The Budget

[dre]

In what way?

Deficit projections last fall were based on a 3 billion dollar deficit baseline for 2016-2017. At that time private sector economists predicted oil would average 54 dollars per barrel and economic growth would be 2%.

But now economists are predicting only $40 oil, and 1.4% growth. That changed the deficit baseline to 18 billion even before the liberals spent a single penny.

The government has no crystal ball and the only numbers they can give you at budget time are projections they get from economists. Those projections changed.

[Bonam]

Theres some information on it here...

http://www.statcan.gc.ca/pub/11-008-x/2007005/10314-eng.htm

I didn't find an overall number but it looks to be 30-40% but that's for young adults between 25 and 39. I had a quick look but didnt see specific numbers on a 20-30 age range.

I could believe 30-40% when you include people up to 39. Certainly much lower for the under 30 age group though. The majority of those under 30 would benefit from a drop in housing prices as it would give them a chance to enter the housing market. This is obviously especially true in overpriced markets like Vancouver. I look forward to the house price implosion (if it ever happens) with much glee.

Anyway, going back to the original point, which is that low interest monetary policy that inflates an asset bubble has its issues, but it is different from fiscal policy that places the government way in debt. I understand what you are saying but I don't think it serves a purpose to conflate the too. In any case, both have their own sets of problems that they contribute, and whatever you may think of the government's deficit spending, the reality is that we'll likely be following the same path of near 0% interest rates under the Trudeau government as we did under the Harper government (or maybe Canada will follow America's lead if their fed raises rates). That's not changing. It's not like the deficit spending is going to be addressing the problem you mention, rather it is just adding more sovereign debt to the fire.

Edited March 25, 2016 by Bonam

[Big Guy]

Methinks that this budget was smart politics. The Liberals lowballed growth at half of one percent (Will probably be closer to 2%) and the price of oil at $25 a barrel. If economy falters they still look good. If economy blossoms then they will look like fiscal geniuses, balancing the budget in three years.

Like I said, good politics.

Edited March 25, 2016 by Big Guy

[dre]

Methinks that this budget was smart politics. The Liberals lowballed growth at half of one percent (Will probably be closer to 2%) and the price of oil at $25 a barrel. If economy falters they still look good. If economy blossoms then they will look like fiscal geniuses, balancing the budget in three years.

Like I said, good politics.

No, oil at 40, growth at 1.4.

[cybercoma]

I could believe 30-40% when you include people up to 39. Certainly much lower for the under 30 age group though. The majority of those under 30 would benefit from a drop in housing prices as it would give them a chance to enter the housing market. This is obviously especially true in overpriced markets like Vancouver. I look forward to the house price implosion (if it ever happens) with much glee.

Anyway, going back to the original point, which is that low interest monetary policy that inflates an asset bubble has its issues, but it is different from fiscal policy that places the government way in debt. I understand what you are saying but I don't think it serves a purpose to conflate the too. In any case, both have their own sets of problems that they contribute, and whatever you may think of the government's deficit spending, the reality is that we'll likely be following the same path of near 0% interest rates under the Trudeau government as we did under the Harper government (or maybe Canada will follow America's lead if their fed raises rates). That's not changing. It's not like the deficit spending is going to be addressing the problem you mention, rather it is just adding more sovereign debt to the fire.

You can't address barriers to first home ownership without addressing the elephant in that room: post secondary education debts.

[scribblet]

Anyone have any additional info on allowing banks to take our deposits for bail ins, in the budget. http://www.zerohedge.com/news/2016-03-22/its-official-canadian-bank-depositors-are-now-risk-bail-ins

I went to the source document and found that it is quoted exactly from the budget. Unfortunately there are no further details to be had.

My understanding was that deposits above the amount insured by cdic have always been at risk. One interpretation of this is that the government will allow a percentage of your deposits to be taken to recapitalize the bank rather than having it fail altogether. We'll have to wait for implementing legislation for further details.

Browsing through the Liberal budget was a stomach churning experience.

[Bonam]

You can't address barriers to first home ownership without addressing the elephant in that room: post secondary education debts.

I don't agree that these are a major issue, especially in Canada. I've been there, I only paid mine off 3 years ago. The average student debt in Canada is $27k. If you get a good job that pays you say $70k or more and you're single and responsible with your money, you can have that paid off in 1-2 years (which was exactly my situation). Unfortunately, even in this happy situation, good luck buying a home in Vancouver for $1.7 million.

Student debts are an issue for many people, especially those that are unable to find good jobs after they are done with their degrees, don't get me wrong. But student loans are typically 10x-100x smaller than the amounts you are talking about to buy a house, so for those that end up in the economic position where they could even possibly consider buying a house, any student loans they may have or may have had are essentially negligible. If you're saving up $100k-$200k for a downpayment in any kind of reasonable timeframe, you might as well knock off that little $27k student loan first.

[CITIZEN_2015]

Justin Trudeau is the son of Pierre Elliot Trudeau former PM of Canada and self professed communist . Let me get this straight , he is racking up massive debt for the sake of Canada's children ? That is an interesting view point since it will be our children paying for his incompetence today spread out over many years in the future. Please look up Ontario's deficit and debt numbers and let me know what you find. That is a prime example of incompetent Liberal leaders destroying future generations ability to get ahead . FYI Ontario now has the world's largest sub sovereign debt , twice that of California , and pays over 1 billion a month to just interest on their massive debt . How is that helping the children from your Liberal perspective ?

The deficit is exaggerated. In 30 years time the 600 or 800 billion dollar deficit will be a very small portion of our GDP. As the economy is expanding (Even with modest After inflation growth of 2 to 3 percent) the impact of cumulative deficit dollars will be reduced. What may have been a huge deficit in 1983 (we had near 30 billion dollar deficit) is not so huge now because our economy has expanded 2.5 times since to 1800 billion dollars. In 30 years time our economy will likely be close to 5000 billion and the cumulative deficit at that time of 600 billion or even 1000 billion will not be such a burden for our children to pay (or keep it just prevent it from expanding).

[Cl Le]

The deficit is exaggerated. In 30 years time the 600 or 800 billion dollar deficit will be a very small portion of our GDP. As the economy is expanding (Even with modest After inflation growth of 2 to 3 percent) the impact of cumulative deficit dollars will be reduced. What may have been a huge deficit in 1983 (we had near 30 billion dollar deficit) is not so huge now because our economy has expanded 2.5 times since to 1800 billion dollars. In 30 years time our economy will likely be close to 5000 billion and the cumulative deficit at that time of 600 billion or even 1000 billion will not be such a burden for our children to pay (or keep it just prevent it from expanding). . Is that you Gerald Butts ?

Is that you Gerald Butts or is this Premier Wynne ? Racking up massive debt without a proper plan is a terrible idea and that is what the Liberals have done.

[Argus]

The deficit is exaggerated. In 30 years time the 600 or 800 billion dollar deficit will be a very small portion of our GDP.

Except it will be 800 million in more like eight years, not thirty, and there is nothing that says it won't continue to grow year by year by year, especially as we pay nothing but the interest and make no attempt to pay it back. Is it your belief that in six or seven years without drastic cuts in spending, drastic tax increases, or both, we will somehow no longer have a yearly deficit?

[dre]

Except it will be 800 million in more like eight years, not thirty, and there is nothing that says it won't continue to grow year by year by year, especially as we pay nothing but the interest and make no attempt to pay it back. Is it your belief that in six or seven years without drastic cuts in spending, drastic tax increases, or both, we will somehow no longer have a yearly deficit?

We will probably keep trying to mitigate the debt with a combination of inflating it away and increasing revenue through economic growth.

[Queenmandy85]

The problem is not so much spending but a lack of revenue. Like the fellow said, "Everyone wants to go to Heaven, but nobody wants to die to get there."

Taxes have been cut year after year and as a result everything has been allowed to slid into disrepair.

Operating a modern government requires a certain amount of money. If citizens don't pay enough taxes, governments have to borrow. If you don't want deficit spending, pay more taxes.

People will line up to buy 649 tickets, buy liquor, but they whine like dentist drills when you ask them to pay for the services they demand from their government.

[Argus]

We will probably keep trying to mitigate the debt with a combination of inflating it away and increasing revenue through economic growth.

