Fiscal Economics 101, for Jim Flaherty
How about this latest gem from our let-the-market-rule Finance Minister:
OTTAWAâ€“Finance Minister Jim Flaherty says the Conservatives will cut government spending if need be to avoid a budget deficit caused by the economic slowdown.
“No deficit â€“ balanced budget,” he said outside the Commons.
“We’re not raising taxes,” Flaherty added when asked how the federal Tories can avoid a budget shortfall if the weakening economy deprives Ottawa of expected tax revenues.
“There are other ways that governments can balance budgets, of course,” Flaherty continued. “We can always restrain spending if that becomes necessary.”
OK Jim, let’s get this straight.Â If the economy goes into a recession, reducing federal revenues and creating a deficit, you will solve the deficit by cutting spending.Â That will make the recession worse.Â Which means you’ll have to cut spending even more.Â It’s like a Bay Street Ponzi scheme, but in reverse.
In a best-case world, of course, government might actually do something positive to EASE the recession (bumping up infrastructure projects, or other stmuli to spending).Â But at a bare minimum, could the government at least stay on the sidelines as our economy starts going down the drain — rather than accelerating the process as Jim would do.
Flaherty’s counter-logical approach violates the Hippocratic oath taken by doctors: before jumping in there, at least make damn sure you’re not doing any harm.
Please please please Mr. Flaherty, go back to building your train line from Peterborough to Toronto and don’t start trying to fine-tune this recession.Â You’re clearly only going to make it worse.