Federal Surplus Grows

[Michael Bluth]

Nonsense, I explain in the next post. Beyond that, the Federal debt has nothing to do with the surplus. If the CPC wants to pay the debt, put it in the budget. Don't overbill me and then tell me that the extra money is just going against the debt (poor investment).

Geoff what are you talking about? The budgeted surplus is going to paying down the debt. Plus the extra 1/2 billion. What do you mean by "put it in the budget"?

Why pay it off? Is Canada planning to retire soon? Debt is a great thing, you can't make (lots of) money without it. I have no issue with the government borrowing for long-term capital projects that have favourable returns.

Government isn't in business and shouldn't be in business. That is the role of private business. We aren't talking about ROI. Pay off the debt and then cut taxes to the bone.

We should be paying down the debt now because we can afford to. Not doing so is more selfish than our paren't generation was. Damn you Trudeau.

[geoffrey]

Geoff what are you talking about? The budgeted surplus is going to paying down the debt. Plus the extra 1/2 billion. What do you mean by "put it in the budget"?

If their goal was to spend $13b paying debt, then they should have had that in the budget. Excess monies should be refunded, the government has no mandate to spend that cash.

Government isn't in business and shouldn't be in business. That is the role of private business. We aren't talking about ROI. Pay off the debt and then cut taxes to the bone.

I disagree. It's all about ROI, always. Why throw money at 3.5% debt when most Canadians carry debt at at least twice that. Doesn't make sense when you really think about it, does it?

We should be paying down the debt now because we can afford to. Not doing so is more selfish than our paren't generation was. Damn you Trudeau.

I disagree. More Canadians benefit from paying of their mortgages than paying down the national debt. Who is the lenders to the government, by the way? Mostly Canadians, getting that government interest right back.

Yum yum. If anything, the government should give us all cash to pay of all debt and accumulate theirs. It makes more sense, people will be better off. Unfortunately, we get into the real world of motivations and all that, so it wouldn't work. But on a reasonable level, tax cuts before debt repayment makes sense to me.

$13b at the debt does little, $13b in tax cuts is absolutely incrediable.

When no Canadian has expensive personal debt, then worry about paying down the national one. We can't change the fact that Trudeau&Co. put us into a hole... but we shouldn't penalise ourselves further trying to get out.

[Topaz]

I think before anyone gets carried away with the surplus, perhaps we should look at what the Harper government is /isn't doing with the money. The largest debt is going to be the military. Harper seems to think we need a military to equal the US perhaps and I would ask why?? I guess now that the military brass have change us from peacekeeping to seek and destroy military I guess one would have to spend billions of $$$ to bring it up to par and keep it there. There's only ONE problem with this size of a military. How is Harper or any other PM who wants to do this, going to get the PERSONNEL to run it???? I've watching the committee meeting on C-Pac and the military has said they need 7900 new recruits just the maintain what they have now. I don't think, especially now, Harper is going to get the men and women to fill the empty places. So we could have the military equipment but no one to use them. Also, I'm wonder what Harper is going to do if Canada troops start dying like the US in Iraq and we see our military go from 2450 to 1000 real fast. I heard the Premier of Quebec say he is getting extra transfers from Ottawa, is this something knew??? If he has to go through another election this soon, will he survive and if not were does that put Harper???

[Figleaf]

There is no point in cutting the GST. The problems with the GST have little to do with the percentage figure it rakes off, but rather with the administrative burden it places on businesses, the extra bureaucracy it requires to administer, and the distortion of purchase price it applies at the cash register. None of those problems is fixed by lowering the percentage rate.

[Argus]

This is a pointless discussion. The reason the Tories used to get mad was that the Liberals played all sorts of accounting tricks with budget figures - tricks which would have landed them in prison if they were in the private sector. For most of their time in office the accounting games were designed to hide the actual state of the budget, by squirelling away as much money as possible into every little nook and crany, by overestimating expenditures and underestimating income, and by paying for programs in advance, in different accounting years than the expenses occured.

There were huge problems with health care, education, the military, and roads, for example, which the Liberals did not want stir themselves to address. They saw no particular advantage to doing anything so long as they were high in the polls. They wanted to keep that money for when they might need it to buy an election. That is why only when the Right united and began to present a legitimate threat did the money taps turn and money begin to flow into health care and other areas that the Liberals had so long starved of funding.

As to what should be done with the surplus - either put it into health care - preferably with major reform added - or put it on the debt.

[Argus]

I think before anyone gets carried away with the surplus, perhaps we should look at what the Harper government is /isn't doing with the money. The largest debt is going to be the military. Harper seems to think we need a military to equal the US perhaps and I would ask why??

Because the military was starved of funding for the entire tenure of the Chretien regime, and because the Chretien and Martin governments commited us to a long, violent stint in Afghanistan.

[jdobbin]

Nonsense, I explain in the next post. Beyond that, the Federal debt has nothing to do with the surplus. If the CPC wants to pay the debt, put it in the budget. Don't overbill me and then tell me that the extra money is just going against the debt (poor investment).

Exactly, Geoffrey. I don't know that anyone of the people who keep cheering the huge surpluses and underestimates of budget revenue get this.

