Sunday, January 11, 2009

CTV News Predicts $40 Billion Deficit

In a news story released Friday January 9th, CTV News is reporting that the soon to be released federal budget will include a $40 billion deficit. The story doesn't give any indication as to a source, which has me wondering if this is perhaps a typical 'trial balloon' being floated by Conservative insiders.

Its not an uncommon practice for governments (Conservative, Liberal or NDP) to float a 'doom and gloom' story to the press. You'll often see it at the municipal level, with reports of huge increases to property taxes. When the actual news comes out, its often not nearly as bad as earlier reported. Oh it still might be bad...but the object is to get people to say:

"Phew, that's bad, but not nearly as bad as I thought it would be".

Call it managing expectations, if we're anticipating a $40 Billion deficit and then get hit with a number that's half or two thirds of that figure, we're likely going to be less angry...we might even view our government as being effective managers of the country's finances. It seems like a long time ago that Ottawa was consistently running massive budget deficits. Having our books in order is something Canadians have taken justifiable pride in.

What I'm finding ironic in all this...

Think back to the recession of the early 90's. Bob Rae's NDP government in Ontario was almost universally condemned for racking up huge deficits in an effort to spend our way out of that recession. Now it seems that massive government borrowing is the universal panacea to all that ails our economy. I'm not sold on the notion that deficit spending is the way to go. Surely there are prudent ways to nudge the economy without racking up hundreds of billions in debt over the next 3-5 years. What about tax incentives to encourage newer and greener industries?

I'm not advocating anything draconian. Obviously tax revenue will be down and expenditures are going to increase. But I would like to see any budget shortfalls kept to a minimum. Whatever the feds borrow now will have to be paid back by taxpayers later.

CTV News Story Here: Conservatives to table $40 billion deficit

Comments are welcomed, I read them all. Feel free to pass this blog entry along via email or through a social network like FaceBook, just click on the ‘Share This’ icon below.

Back to Canadian Soapbox Home

No comments: