So Much For Tory Fiscal Stewardship

[ToadBrother]

The PBO has released its fall assessment which states that confirmed the small surplus this year, states clearly that the only reason there is a surplus is because of the asset sales, in particular the sale of GM shares. In other words, the Tories' biggest claim to fame, deficit busting, was a phantom, and that the Federal government, even without the Liberals' commitment to borrow more money, would have ended up in years of deficits.

http://ottawacitizen.com/news/national/liberal-government-inherits-deteriorating-financial-and-economic-situation

[Big Guy]

Well, that certainly did not take long. The Liberals get in, check the previous government books and find a few "errors":

http://www.ctvnews.ca/politics/trudeau-government-facing-bigger-baseline-deficits-amid-weaker-economy-pbo-1.2651221

Trudeau government is facing bigger baseline deficits amid weaker economy according to the (politically neutral) PBO. Will this change the Trudeau projections and be the excuse to blame the Harper government for undermining subsequent governments?

"The lowered forecast suggests it will be tougher for the Liberals to fulfil their election promise to balance the books by 2019-20 after three years of predicted deficits. The parliamentary budget office said Tuesday it has downgraded its economic outlook for Canada as the country grapples with weaker growth and lower revenues."

Edited November 10, 2015 by Big Guy

[ToadBrother]

Well, that certainly did not take long. The Liberals get in, check the previous government books and find a few "errors":

http://www.ctvnews.ca/politics/trudeau-government-facing-bigger-baseline-deficits-amid-weaker-economy-pbo-1.2651221

Trudeau government is facing bigger baseline deficits amid weaker economy according to the (politically neutral) PBO. Will this change the Trudeau projections and be the excuse to blame the Harper government for undermining subsequent governments?

"The lowered forecast suggests it will be tougher for the Liberals to fulfil their election promise to balance the books by 2019-20 after three years of predicted deficits. The parliamentary budget office said Tuesday it has downgraded its economic outlook for Canada as the country grapples with weaker growth and lower revenues."

I have to believe the Liberals knew the situation even three or four months ago. Everyone was aware that the only reason the books were balanced this year (or at least, we think they're balanced, we won't know for sure until mid-2016) was because of asset sales. And really, only in government could one try to claim selling assets was the equivalent of revenue, particularly when you're taking a hit on asset value, but I digress.

At any rate, I don't think anyone is surprised, and I firmly believe that if the Tories or NDP had one, with their budget surplus commitments, they themselves would have used deteriorating medium term economic outlook as an excuse to run more deficits.

As to the Liberals, I expect them to forge ahead. Politically they cannot afford to go "Well, looks like the next few years are going to be deficits, so we're not going to borrow for our infrastructure commitments." In some ways, it probably offers them a bit of cover, and a new government is never allergic to blaming the previous government for all its woes.

[overthere]

we're not going to borrow for our infrastructure commitments.

according to an analysis by Andrew Coyne some time ago, he found only 15% of Trudeaus promised 'infrastructure' deficit for the foreseeable future was related to capital improvements, actual physical infrastructure. The rest is 'social infrastructure', which is Orwellian NewSpeak for social program spending, new and old.

In other words, he is busting out the VIsa card to buy groceries.

Forge ahead indeed.

[The_Squid]

according to an analysis by Andrew Coyne some time ago, he found only 15% of Trudeaus promised 'infrastructure' deficit for the foreseeable future was related to capital improvements, actual physical infrastructure. The rest is 'social infrastructure', which is Orwellian NewSpeak for social program spending, new and old.

In other words, he is busting out the VIsa card to buy groceries.

Forge ahead indeed.

So what do you think of the CPC government essentially cooking the books to convince you that they had a balanced budget when the Canada's fiscal condition is actually much worse than they let on?

Does that bother you in the least?

[Argus]

So what do you think of the CPC government essentially cooking the books to convince you that they had a balanced budget when the Canada's fiscal condition is actually much worse than they let on?

Cooking the books? Using one-time sales is perfectly normal. Look at the Ontario Liberals, who are doing it now. Look at how the federal Liberals did it last time when they grabbed off all that 'excess' money from the unemployment fund, and from employee's pensions.

Everyone knew the goal of balancing the budget this year was for bragging rights in time for the election. The Tories got clobbered by an unexpected huge drop in the price of oil, though, just in time for the election. Whoops. Not their fault, but they'd promised a balanced budget, so they delivered.

As for what might have happened next year under a Tory government. I don't see them returning to deficits that quickly. It would have made them look bad. There'd have had to be more cost savings announced after the election, had they won.

But now, just like the Ontario Liberals did (which is no surprise given the number of Ontario Liberals now flooding into the federal party to 'help out') they'll use this 'surprise" which they already knew all about, as a pretext to run continual deficits, even while increasing spending and taxes. Ten years after being in power, despite more than doubling spending, the Ontario Liberals still blame the Tories who preceded them.

[Smallc]

according to an analysis by Andrew Coyne some time ago, he found only 15% of Trudeaus promised 'infrastructure' deficit for the foreseeable future was related to capital improvements, actual physical infrastructure. The rest is 'social infrastructure', which is Orwellian NewSpeak for social program spending, new and old.

In other words, he is busting out the VIsa card to buy groceries.

Forge ahead indeed.

Andrew Coyne was wrong. So are you. He included the new child benefit spending, but not the savings by ending the old child benefit schemes.

[ToadBrother]

Cooking the books? Using one-time sales is perfectly normal. Look at the Ontario Liberals, who are doing it now. Look at how the federal Liberals did it last time when they grabbed off all that 'excess' money from the unemployment fund, and from employee's pensions.

Oh well, if the ONtario Liberals are doing, then it's perfectly fine.

Using asset sales to bolster cash is certainly fine (although taking a big hit usually isn't). Using asset sales to proclaim you've fixed a structural deficit is nothing more than smoke and mirrors. The Tories had no real plan after this year, and the PBO confirms all this crap about their excellent fiscal management was total BS.

Everyone knew the goal of balancing the budget this year was for bragging rights in time for the election. The Tories got clobbered by an unexpected huge drop in the price of oil, though, just in time for the election. Whoops. Not their fault, but they'd promised a balanced budget, so they delivered.

As for what might have happened next year under a Tory government. I don't see them returning to deficits that quickly. It would have made them look bad. There'd have had to be more cost savings announced after the election, had they won.

But now, just like the Ontario Liberals did (which is no surprise given the number of Ontario Liberals now flooding into the federal party to 'help out') they'll use this 'surprise" which they already knew all about, as a pretext to run continual deficits, even while increasing spending and taxes. Ten years after being in power, despite more than doubling spending, the Ontario Liberals still blame the Tories who preceded them.

Yes, everyone knew the Tories' "balanced" budget was nothing more than an asset fire sale to try to win an election. Clearly even you know it.

If the Tories had won, they would have had 2015-16 as a small surplus, and then would either have had to cut spending even more, and still not likely be able to hit their deficit targets. You and I both know their claims of a balanced budget was an unsustainable one-time hit that couldn't be pushed further because of weak international conditions.

[Argus]

If the Tories had won, they would have had 2015-16 as a small surplus, and then would either have had to cut spending even more, and still not likely be able to hit their deficit targets. You and I both know their claims of a balanced budget was an unsustainable one-time hit that couldn't be pushed further because of weak international conditions.

We don't elect leaders to not try.

Well, I don't. You have a different philosophy.

[Moonbox]

Andrew Coyne was wrong. So are you. He included the new child benefit spending, but not the savings by ending the old child benefit schemes.

Do you have your alternate source? I'm curious to see the breakdown corrected for this error. I didn't vote for Trudeau to blow his load on on social programs that get us nowhere (like his Dad did). I voted for him because he promised infrastructure spending.

[ToadBrother]

We don't elect leaders to not try.