If the debt is a priority, budget for it. Make it a line item in the budget just like any other spending program such as say...military spending.

A $13 billion dollar surplus is poor planning. Even if it goes to paying off the debt, it means the government is not doing a very good job forecasting revenue. A $500 million jump on an already ballooning surplus is ridiculous.

The Liberals were guilty of taking in this extra revenue by deliberately underestimating revenue. The Tories have made $13 billion surpluses as part of their budget process and they still can't get it right when they take in $500 million beyond that.

Imagine what could be done with $500 million. A tax cut. Paving 500 kilometers of road.

[jdobbin]

As to what should be done with the surplus - either put it into health care - preferably with major reform added - or put it on the debt.

It isn't a pointless discussion. If the Tories want to pay for either health or debt, budget for it. Simply place make a line item for the budget that specifically pays for debt reduction or for additional health spending.

The private sector is no less unhappy with Tory forecasting as they were with Liberal forecasting. There is no excuse for a yearly $13 billion surplus.

[geoffrey]

There is no point in cutting the GST. The problems with the GST have little to do with the percentage figure it rakes off, but rather with the administrative burden it places on businesses, the extra bureaucracy it requires to administer, and the distortion of purchase price it applies at the cash register. None of those problems is fixed by lowering the percentage rate.

Your right, either eliminate it, or keep it as is. Don't forget the burden it places on those that follow the GST rules, compared to the cash discounters.

[jdobbin]

Because the military was starved of funding for the entire tenure of the Chretien regime, and because the Chretien and Martin governments commited us to a long, violent stint in Afghanistan.

The troops would have been home in February. Harper extended that mission to 2009 and beyond.

[Michael Bluth]

If the debt is a priority, budget for it. Make it a line item in the budget just like any other spending program such as say...military spending.

There is a line item for debt reduction. It is called the NET SURPLUS.

The Conservatives said it would be 12.5 billion. It was 13 billion. Woo hoo, the debt is being paid down.

[jdobbin]

You are being overbilled because the nation of Canada has a massive debt that needs to be paid off.

Is that the reason why the Tories have a $13 billion surplus or is it because of poor forecasting as the private analysts keep saying?

Here is the TD Banks thoughts on the surplus.

http://www.td.com/economics/special/dd0207_surplus.pdf

OOPS THEY DID IT AGAIN: THE FEDERAL SURPLUS HAS

BEEN UNDER-PREDICTED

Despite taking some steps that should have improved

the accuracy of federal government fiscal projections, it

appears that like their Liberal predecessors, the Conserva-

tive Government has under-predicted the size of the budget

surplus. In the Fall 2006 Economic & Fiscal Update the

surplus for 2006-07 was predicted to be $7.2 billion. Af-

ter the first 8 months of the year it sits at $6.1 billion,

down only $0.5 billion from the same period of 2005-06

when the full year result came in at $13.2 billion

[Michael Bluth]

Is that the reason why the Tories have a $13 billion surplus or is it because of poor forecasting as the private analysts keep saying?

They forecast a $12.5 billion surplus. The actual surplus was $13 billion Which private analysts "keep saying" it is poor forecasting?

Any proof? Doubtful.

More likely another jbobbin fabrication.

Does lying make you feel better?

Quiet the voices in your head maybe?

[jdobbin]

Your right, either eliminate it, or keep it as is. Don't forget the burden it places on those that follow the GST rules, compared to the cash discounters.

The GST should be left alone. It is far more effective to give income tax relief rather than tinkering with the GST.

[Renegade]

Why pay it off? Is Canada planning to retire soon? Debt is a great thing, you can't make (lots of) money without it. I have no issue with the government borrowing for long-term capital projects that have favourable returns.

Paying off the debt provides much less benefit than investing that same dollar in the economy. Example...

The government pays about 3.5% on it's debt (haven't checked recently, it's +/- .25 of that). Let's say we have $100 to use.

Apply that $100 directly to the debt: Saves us $3.50/year

Cut our taxes giving all Canadians that money to apply to mortgages: Saves about $6.50/year

Buy a new software system that eliminates a government employee: Saves say $10.00/year

Cut our taxes giving all Canadians money to invest in enterprise: Generates about $12.00/year

Cut our taxes giving all Canadians that money to apply to credit card debt: Saves about $18.00/year

What do you want to do with that $100?

So geoffrey, why stop there? Why not triple the debt and give everyone tax cuts to pay-off credit card debt, or mortgages, or invest in the stock-market to get 25% returns. Taken the extreme, why not just stop taxing and just accumulated debt?

[Renegade]

http://ca.news.yahoo.com/s/25052007/3/cana...x-revenues.html

The federal government ran an estimated budget surplus of $13.7 billion in the fiscal year that ended March 31, the Finance Department said Friday.

However, the figure doesn't include about $4 billion in promised spending to address patient waiting times, air pollution and climate change.

Factoring that in, the surplus for April 2006 to March 2007 will come in at $9.7 billion.

That is $500 million above the $9.2-billion surplus that Ottawa forecast in the 2007 federal budget.