Except our inflation rate is lower than the cost of servicing the debt. So we're not inflating it away. Plus we keep borrowing more, adding to it. And there's nothing in this budget which is going to spur economic growth unless it's a minute fraction of a percent.

[Argus]

The problem is not so much spending but a lack of revenue. Like the fellow said, "Everyone wants to go to Heaven, but nobody wants to die to get there."

Taxes have been cut year after year and as a result everything has been allowed to slid into disrepair.

Operating a modern government requires a certain amount of money. If citizens don't pay enough taxes, governments have to borrow. If you don't want deficit spending, pay more taxes.

People will line up to buy 649 tickets, buy liquor, but they whine like dentist drills when you ask them to pay for the services they demand from their government.

Taxes haven't been cut on everyone. The lower 30% of income owners pay no income taxes. The lower 50% of income earners pay just 4% of income taxes.

[waldo]

Is that you Gerald Butts or is this Premier Wynne ? Racking up massive debt without a proper plan is a terrible idea and that is what the Liberals have done.

is that you Stephen Harper or is this Joe Oliver?

No matter how you add it up, Harper’s fiscal record is a catastrophe

Since Harper was elected, the federal debt has increased by over $150 billion, wiping out the reduction in federal debt achieved under Chretien and Martin. Not much to boast about there.

.

[Argus]

is that you Stephen Harper or is this Joe Oliver?

No matter how you add it up, Harper’s fiscal record is a catastrophe

Since Harper was elected, the federal debt has increased by over $150 billion, wiping out the reduction in federal debt achieved under Chretien and Martin. Not much to boast about there.

No column with the slightest pretense of being unbiased, would criticize Harper for going into debt in 2008 without even casually mentioning the world wide economic recession or that the opposition parties revolted and demanded a huge economic stimulus package.

[waldo]

No column with the slightest pretense of being unbiased, would criticize Harper for going into debt in 2008 without even casually mentioning the world wide economic recession or that the opposition parties revolted and demanded a huge economic stimulus package.

ya ya... that 'short and mild' 3 quarters recessionary impact on Canada - the forever go-to for Harper apologists! Such a perpetual quandary: it's either one of, "those wascally Opposition members made us spend... overspend"... or... "it was that prudent Harper spending that carried Canada through the recession"... the "short and mild one"! Pick one, but only one.

.

[dre]

Except our inflation rate is lower than the cost of servicing the debt. So we're not inflating it away. Plus we keep borrowing more, adding to it.

We ARE inflating most of it away. Just not all of it.

And there's nothing in this budget which is going to spur economic growth unless it's a minute fraction of a percent.

No column with the slightest pretense of being unbiased, would criticize Harper for going into debt in 2008 without even casually mentioning the world wide economic recession or that the opposition parties revolted and demanded a huge economic stimulus package.

The economy is in worse shape now than it was then. Its not an excuse, but no excuses are required! Harper should not be blamed for trying to ease his way out of a recession... every other government was doing the same thing, and that's really all that a government can do.

That's why the liberals are continuing on with Harper's easing program.

[Argus]

We ARE inflating most of it away. Just not all of it.

How do you figure when we're paying tens of billions each year, which is higher than the inflation rate.

The economy is in worse shape now than it was then.

The economy was contracting by over 2%. It's growing now by 1 1/2. So no, we're not in worse shape.

[dre]

How do you figure when we're paying tens of billions each year, which is higher than the inflation rate.

We inflate away about 20 billion worth of our national debt per year.

The economy was contracting by over 2%. It's growing now by 1 1/2. So no, we're not in worse shape.

That's not the only indicator of our economic position. We have huge structural problems and the worst overall economic position in more than 20 years.

[Argus]

Andrew Coyne describes the budget fairly accurately when he says its not a big deficit brought about by circumstances, but by choice, and that virtually none of it is for economic incentives or growing the economy.

Given the scale of the fiscal challenges facing the provinces in the coming decades — there are credible projections that one or more of them may eventually be forced to default on their debts — the very last thing Ottawa should be doing now is weakening its own financial position. It would be one thing if the $113-billion it plans to borrow over five years was to be invested in the sort of productive assets that would pay off over the longer term in higher economic growth and more revenues.