Well, I don't. You have a different philosophy.

My philosophy is "When a government releases a budget within weeks or months of an election, believe absolutely nothing they say."

[Smallc]

Do you have your alternate source? I'm curious to see the breakdown corrected for this error. I didn't vote for Trudeau to blow his load on on social programs that get us nowhere (like his Dad did). I voted for him because he promised infrastructure spending.

It's in the Liberal platform.

https://www.liberal.ca/files/2015/09/The-Liberal-fiscal-plan-and-costing.pdf

Page 8 and 12.

[ReeferMadness]

Cooking the books? Using one-time sales is perfectly normal. Look at the Ontario Liberals, who are doing it now. Look at how the federal Liberals did it last time when they grabbed off all that 'excess' money from the unemployment fund, and from employee's pensions.

I love how every time Harper was caught lying and mismanaging finances, his supporters justify it by comparing him to Kathleen Wynn. Is that the Harper standard of excellence? is that why the Conservative supporters around here are touting him as one of the great Prime Ministers? His claim to fame is he's not much worse than Katherine Wynn on economic matters?

Everyone knew the goal of balancing the budget this year was for bragging rights in time for the election. The Tories got clobbered by an unexpected huge drop in the price of oil, though, just in time for the election. Whoops. Not their fault, but they'd promised a balanced budget, so they delivered.

As for what might have happened next year under a Tory government. I don't see them returning to deficits that quickly. It would have made them look bad. There'd have had to be more cost savings announced after the election, had they won.

Oh. So, you're saying you knew Harper was lying through his teeth when he claimed he balanced the budget. I don't recall you mentioning that during the election discussions.

But on one point, we agree. Clearly, Harper deliberately mismanaged the finances so that next year he would have an excuse to make further cuts to program spending. Conservatives who make tax cuts that they know can't be sustained without future program cuts are lying through their teeth. But apparently you knew that and are OK with it.

Edited November 11, 2015 by ReeferMadness

[ToadBrother]

I love how every time Harper was caught lying and mismanaging finances, his supporters justify it by comparing him to Kathleen Wynn. Is that the Harper standard of excellence? is that why the Conservative supporters around here are touting him as one of the great Prime Ministers? His claim to fame is he's not much worse than Katherine Wynn on economic matters?

Don't forget to invoke Adscam at every turn as well!

Oh. So, you're saying you knew Harper was lying through his teeth when he claimed he balanced the budget. I don't recall you mentioning that during the election discussions.

This one is kind of fun because, as I recall, Argus is an accountant, and I can't imagine an accountant, in the world of private enterprise, particularly when acting as an auditor, allowing a private company to list an asset sale as revenue. It's precisely these kinds of asset fire sales that has got Blackberry in hot water for intentionally trying to overstate sales via a similar mechanism.

[Triple M]

how much credit will Harper receive for future deficits???

His last two budgets will probably be balanced and how will be able to distinguish any future structural deficits with the liberal deficits??

I only mention that because projections can change and the libs will also make adjustments.

Correct me if I'm wrong but I thought the PBO projections of April projected a deficit for this fiscal year but today's projections indicate a small surplus. Again please correct if I'm misinterpreting the data.

[Wilber]

Anyone else wondering if we are being set up for even bigger deficits than stated during the election?

[ToadBrother]

how much credit will Harper receive for future deficits??? His last two budgets will probably be balanced and how will be able to distinguish any future structural deficits with the liberal deficits?? I only mention that because projections can change and the libs will also make adjustments. Correct me if I'm wrong but I thought the PBO projections of April projected a deficit for this fiscal year but today's projections indicate a small surplus. Again please correct if I'm misinterpreting the data.

The problem with this year's balanced budget is that it's only balanced because of asset sales (the PBO specifically mentions the GM share sale). In other words, it's not balanced if we're talking about revenues exceeding expenditures. It doesn't solve any structural deficit issues, because the underlying revenue under-performance remains.

