Massive Conservative $85 Billion Dollar Deficit

[madmax]

With the Conservatives passing a Budget that entails going 85 Billion in the hole, I thought we should add up that deficit along with all the Provinces ditch digging endeavours and tax reductions measures.

What other Provinces are reducing revenues and increasing spending and how many Provinces are currently running a deficit prior to engaging in deficit spending?

Ok, the Conservatives are the largest offenders but who is next?

The Ontario Liberals are claiming they are running marginal deficit shortfalls (I don't believe them). The Ontario budget is two weeks away.

Can people update their Provinces current and future deficit projections?

BC

Alberta

Sask

Manitoba

Ontario: Current Deficit: YES, Size Unknown, Future Deficit: Very Likely to be huge.

Que

NB

PEI

NS

NFLD

And then we add up all the money we are spending or giving away that we don't have.....

Edited March 27, 2009 by madmax

[jdobbin]

With the Conservatives passing a Budget that entails going 85 Billion in the hole, I thought we should add up that deficit along with all the Provinces ditch digging endeavours and tax reductions measures.

What other Provinces are reducing revenues and increasing spending and how many Provinces are currently running a deficit prior to engaging in deficit spending?

No deficit in Manitoba this year.

No deficit in Saskatchewan this year.

[fellowtraveller]

No deficit in Manitoba this year.

Manitoba gets 20% of its annual operating costs as welfare/equalization payments.

Without the largesse/support of the federal government, they'd be in massive deficit. So would all the other 'have not' provinces.

The only provinces that mnatter in this OP question are Alberta, BC, Sask and Ontario.

All the rest are effectively in deficit, all the time.

AB will have a small deficit this year, but with no debt will easily weather the storm.

They are in the middle of a massive $20 billion+ infrastructure program unrelated to the federal stimulus plans.

Stelmach is now talking abouyt borrowing for even more infrastructure now, when AB can leverage its excellent credit rating into getting loans for around 1.5%. If they wait until the economy recovers and oil prices increase, the cost of money will have increased too.

[punked]

NS I thought we might get through the year with out a deficit but the 1.8 billion stimulus I think killed that dream. I think you can put us in that column.

Edited March 13, 2009 by punked

[Vancouver King]

BC's announced deficit is $1.5 billion, however, Gordon Campbell's farthest-to-the-right-of-any-govt-in-Canada Liberals face voters in 2 months, so there is a reasonable asssumption that they've done a Flaherty - cooked the books out of political expediency.

What else to expect from a premier who keeps a straight face while insisting that a $1 billion security bill for the 2010 Olympics should not be included as part of Olympic budget expenditures.

As if this recession isn't bad enough, now the full implications of a political culture that tolerates fraudulent budgets and statistics will frustrate any recovery.

[guyser]

Without the largesse/support of the federal government, they'd be in massive deficit. So would all the other 'have not' provinces.

Not all.....

[Smallc]

Manitoba gets 20% of its annual operating costs as welfare/equalization payments.

Without the largesse/support of the federal government, they'd be in massive deficit.

And since that's part of the way this confederation works, its rather irrelevant. Manitoba will have no deficit this year. Manitoba is also one of the only provinces that continues to grow.

[fellowtraveller]

And since that's part of the way this confederation works, its rather irrelevant. Manitoba will have no deficit this year. Manitoba is also one of the only provinces that continues to grow.

It is irrelevant if you're grafting the welfare.

It is very relevant if you're the ones paying.

When are you deadbeats going to get off your asses and support yourselves? Or better yet, contribute somethng to the country overall?

And yes, I know how equalization works so I know as long as you keep yourselves well below national averages, you can suck on the national teat forever. How convenient in these tough times. Convenient for you. It is shocking that a province with the resources of Manitoba tolerates itself.

[guyser]

When are you deadbeats going to get off your asses and support yourselves? Or better yet, contribute somethng to the country overall?

We waited for you , now you wait for them.

See how that works? Easy.

[August1991]

With the Conservatives passing a Budget that entails going 85 Billion in the hole, I thought we should add up that deficit along with all the Provinces ditch digging endeavours and tax reductions measures.