But as is now becoming more widely recognized, only a very small proportion of the spending the Liberals have planned could conceivably be described in such terms.

http://news.nationalpost.com/full-comment/andrew-coyne-liberals-30b-deficit-a-debt-of-choice-not-circumstance

[Smallc]

I believe someone accused Coyne of being a Liberal during the election. He's actually a wacko when it comes to government - a hardcore libertarian with no real understanding of how the body politic operates.

[69cat]

Anyone have any additional info on allowing banks to take our deposits for bail ins, in the budget. http://www.zerohedge.com/news/2016-03-22/its-official-canadian-bank-depositors-are-now-risk-bail-ins

I went to the source document and found that it is quoted exactly from the budget. Unfortunately there are no further details to be had.

My understanding was that deposits above the amount insured by cdic have always been at risk. One interpretation of this is that the government will allow a percentage of your deposits to be taken to recapitalize the bank rather than having it fail altogether. We'll have to wait for implementing legislation for further details.

I didnt delve into anything beyond this article but does not sound like anything as changed. As i understand it, laws were changed in the last few years in US and Canada to enact the bail in policy. In Canada we are insured of our savings up to $100,000 if a bank fails. Anything over that is taken by the bank and converted to shares, if the bank survives then you have a share with some value, if the bank still fails then you have nothing.

Banks love to borrow money that have no backing of so this is a concern. Particularly for US residents as there are many smaller banks making riskier investments in such things as junior oil companies during peak times.

People can dress the new deficit up how ever they want but the reality is the government is borrowing and spending more money than it takes in and therefore we will continue to piss away billions of dollars on interest rather than converting those dollars into something tangible.

As dre points out, we see this problem with individuals borrowing and spending because interest is cheap so no better time to do so. This is what drives the economy and is why interest rates are where they are - this is by design. However to show concern for individual indebtness but give a passing mark to the government (federal and provincial) for doing the same is questionable.

Yes consumers are in debt and it concerns me. Also our government is taking on more debt without a repayment plan so this concerns me as much as consumer fiscal plans.

[dre]

I didnt delve into anything beyond this article but does not sound like anything as changed. As i understand it, laws were changed in the last few years in US and Canada to enact the bail in policy. In Canada we are insured of our savings up to $100,000 if a bank fails. Anything over that is taken by the bank and converted to shares, if the bank survives then you have a share with some value, if the bank still fails then you have nothing.

Banks love to borrow money that have no backing of so this is a concern. Particularly for US residents as there are many smaller banks making riskier investments in such things as junior oil companies during peak times.

People can dress the new deficit up how ever they want but the reality is the government is borrowing and spending more money than it takes in and therefore we will continue to piss away billions of dollars on interest rather than converting those dollars into something tangible.

As dre points out, we see this problem with individuals borrowing and spending because interest is cheap so no better time to do so. This is what drives the economy and is why interest rates are where they are - this is by design. However to show concern for individual indebtness but give a passing mark to the government (federal and provincial) for doing the same is questionable.

Yes consumers are in debt and it concerns me. Also our government is taking on more debt without a repayment plan so this concerns me as much as consumer fiscal plans.

I don't necessarily give the government a passing grade... I just realize that some of the attacks against the budget are hyperbole. Some of the clueless rabid partisan attacks by people on the forum make it hard not try to put things in context, but there's definitely room for some honest criticism.

I would have liked to have seen a lot more of the spending go towards steel, concrete, and pavement. Spending on those things at least chips away at another deficit (infrastructure). I would also like to have seen a plan to gradually increase the overnight rate, and increase the down payment required for government backed mortgages to 10%.

I think the new spending will help in the short term and may help prevent a major recession, but I see it as a continuation of the previous governments policy aimed at kicking the can down the road as opposed at least taking SOME steps towards sustainable economic future.

[Argus]

I believe someone accused Coyne of being a Liberal during the election. He's actually a wacko when it comes to government - a hardcore libertarian with no real understanding of how the body politic operates.

Kind of a pathetic rejoinder given you didn't seem able to address any of his points. He's one of Canada's most noted political commentators and a regular on the CBC. Dismissing him as a 'wacko' is silly.

Edited March 26, 2016 by Argus