It's true that the Tories have cut a lot of program spending, and some of the big deficits that came out of the 2008-09 financial crisis went towards infrastructure, which, though the Tories and NDP seemed to deny it in the election, has to be viewed in much larger time spans than yearly (ie. a bridge, hospital or highway might be costed over thirty years or more). And I would say they took some steps towards addressing program spending, though really it was fairly moderate as compared to the famous/infamous Paul Martin budgets of the 1990s.

But as the PBO report makes clear, they have not really made that much headway into the structural deficit, and once you take away the asset sale, this year's balanced budget becomes a deficit budget. Considering the GM shares were sold at a loss, with the sole purpose of manufacturing a "balanced" budget, I can't even say that it's fair to call 2015-16 balanced. With the Liberals commitment to reconvene Parliament in December for what I assume will be new fourth quarter (maybe third quarter too???) spending, the only salvation for the Conservatives is that the waters will be too muddied to figure out whether there was an actual structural surplus or not.

[ToadBrother]

Anyone else wondering if we are being set up for even bigger deficits than stated during the election?

Well, you and I differ on a lot of things, but I think, if the LIberals keep their word on implementing the spending plans in their platform this fiscal, we're guaranteed a deficit for 2015-16.

[Smallc]

Anyone else wondering if we are being set up for even bigger deficits than stated during the election?

The PBO isn't controlled by the government.

[ReeferMadness]

The PBO isn't controlled by the government.

Shhh.... everyone knows that the PBO is part of the giant conspiracy against the Conservatives. Along with Elections Canada, the media, the courts, the civil service, the United Nations and the Illuminati.

[Triple M]

I'm aware of that TB but thought the GM shares were included in the earlier projections.

As for comparing spending cuts between Harper/Martin, I've always felt Martin's cuts were a bit too harsh but I also understand how necessary they were in the context of that era. With that being said those cuts are probably still visible in infrastructure and strained health services.

Harper's cuts seemed more gradual and he always mentions preferring cutting growth of spending. However they probably attributed to the recession by taking stimulus out of the economy.

[Moonlight Graham]

The PBO has released its fall assessment which states that confirmed the small surplus this year, states clearly that the only reason there is a surplus is because of the asset sales, in particular the sale of GM shares. In other words, the Tories' biggest claim to fame, deficit busting, was a phantom, and that the Federal government, even without the Liberals' commitment to borrow more money, would have ended up in years of deficits.

From an April 2015 story reporting the GM sale:

"The sale also comes only a few days after the start of the 2015-16 fiscal year, which means proceeds from the sale will boost the budget's bottom line."

That's campaign year politics I guess...

[Wilber]

The PBO isn't controlled by the government.

Maybe not but it is providing a perfect excuse.

[Wilber]

Well, you and I differ on a lot of things, but I think, if the LIberals keep their word on implementing the spending plans in their platform this fiscal, we're guaranteed a deficit for 2015-16.

We already know he has planned on three years of deficits, I'm just wondering how much the number is going to go up and how many more years. I never did believe in 10B for three years then a balanced budget anyway. Believe it less now.

[ToadBrother]

We already know he has planned on three years of deficits, I'm just wondering how much the number is going to go up and how many more years. I never did believe in 10B for three years then a balanced budget anyway. Believe it less now.

I'd say deficit busting in year four ranges from unlikely to improbable, and I do agree that seeing as no one can be surprised that 2015-16's "balanced" budget was only going to be balanced providing you believe moving a less liquidable asset to a more liquidable asset while taking a write-down on the difference (capital loss) is somehow the equivalent of cutting program expenditures below revenues.

So, in a way, the fact the Liberals don't appear to be the least bit surprised suggests they knew all along, just like the Tories did, that the 2015-16 "balanced" budget was a phantom, and that the Tories have now supplied them the wiggle room to go "well, we can't be expected to make year four balanced with those nasty numbers the Tories left us."

And the cycle of blaming a previous government through an entire first term continues.