We are now into full blown Budget consultation mode, with MPs of all parties going through a bit more than the usual pretence of listening before the actual Budget is finally put to bed by the government a few days hence. For once, even the Conservative inner circle seem a bit unsure of where to go. Below the closed (charmed) […]
Read moreSupporters of various American wars have sometimes proclaimed, “Freedom isn’t free.” This idiom could also be applied to Tax-Free Savings Accounts, which entail a cost in terms of lost federal and provincial revenues. When Budget 2008 unveiled TFSAs, several writers on this blog pointed out that their initially low fiscal cost would grow exponentially over time. At least one high-profile TFSA […]
Read moreEven as Conservatives jettison some of the worst features of Thursday’s economic statement, they appeared on this morning’s TV news programs reiterating that their tax cuts are worth 2% of GDP – the amount of stimulus recommended by the International Monetary Fund. Almost a year ago, Marc began noting the dubiousness of casting tax cuts from the 2007 Economic Statement […]
Read moreI wasn’t originally planning to write a longer analysis and critique of Flaherty’s fiscal and economic statement beyond our immediate response because, like most people, I expected it would at least show some reasonable recognition of the problem and at least the framework for a stimulus program (besides, I had young children to pick up from school, feed and put […]
Read moreThe PEF got a plug in the Toronto Star today. This article by Linda Diebel noted our open letter on the economic crisis and interviewed a few of our signatories. Overall it is a good article and the comments of a few signatories are excellent. We really appreciate the plug, but I should note, as PEF Chair, that those interviewed […]
Read moreThe Equalization changes are probably the most fiscally significant cuts in yesterday’s unstimulating Economic Statement. In 2009-10, the program is projected to pay out $14.2 billion instead of $16 billion. In 2010-11, it will pay $14.5 billion instead of $20 billion. This $5.5 billion difference exceeds the $3.5 billion in total projected savings from spending austerity, asset sales, the wage […]
Read moreBy desperately clinging to the facade of a balanced budget, today’s Economic Statement rules out a meaningful stimulus package. The federal government optimistically assumes an economic slowdown rather than a sustained recession (it projects real GDP growth every year). To avoid the modest annual deficits that a slowdown would cause, the government proposes to reduce overall expenditures, sell public assets, […]
Read moreIt appears that, once again, “We are all Keynesians now.” Almost everyone agrees that the federal government needs to inject significant fiscal stimulus into the deteriorating Canadian economy. In particular, there now seems to be a consensus for more infrastructure investment. While accepting this prescription in theory, the federal Conservatives maintain that tomorrow will simply be a fiscal “update” and […]
Read moreLast night when I was watching the US presidential debate on Newsworld, the ticker told a one-line story that the Conference Board of Canada’s latest forecast for 2008 economic growth has been lowered to 0.8%. It was a redemption or sorts because back in February I testified before the House Finance Committee with Glen Hodgson of the Conference Board. I […]
Read moreWhat irks me about the Harperites’ non-response to the economic crisis is their claim that they have responded by bringing in tax cuts, announced in the Economic and Fiscal Update almost a year ago, and perfectly timed to the occasion. There is an argument to be made for tax cuts as a fiscal stimulus, although I think they will do […]
Read moreToday’s Parliamentary Budget Office (PBO) report provides the following estimates. Total Cost of the Afghanistan War (2001-02 to 2010-11): $18.1 billion Past Cost (2001-02 to 2007-08): $10.5 billion Future Cost (2008-09 to 2010-11): $7.7 billion These figures are incremental costs, “costs that would not have been incurred except for the operation. Alternatively put, these would be the total savings to […]
Read moreDeficits. There. I said it. Are you afraid? You shouldn’t be. If, as I suggested in my previous post, monetary policy is proving ineffective and if fiscal policy needs to be a big part of the solution, then we must consider what for many has become the unthinkable. We must revisit our fear of deficits, that word — that state […]
Read moreLettre ouverte de la part d’économistes canadiens à propos de la crise économique actuelle et la réponse du gouvernement qui s’impose La crise financière mondiale qui s’aggrave, la chute des prix des matières premières à l’échelle mondiale et le risque grandissant d’une récession mondiale dévoilent des faiblesses inquiétantes de l’économie canadienne. Le simple fait de nous en remettre à nos […]
Read moreThe Progressive Economics Forum’s open letter is now making the rounds. Signatories include four chairs of economics departments, two former Presidents of the Canadian Economics Association, a former federal Secretary of State (Finance), and a former Quebec Minister of Industry. Here’s the text and the 88 signatories: Open Letter from Canadian Economists on the Current Economic Crisis and the Appropriate […]
Read moreSome coverage has suggested that the NDP’s platform costing was based on excessively optimistic projections. The Globe and Mail reported, “Like the Liberals, the NDP is basing its fiscal plan on the Conservative government’s 2008 budget projected surpluses, which are more than six months old and are widely believed to be too rosy in light of the economic slowdown in […]
Read moreOnce again, there seems to be a heavier hand in censoring or editing Statistics Canada’s releases. This morning The Daily reported that: “Spending on research and development in the higher education sector amounted to $9.6 billion (current dollars) in the fiscal year 2006/2007.” but there was no word on whether this was an increase or decrease from the previous period, which Statscan releases […]
Read moreCanada has the third-lowest business taxes of ten countries examined in a study released as part of KPMG’s 2008 Competitive Alternatives report. The spin from KPMG has been that “If the provinces follow the federal lead and reduce their rates as well, Canada’s advantage will be enhanced.” Canadians should be asking a different question. If we already have a substantial “tax […]
Read moreTranscripts are now available of my appearances before the House and Senate Finance Committees regarding Bill C-50 (Budget Implementation). I critiqued the Budget’s general direction and its particular changes to (Un)Employment Insurance. The following remarks to the House committee duplicate what I said to the Senate committee, although MPs asked different questions than Senators. Mr. Erin Weir (Economist, United Steelworkers): […]
Read moreThe lead editorial in today’s Toronto Star essentially restates McGuinty’s case more coherently than yesterday’s reports. The supposed problem identified is that, if Ontario becomes a “have-not” province, it would continue to pay more into Equalization than it would get out. This scenario is not nearly as strange as The Star makes out. Equalization has always been funded by all […]
Read moreFor a while, the Ontario Premier was looking quite reasonable in his dispute with the federal government. As Jim Flaherty charged that Ontario’s economic woes reflected a lack of provincial corporate tax cuts, Dalton McGuinty correctly responded that a lower rate of tax on profits would entail a large fiscal cost and provide little assistance to Ontario’s currently unprofitable manufacturing […]
Read moreAlthough it was probably overshadowed by the census release, Ralph Goodale appeared to jump on Marc’s deficit bandwagon last week. Some paragraphs in the early portion of his National Post op-ed seemed like they belonged on this blog: He [Harper] has taken this nation to the brink of a deficit – the first in more than a decade. And it’s […]
Read moreIn his latest Maclean’s column, Paul Wells suggests that the Prime Minister’s apparent anger toward various public officials and agencies reflects not his personality, but his ideological crusade against government. Of course, as Wells observes, the Canadian state was greatly diminished during the years preceding Harper’s government. However, Harper undoubtedly aims to continue the trend and is on record arguing […]
Read moreThe Federation of Canadian Municipalities released a large poll today — the largest of its type on municipal issues. The poll seems reasonably well done with decent questions and language. Many of the results are to be expected: strongest support for increased funding for health care, with increased funding for local infrastructure as a solid second in terms of priority. What surprised […]
Read moreAs Andrew, Marc, Toby and I pointed-out at the time, despite the low up-front cost of Tax-Free Savings Accounts, they will become exponentially more expensive over time. To obnoxiously quote myself, “this measure could burn a significant hole in future government revenues.” It is worth noting that Jack Mintz, a huge fan of Tax-Free Savings Accounts, suggests essentially the same […]
Read moreOver the years, federal budget legislation has acquired the feel of U.S. omnibus bills (the Farm Bill is probably the quintessential example). To some extent, this is to be expected. Ever since the “disastrous” Trudeau era, the imperial Department of Finance has not-so-quietly re-asserted its domain over the federal bureaucracy. One manifestation of Finance’s power has been the increasing tendency […]
Read moreIn a new report released today for Sustainable Prosperity (a new research institute), Jack Mintz and Nancy Olewiler pitch a federal carbon tax constructed by broadening the base of the federal excise tax (which currently raises over $5 billion per year based on a tax of 10 cents per litre of gas and 4 cents per liter of diesel) to […]
Read moreAh, the confluence of the events! The tabling of a “prudent†federal budget for uncertain times, followed a week later by news of slowing economic growth. Of course, rumors of the economy’s imminent decline may be greatly exaggerated, given January’s jobs report and trade data. But let’s carry forth with the economic accounts data. Earlier, Erin and Toby drew […]
Read moreUsually when expectations are lowered it is so that they can subsequently be exceeded. So budget watchers were all wondering in the past few days what the surprise in this budget would be. Alas, the surprise is that there is no surprise. As expected we got a do-nothing budget, albeit one with a glossy cover of a child waving a […]
Read moreExcellent analysis by Marc and Andrew leaves me with relatively little to add. The Steelworkers and NDP made many of the same points. Budget 2008’s minor new investments in public programs will amount to only one-sixth the value of recent corporate tax cuts during the next fiscal year. Budget 2008 (Table 1.1, page 10) proposes $1.4 billion of new spending […]
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