What will we do? How high will the deficit go and will Canada ever have balanced books? Jim Flaherty is pushing his tax on everything HST and is now going to impose an extra tax on those Canadians lucky enough to still have jobs, by raising their EI premiums, but there are still so many questions.
Here are a few answers:
Two-year $101B deficit 'worse than expected:' Flaherty
Government can't say when it will balance books again
Sep 10, 2009 04:39 PM
Les Whittington Ottawa Bureau
OTTAWA – The Conservatives admitted today that the federal government deficit would be worse — a total of $101 billion this year and next — than expected and that the government cannot say when it will balance the books again.
In a hastily-released fiscal update, Finance Minister Jim Flaherty said the severe economic recession means that, between now and 2014-15, Ottawa's budget shortfall will total more than $160 billion, the government said.
A senior federal government official briefing reporters said there is too much uncertainty about the pace of the economic recovery to predict when the federal accounts can be balanced.
It may take between five and 10 years to put an end to the federal deficit, the official said. But a spokesperson for Flaherty said the government hopes to do so sooner. (And he's got so much credibility)
Flaherty said that, once the recovery takes place, the government will attempt to balance its books by cutting the growth in government spending. The Conservatives would not raise taxes or trim transfer payments to the provinces, he said in a speech in Victoria.
"But restraining the growth in government spending will still mean tough choices for the government," Flaherty said. "It will require decisions of government that won't always be popular or pain-free."
Payments to seniors, students and transfers to the provinces for health services will not be cut, federal government officials said.
Explaining the further deterioration in federal finances, the government said in the update papers that "the sharp drop-off in global activity and incomes has reduced revenues (lowering the GST didn't help either) and pushed up government deficits world-wide" and Canada has suffered a similar impact.
Flaherty said the economy is improving but the recovery is fragile. He predicted economic growth of minus 2.3 per cent this year, much worse than the minus 0.8 per cent forecast in the January budget.
But the economy will bounce back and expand by 2.3 per cent next year., he said Unemployment will continue to rise and hit 9 per cent next year, up from the 7.7 per cent predicted in the January budget, the government said.
In the budget, Flaherty had predicted that the government would begin running budget surpluses again in 2013-14 but he now says there will be an $11.2 billion deficit that year, followed by another deficit of $5.2 billion the following year.
He said the deficit this year will hit $55.9 billion, up from the $33.7 billion shortfall predicted in January. And next year's deficit will hit $45.3 billion, up from the January prediction of $30 billion.
During last year's election campaign, Prime Minister Stephen Harper said Canada would not suffer an economic recession and the federal government would not run a budget deficit. With another election looming, Flaherty has expressed a determination to talk about how the Conservatives would extricate themselves from the deficits they are now facing.
Flaherty said in his speech that the uncertain economic times mean the Liberal Opposition's sabre rattling over an election is bad timing for the country.
"Now is not the time to put economic recovery at risk with political opportunism. This is not the time to create instability out of narrow, partisan self-interest," he said.
"This is not the time to play political games." (The Conservatives have NEVER STOPPED PLAYING POLITICAL GAMES)
Canada’s $1-trillion debt baby
September 11, 2009
The Tory commitment to ‘eliminate’ Canada’s total net debt by 2021 now looks absurd
By Terence Corcoran
Debt is good, even for governments. But it depends on the kind of debt, what it’s used for and what the financial plan is for getting out of debt. Finance Minister Jim Flaherty’s latest revelations on the future of Ottawa’s annual deficits do not fill one with confidence that the federal government has a firm grip on the floodgates that control the level of debt in Canada, not all of which is going to be doing much good for the economy.