of its borrowed money isn't spent in country like the US. They invest and pump money else where, plus becuase of the tax cuts, and deflation due to the 90's they keep borrowing to keep a float. This is where you get the 175 from they can't spend it as fast they are borrowing it.

Zimbabwe's is 218% because their dollar falls so fast that by the time they have the money they borrowed their dollar is worth 10 times less. Does not mean my premise is off. If you spend it in country it adds to the GDP that is the way the GDP works.

[bush_cheney2004]

What folly Japans 175% is becuase all of its borrowed money isn't spent in country like the US. They invest and pump money else where, plus becuase of the tax cuts, and deflation due to the 90's they keep borrowing to keep a float. This is where you get the 175 from they can't spend it as fast they are borrowing it.

That's not how it works.

Zimbabwe's is 218% because their dollar falls so fast that by the time they have the money they borrowed their dollar is worth 10 times less. Does not mean my premise is off. If you spend it in country it adds to the GDP that is the way the GDP works.

I don't think I understand your premise at all. Neither do the billions of international dollars headed for US Notes....it's still the best game in town.

[punked]

That's not how it works.

I don't think I understand your premise at all. Neither do the billions of international dollars headed for US Notes....it's still the best game in town.

Do you know what the GDP is? It is just all the money spent in country. So if I pay you in Tax dollars to dig a ditch it contributes to the GDP. If I give you a tax break and you take that money and put in a bank account it does not, however if you buy a DVD player inside the US even if made in Japan it contributes to the GDP. So as long as your country spends the money it borrows "in country" it contributes to the GDP. If you spend it in Iraq it contributes to Iraq's GDP.

So if Zimbabwe borrows 100 000 US dollars converts it too like a gazillion Zimbabwean dollar gives it to a contractor to build a road it adds to the Zimbabwe GDP. However if by the time they get the loan and convert it the dollar is defaulted which happens in Zimbabwe a lot then they have less money then they borrowed. Is this true of all countries with a 100+ ratio? No. I am not saying it is.

I am saying however if you spend money in country it always adds to the GDP so your measurement is a poor predictor. You still owe that money to some other country regardless of you GDP.

Edited January 3, 2009 by punked

[bush_cheney2004]

Do you know what the GDP is? It is just all the money spent in country. So if I pay in Tax dollars to dig a ditch it contributes to the GDP. If I give you a tax break and you take that money and put in a bank account it does not, however if you buy a DVD player inside the US even if made in Japan it contributes to the GDP. So as long as your country spends the money it borrows in country it contributes to the GDP. If you spend it in Iraq it contributes to Iraq's GDP.

What? This is not correct...you are missing some elements of "real" GDP....including export.

I am saying however if you spend money in country it always adds to the GDP so your measurement is a poor predictor. You still owe that money to some other country regardless of you GDP.

No, no, no....the public debt/GDP ratio is a significant metric because it reflects the ability to service the public debt.

What does any of this have to do with Flaherty's tax cuts?

[ToadBrother]

I don't think I understand your premise at all. Neither do the billions of international dollars headed for US Notes....it's still the best game in town.

Which isn't exactly saying a lot right now.

[bush_cheney2004]

Which isn't exactly saying a lot right now.

Actually...it speaks volumes. Flight to safety in a storm.

[Progressive Tory]

Let me cut to the chase here: Tax cuts. Please, now.

"Shovels in ground" will take months or years. OTOH, a change in the base exemption will affect every Canadian next month in their bi-weekly deposit.

When unemployment is around 6%, the best stimulus package is a tax cut.

GOVERNMENT IS ALREADY TOO BIG.

No more government spending, please. If you want to be Keynesian, cut taxes.

[/end of rant]

Government deficits don't matter. Government spending does.

Some day, you and others may understand this critical nuance.

I agree that the government should be a smaller, more effective unit. That's why I was so amazed that Harper is adding 30 more seats to the House of Commons after overstuffing his cabinet. I always thought he was for smaller gov't. Not very prudent.