We are facing a severe recession (downturn, depression, choose your term). With a decline in economic activity, governments will receive less in tax revenue. At the same time, most government spending is mandated: salaries, routine maintenance purchases or mandated transfers: pensions, various grants.

IOW, all governments in Canada are going to go into deficit (and in Keynesian terms, these deficits are an automatic self-stabilising force).

How serious will these deficits be? Well, let me take the OP's Canadian federal $85 billion deficit example. In the US (with 10x the population), this would translate into a $850 billion deficit. In fact, Obama is proposing a $1750 billion deficit. IOW, the US federal deficit is twice what Harper proposes if we take into account population.

----

Nevertheless, I suspect Obama (and Harper) will soon be back, in the famous words of Richard Dreyfuss in Jaws, for a bigger boat. The US needs a bigger stimulus package.

But what the US really needs is a fixed banking system. No stimulus package can do that.

[jdobbin]

IOW, all governments in Canada are going to go into deficit (and in Keynesian terms, these deficits are an automatic self-stabilising force).

Not all governments are going into deficit. Harper didn't have to let this happen but he couldn't control his spending. He didn't think to have a reserve fund.

[jdobbin]

Manitoba gets 20% of its annual operating costs as welfare/equalization payments.

Talk to your leader Harper who enriched that program.

I know you hate equalization but have some balls and actually vote for a party that will end it rather than voting same old, same old.

Without the largesse/support of the federal government, they'd be in massive deficit. So would all the other 'have not' provinces.

Doubtful. The province would just drop the services if there as no federal mandate to keep them. Can't pay for it if you don't have it.

AB will have a small deficit this year, but with no debt will easily weather the storm.

As long as Alberta continues to spend like crazy, it will be harder to get out of deficit unless oil goes up dramatically again. And even then, Alberta tends to spend even more when that happens.

The only province to ever go into default in Canadian history is Alberta.

[Topaz]

Not all governments are going into deficit. Harper didn't have to let this happen but he couldn't control his spending. He didn't think to have a reserve fund.

Harper does have 4 BIllion leftover from last year, at least till the end of the month and he also has the 3 billion from somewhere so that`s 7 Billion he was kinda hiding and yet it was reported they had a 15 billion deficit??

[Argus]

Not all governments are going into deficit. Harper didn't have to let this happen but he couldn't control his spending. He didn't think to have a reserve fund.

Are you seriously suggesting that Harper should have had a "reserve fund" of thirty or forty billion dollars each year just in case he might need it for something?

Like, oh, this massive stimulous budget which your party threatened to overthrow the government if it didn't bring in? Which your party was pulling its hair out, screaming and gnashing its teeth and running around in circles screaming in angushin for?

You guys are such flaming bloody hypocrites. You started this thing in Afghanistan, and as soon as you were in opposition you started pompously demanding the Conservatives end it. You demanded, absolutely demanded a huge stimulous package, and right away you're already snivelling about it and weasling out of responsibility and blaming it on the Tories.

[Argus]

With the Conservatives passing a Budget that entails going 85 Billion in the hole,

The deficit is $34 billion. That's bad enough. No need to exaggerate it.

[jdobbin]

Are you seriously suggesting that Harper should have had a "reserve fund" of thirty or forty billion dollars each year just in case he might need it for something?

Most reserve funds are equal to a half year of government spending. Many provinces have them, some like Saskatchewan and Manitoba are using them this year to avoid deficits.

Like, oh, this massive stimulous budget which your party threatened to overthrow the government if it didn't bring in? Which your party was pulling its hair out, screaming and gnashing its teeth and running around in circles screaming in angushin for?

And your party said there was no rush to act even though it is now shown that we were experiencing a very dramatic drop in the last quarter.

You guys are such flaming bloody hypocrites. You started this thing in Afghanistan, and as soon as you were in opposition you started pompously demanding the Conservatives end it. You demanded, absolutely demanded a huge stimulous package, and right away you're already snivelling about it and weasling out of responsibility and blaming it on the Tories.

And Harper supporting Tories here are whining and complaining that because they don't have a minority that they were forced to spend like drunken sailors. Buck up, grow some balls and stop whinging like 10 years old with anger problems and frothy mouthed conspiracy tales about how everyone is out to get you.