The Tories used to ridicule the Liberals for making such huge underestimations.

Sadly, the Tories are likely to just try to cut the GST rather than address income taxes where the largest percentage of growth in federal income was made.

And if they don't cut taxes, expect a new wave of spending prior to an election announcement. Perhaps they will be defeated before they have a chance to cut or spend.

Given the choice between governments missing their estimates by overspending or by underspending, I much prefer underspending. It doesn't matter much to me whether it was the Liberals or PC who did so.

As far as applying the surplus to the GST, shouldn't we expect that, afterall isn't that part the platform they were elected on? Or are you encouraging the PC not to keep their election promises?

[stignasty]

Steve and Flim Flam

I realize this is off topic, but would it be too much to ask to use proper names when referring to people? I mean, okay, I can figure out who Steve is, but "Flim Flam?"

Have respect for those of us who don't read rabble (or it's conservative counterpoints). That way, not only do you avoid appearing blatantly partisan, but the rest of us will be able to follow along.

[jdobbin]

Given the choice between governments missing their estimates by overspending or by underspending, I much prefer underspending. It doesn't matter much to me whether it was the Liberals or PC who did so.

As far as applying the surplus to the GST, shouldn't we expect that, afterall isn't that part the platform they were elected on? Or are you encouraging the PC not to keep their election promises?

Poor forecasting one way can turn around and hit you the other way as well. In other words, poor forecasting can produce surpluses or deficits.

TD Bank commented back in March on how these poor projections cause a lack of faith in the Finance department.

This study this year looked at the problem of rolling surpluses during Martin's government.

http://www.irpp.org/wp/archive/wp2006-01.pdf

The author of the study has said in media interviews that the Tories are continuing the practice. He had some particular observations on Alberta's surpluses.

I never said the surplus should be applied to the GST. I was saying that the next planned GST cut is less regarded as an income tax.

As far as making changes to the budget, Flaherty has had to make several because of the outcry. Are those broke promises?

[sharkman]

As far as applying the surplus to the GST, shouldn't we expect that, afterall isn't that part the platform they were elected on? Or are you encouraging the PC not to keep their election promises?

Yes, expect Liberal supporters to berate the government for not cutting income taxes when they knock a cent off the GST, and berate the government for not keeping a promise if they cut income taxes instead. We may get both, which will momentarily confuse Liberals supporters until they get their talking points from Liberal INC.

[Michael Bluth]

Poor forecasting one way can turn around and hit you the other way as well. In other words, poor forecasting can produce surpluses or deficits.

TD Bank commented back in March on how these poor projections cause a lack of faith in the Finance department.

This study this year looked at the problem of rolling surpluses during Martin's government.

http://www.irpp.org/wp/archive/wp2006-01.pdf

The author of the study says the Tories are continuing the practice.

This study was released before the Conservatives took power. And the author said nothing of the kind.

The Conservatives have come closer to estimating the net surplus (or deficit) in their first year in power than the Liberals did in any one of their 13 years.

Nice try though...

[Renegade]

Poor forecasting one way can turn around and hit you the other way as well. In other words, poor forecasting can produce surpluses or deficits.

Agreed, but a government is not judged by how well it forecasts. If a govenment wanted to, it could come in exactly on budget but underestimating the surplus and then applying last minute frivilous spending to make sure it came on budget.

Not sure about you, but I'd prefer the government to come in with as large surpuluses as possible despite what they have forecast.

I never said the surplus should be applied to the GST. I was saying that the next planned GST cut is less regarded as an income tax.

Well your specific comment was " the Tories are likely to just try to cut the GST rather than address income taxes" and you made that comment in a topic about the use of the federal surplus, so it was natural for me to assume you meant that the Tories were likely to apply the surplus toward a GST cut. If that is not what you meant, I must have misunderstood.

As far as making changes to the budget, Flaherty has had to make several because of the outcry. Are those broke promises?

Yes, absolutely he has broken some. Personally I would have favoured income tax cuts over a GST cut, but even more than that, I favour a government keeping its word, especially promises it was elected on.

[Michael Bluth]

Poor forecasting one way can turn around and hit you the other way as well. In other words, poor forecasting can produce surpluses or deficits.

Agreed, but a government is not judged by how well it forecasts. If a govenment wanted to, it could come in exactly on budget but underestimating the surplus and then applying last minute frivilous spending to make sure it came on budget.

Forecasting is important.

dobbin doesn't get that bad forecasts are not accurate to judge the Conservatives on. They came within $500 million of their budget forecast in this case.

Yes, the Conservatives haven't been perfect. But at least the ilk of dobbin could direct their attacks accurately rather than resort to out right fabrications.

[runningdog]

surplus increasing, middle class decreasing...way to go "New Government"

[scribblet]

Surplus increasing, more tax cuts coming - way to go CPC

[jdobbin]

Yes, expect Liberal supporters to berate the government for not cutting income taxes when they knock a cent off the GST, and berate the government for not keeping a promise if they cut income taxes instead. We may get both, which will momentarily confuse Liberals supporters until they get their talking points from Liberal INC.

So far, what we did get was the Tories raising income taxes to fund their GST cut.