[Progressive Tory]

Harper certainly doesn't. He can't control his spending. Problem is that now he has no cushion for tax cuts without going into deficit.

Some day, you and others will realize that I was right all along that Harper was a freespender and that deficits do matter when they come as a result of that.

Couldn't agree more. Harper is a fan of the Laffer curve, but Art Laffer himself says that tax cuts only work if GOVERNMENT SPENDING IS REDUCED. Can't have one without the other. He must have missed that class.

[Barts]

Conservative tax cuts are nothing more than a tactic to "buy" votes. They will not help the economy. First, the tax cuts will be small for most people; anyone notice the 2% GST cut? Second, most of the money will be either spent on paying down credit cards or, for the most part, imported goods, particularly from China. Neither consumer action will do anything for jobs or economy stimulation in Canada. And, lastly Canada and its economy will have little to show for the tax cuts except more Chinese and Asian junk in our landfill sites.

Expenditures in infrastructure on the other hand will create jobs, and leave a "bricks and mortar" legacy which will improve the quality of life in Canada and productivity.

The Conservative tax cuts political purpose is to put into the budget something that the Opposition parties will--in the view of the Conservatives--be loath to vote against.

The way to stimulate the economy is to increase taxes, particularly the consumption and gas taxes and the highest marginal income tax rate, borrow heavily, and spend massively on infrastructure (high speed inter-city train system, super high speed national broadband, public transit, schools, health services, home insulation, etc.) that cannot be outsourced and that will provide a legacy.

The Conservative's approach, we know does not work, and is intended only to seduce voters with a con. The only thing I'm not sure about is whether they actually believe their discredited dogma or are merely charlatans. Perhaps both.

[jdobbin]

Couldn't agree more. Harper is a fan of the Laffer curve, but Art Laffer himself says that tax cuts only work if GOVERNMENT SPENDING IS REDUCED. Can't have one without the other. He must have missed that class.

I could agree on tax cuts if there was some substantial cuts in spending.

My personal view is that transfer payments should be reduced first. Next, all departments of the the government should be required to cut spending cross the board by a certain percentage. The cabinet should be reduced to 24 ministers. Large procurement of military spending needs to be extended at least a year or two. There should be consideration about abandoning the sub program which has been a bottomless pit. The overall employment by government needs to decrease, at first through attrition but then by targeted cuts.

Overall spending should be reduced to 2004 levels.

http://www40.statcan.gc.ca/l01/cst01/govt48b-eng.htm

If there are to be tax cuts, they should have time limits. I suggest a one year moratorium on the GST, a one year moratorium on corporate tax and a one year moratorium on income tax.

After that, the GST should go back up to 7% and corporate and income taxes would return but at a reduced level.

I would favour this rather than direct bail outs.

If there is to be spending, direct it at infrastructure. There are over 30,000 jobs created for each billion spent on roads, bridges and water treatment plants.

The government should consult with the Opposition. The time limits have to be agreed upon and the plan has to be get people working and feeling confident in investing in houses and cars.

[Jerry J. Fortin]

What happens when the US just can't seem to sell those T-Bills anymore?

That is how they fund their deficits, so what happens next?

[punked]

What? This is not correct...you are missing some elements of "real" GDP....including export.

No, no, no....the public debt/GDP ratio is a significant metric because it reflects the ability to service the public debt.

What does any of this have to do with Flaherty's tax cuts?

It has nothing to do with it. You brought it up. PS exports are bought from a country thus money is spend in Country. GDP IS ALL THE MONEY SPEND IN THE COUNTRY.

Moving on the US is a bad example you can not have a debt that keeps growing it wont work no matter how many times people say it will. They use to do this in Europe what would happen is someone would eventually try to collect and the public would rebel and burn all the records. There you go no more debt. How will the US do this?

Edited January 3, 2009 by punked