All this blaming of the Liberals for everything gone wrong is so laughable that it defies belief and it is probably why the latest poll yesterday has the Liberals a point ahead of the Tories.

[Oleg Bach]

Unemployment insurance fund was a huge huge surplus...for years and money was shifted off to other places...so why is it so difficult to quickly send out benefits..where's the money? I have a feeling they may have spent it at the bar. Keeping a reserve for government spending is not sensible because governments are incapable of saving money - if they have it they spend it - the more they have the more wild the spending..From this dumb laymans' point of veiw, deficit spending is in effect to take a loan from the public. To spend their money that has not come into being yet - in other words to rack up a debt supposedly to benefit THEM - I think it actually is to keep governments happy and healthy - but not the people - they have it backwards - best to let the people scrounge for a while and for government to cut back on itself..allowing the populace to build themselves back up - what's the point in creating a false paradise with a hell at the end of the road?

[Keepitsimple]

Not all governments are going into deficit. Harper didn't have to let this happen but he couldn't control his spending. He didn't think to have a reserve fund.

Instead of having a huge reserve fund, Harper chose to pay down record amounts of debt. One year he paid down $10 billion, another was $13.2 billion....and I believe there was one more large repayment as well. This compares to the Liberals, who kept most of their surpluses kicking around so they could spend like madmen on the election trail.

Edited March 15, 2009 by Keepitsimple

[jdobbin]

Instead of having a huge reserve fund, Harper chose to pay down record amounts of debt. One year he paid down $10 billion, another was $13.2 billion....and I believe there was one more large repayment as well. This compares to the Liberals, who kept most of their surpluses kicking around so they could spend like madmen on the election trail.

I think you will find that spending has increased under the Tories and now we are in deficit. Harper should have been thinking about a reserve fund. As an economist he knows things go in cycles. You know this was well.

The big spender in the last years has been Harper. He has spent more than Martin on a yearly basis and has broken his election promise each year on holding it down.

[Canapathy]

I think you will find that spending has increased under the Tories and now we are in deficit. Harper should have been thinking about a reserve fund. As an economist he knows things go in cycles. You know this was well.

The big spender in the last years has been Harper. He has spent more than Martin on a yearly basis and has broken his election promise each year on holding it down.

What? Cycles? That's crazy man...nobody saw this one coming...not one economist...nobody. Just ask Flaherty.

[Wilber]

I think you will find that spending has increased under the Tories and now we are in deficit. Harper should have been thinking about a reserve fund. As an economist he knows things go in cycles. You know this was well.

The big spender in the last years has been Harper. He has spent more than Martin on a yearly basis and has broken his election promise each year on holding it down.

Unfortunately all governments increase spending in good times, I don't care which party they are, the only difference is what they spend it on. Seems to me you were decrying GST cuts and demanding reductions in income taxes all that time. Everything does go in cycles and paying off debt during good times is the responsible thing to do. I don't pound money into a savings account to earn 3% interest if I have an outstanding loan at 6%. I pay off the loan first and if I have an emergency expenditure, that is what my line of credit is for, on which I now pay 3%. I will then pay off the line of credit first because saving will earn me dick at today's rates. Why would a responsible government act differently?

[Canapathy]

Unfortunately all governments increase spending in good times, I don't care which party they are, the only difference is what they spend it on. Seems to me you were decrying GST cuts and demanding reductions in income taxes all that time. Everything does go in cycles and paying off debt during good times is the responsible thing to do. I don't pound money into a savings account to earn 3% interest if I have an outstanding loan at 6%. I pay off the loan first and if I have an emergency expenditure, that is what my line of credit is for, on which I now pay 3%. I will then pay off the line of credit first because saving will earn me dick at today's rates. Why would a responsible government act differently?

During the 06 election campaign Harper blasted Martin's high level of spending. He then went on to increase spending at over double the rate of inflation. He didn't adjust spending, he added new spending...a lot of it.

[jdobbin]

Unfortunately all governments increase spending in good times, I don't care which party they are, the only difference is what they spend it on. Seems to me you were decrying GST cuts and demanding reductions in income taxes all that time.

I was. I still do. Income tax cuts get far more stimulus than GST cuts.

However, I also believe in reserve funds and have mentioned that we needed to ensure we had some cushion from a downturn in the economy. You know that. You read me saying that here.

Everything does go in cycles and paying off debt during good times is the responsible thing to do. I don't pound money into a savings account to earn 3% interest if I have an outstanding loan at 6%. I pay off the loan first and if I have an emergency expenditure, that is what my line of credit is for, on which I now pay 3%. I will then pay off the line of credit first because saving will earn me dick at today's rates. Why would a responsible government act differently?

The government did have a repayment plan and it was going strong even as the Tories got into power. What the government didn't have was a reserve fund.

What good is paying off your debt faster if you have no cushion? You seem to think going into deficit (line of credit) is better but even most banks will tell you to have some sort of kitty of cash for the unexpected.

[Wilber]

I was. I still do. Income tax cuts get far more stimulus than GST cuts.

However, I also believe in reserve funds and have mentioned that we needed to ensure we had some cushion from a downturn in the economy. You know that. You read me saying that here.

The government did have a repayment plan and it was going strong even as the Tories got into power. What the government didn't have was a reserve fund.

What good is paying off your debt faster if you have no cushion? You seem to think going into deficit (line of credit) is better but even most banks will tell you to have some sort of kitty of cash for the unexpected.

You know very well that people holler loud and long when governments wind up with huge surpluses. They bitch about being over taxed and demand tax cuts. So what do governments do? They spend it. It doesn't matter which party is in power, the process is the same. Thankfully, in recent years both parties spent a reasonable portion of it on debt reduction.

I repeat, it is stupid to put money into a savings account if you are earning less than half the interest it is costing you to carry debt. That shouldn't be difficult to understand.

There are two kinds of cushions, you can have money in the bank or carry less debt. Which one is most appropriate depends on what your savings can earn vs what your debt costs to carry. You are foolish to carry debt at a higher interest rate than you can earn on your savings therefore it makes more sense to pay your debt down. If you have less debt, you have an increased ability to borrow at lower rates, either way you have a cushion.

I don't see how income tax cuts provide more stimulus than GST cuts. Decreasing income taxes can stimulate a lot of things including saving, not a bad thing in itself but decreasing consumption taxes can only increase spending. Decreasing the cost of a home by 2% with a GST cut will save a buyer thousands in borrowing costs over 20 years. A cut in income tax may only qualify them for a higher mortgage to cover that extra 2% and end up costing them much more in financing costs over 20 years.

[jdobbin]

You know very well that people holler loud and long when governments wind up with huge surpluses. They bitch about being over taxed and demand tax cuts. So what do governments do? They spend it. It doesn't matter which party is in power, the process is the same. Thankfully, in recent years both parties spent a reasonable portion of it on debt reduction.

There was no complaining in Saskatchewan and Manitoba when they built up reserve funds. There is certainly complaining now that they are being drained and fear about deficits if things aren't brought under control.

I repeat, it is stupid to put money into a savings account if you are earning less than half the interest it is costing you to carry debt. That shouldn't be difficult to understand.

I repeat, it is stupid to borrow money to go into deficit. That shouldn't be too difficult to understand.

There are two kinds of cushions, you can have money in the bank or carry less debt. Which one is most appropriate depends on what your savings can earn vs what your debt costs to carry. You are foolish to carry debt at a higher interest rate than you can earn on your savings therefore it makes more sense to pay your debt down. If you have less debt, you have an increased ability to borrow at lower rates, either way you have a cushion.

And yet somehow we have a large deficit now. Where was the cushion?

I don't see how income tax cuts provide more stimulus than GST cuts. Decreasing income taxes can stimulate a lot of things including saving, not a bad thing in itself but decreasing consumption taxes can only increase spending. Decreasing the cost of a home by 2% with a GST cut will save a buyer thousands in borrowing costs over 20 years. A cut in income tax may only qualify them for a higher mortgage to cover that extra 2% and end up costing them much more in financing costs over 20 years.

I'm afraid this has been gone over many times by economists and yet some seem to continue to insist that GST cuts are better than income tax cuts.