Why you can't expect this government do anything right- it is about priorities

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Wed, 2010-02-24 11:43

Sean in Ottawa

The issues are being addressed as if they are economic when they aren't-- they are political.

Looking at this from a fiscal and economic point of view, the last time Canada faced a deficit problem the dollar was too low and interest rates too high. This encourages a tighter fiscal policy that makes it difficult to address weaknesses in the economy. Today the dollar is too high and interest rates are at record lows. I assume therefore that we ought to be able to print some more money which would allow the dollar to drop. A short term solution but not ineffective.

Secondly we need to address what are Canadian core priorities-- unfortunately this is political-- those are the social structures that the Conservatives have no use for. For that reason we can expect them to get it wrong-- spending on the military is only part of the problem. Even within military spending there are choices that are political. The Conservatives are looking for an offensive military that can play with the big boys. They are not looking for equipment for peacekeeping roles, roles in support of international aid, equipment designed for safety, at least not for the most part. You could argue some heavy lift equipment and helicopters are a priority given our coasts and spread out population. Unfortunately, the government has the wrong purpose for the military (aggressive involvement outside our borders) and therefore we can be certain that the wrong emphasis will be made. When it comes back to our core priorities again the Conservatives are buying the wrong things-- support for big business is coming ahead of support for employment-- even when some of the right industries are supported the deals will lack the employment conditions. A healthy population is the most important priority that this government misses as they consider that an individual responsibility.If we were to address this priority we would see First Nations concerns about access to proper housing, health and medical services, education and water rise to the top. The second priority related to the first (considering the social determinants of health) is job creation-- from the point of view of a living wage-- not a statistical -- oh, it is ok so long as you are working (even if it is for minimum wage). Of course this requires an industrial plan rooted in the environmental, economic and technological context we face today. The first and the second to be sustainable need the environment to be sustainable. Finally, how we pay for the running of government through taxes, resource shares and investments needs to be repaired. A more open tax system, simplified so as to make it more accountable with the removal of loopholes and the leveling of the treatment of various types of income has to be developed. Amazing when the Cons talk about the virtue of earning a living. Presently our income tax system prejudices against those who do that with the highest taxes on wages of all forms of income.

None of these things can happen. the reason is this is not about what is practical or right but what those in power wish to do.

The greatest myth is the idea of good governance, proper management. The reality is that mistakes in management are fairly small as most governments succeed in doing what they want. The difference is in fact not about competence but about priority and direction. People need to learn that they are more likely to get hurt by a party that is competently going in the wrong direction than one that is trying to go the right way but screwing up. This has always been true and we are delivered masses amounts of propaganda designed to convince us that the right direction is actually incompetent and the wrong direction is in fact competence. There is no hope in expecting a government that has fundamentally the wrong priorities to achieve any good. If they screw up, we will suffer because they wasted resources. If the succeed we will suffer because they spent those resources on the wrong priorities. People need to get out there and discuss this political reality before we can consider anything concrete about budget solutions.

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Economy

Wed, 2010-02-24 22:35

Frmrsldr

In dummied down language, if enough people bitch loud enough and long enough about what they want and don't want the government to do, the government will eventually listen. Even a dictatorial government.

That is the limits of (political) power. A minority of people are in power (government) because a majority of people put them there or alow them to remain in power.

Look at how the vocal protestation against prorogation and a drop in popularity by 10% of the Conservatives have caused the government to tone down its language concerning the budget. The budget is yet one more means of attempting to boost the popularity of the Conservatives and increase their chances of gaining a majority come next election.

You want the government to change? Make it very clear to them what will boost and what will harm their popularity and chances of re-election. Under such circumstances, most (prudent) governments will forgo their dogmatism in favor of pragmatism.

Wed, 2010-02-24 23:52

Sean in Ottawa

I can't agree-- this government plays every angle both strategically and politically. The only climb down is the stimulus spending-- look how quickly they were able to direct the money to mostly Con ridings and how they were able to go over the top with spending and effectively bring the debate back to deficit fighting which will give them the ability to sell cuts to popular programs they might otherwise have not been able to touch. Don't underestimate this bunch.

I don't think the Cons are necessarily thinking about going for a majority. I think they might be looking to see what they can get away with in a minority situation now.

So far the Cons have played everything to their advantage-- can you identify a policy loss for them that they did not turn to advantage?

Thu, 2010-02-25 01:51

Fidel

Stooging for the Yanks in Afghanistan doesn't seem to be winning either of the two old line parties any brownie points with voters. And the dollar-interest rate situation would surely change with a phony-majority government Tory or Liberal. They've been telling us in news reports that now they are worried about a housing bubble and cheap credit too freely available. Newer Canadian families trying to put roofs over their heads are silly hearts according to Carney and market oracles. Iow's, the feds and Carney would like nothing better than to wage a war on the unseen enemy in Canada - "inflation" - but don't have the stomach for it without first putting a grab on phony-majority dictatorial power for at least four years. "Markets" and their hirelings in government prefer four year terms without democracy getting in the way of their financial and economic agendas decided behind closed doors. Markets prefer certain guarantees for the future, whereas us ordinary slobs should expect very few guarantees in life. It's an unwritten aspect of the ideology that says ordinary people should be disabused of the notion that democratically elected governments should govern with populist policies on behalf of ordinary citizens.

Thu, 2010-02-25 01:52

Frmrsldr

Sean in Ottawa wrote:

I can't agree-- this government plays every angle both strategically and politically. The only climb down is the stimulus spending-- look how quickly they were able to direct the money to mostly Con ridings and how they were able to go over the top with spending and effectively bring the debate back to deficit fighting which will give them the ability to sell cuts to popular programs they might otherwise have not been able to touch. Don't underestimate this bunch.

I don't underestimate them. That is why when the Cons throw out the argument about cuts, we (the people) should throw back the argument that the government can save hundreds of billions of dollars by killing their law and order agenda and by making cuts to the military and by militarily disengaging from Afghanistan NOW! I realize that law and order and the warfare state is "company policy" with the Cons. By making the Cons' popularity contingent upon this will determine whether they sacrifice their dogmatism in favor of pragmatism or not. I realize this is a bit of a dream, but I'd like to see them squirm.

Chief economists like Kevin Paige and the director of TD bank have said this is a structural deficit, a deficit that cannot be paid off by cuts alone. Taxes will have to be raised. Reducing the GST did "buy" some votes, in the short term. But wait until the reduced revenue for the federal government as a result of the reduction in the GST is combined with the cost of the war and the HST for Ontario and B.C. results in a worsening Canadian economy. You are going to have a lot of angry people. If the Cons and the NDP are unable to capitalize on this anger, then come next election, the Libs may form the next government by default as a result of this anger.

Sean in Ottawa wrote:

I don't think the Cons are necessarily thinking about going for a majority. I think they might be looking to see what they can get away with in a minority situation now.

Given the situation, the Cons are currently in damage cotrol mode. If things pick up, then they will become cocky once again and try to boost their popularity into majority territory.

Sean in Ottawa wrote:

So far the Cons have played everything to their advantage-- can you identify a policy loss for them that they did not turn to advantage?

Proroging Parliament. The Cons have tried to use the crisis in Haiti and the Olympic Games to their advantage, but have, so far failed to gain any traction with this.

It took a number of years after the Watergate break in and Nixon's resignation: Watergate didn't happen over a matter of hours, days, weeks or months.

The NDP and the Liberals have promised to continue the Torturegate hearings after Parliament resumes. Hopefully, eventually Harper falls in a vote of nonconfidence, resigns, is impeached, Elizabeth Regina steps in, throws him in the Tower of London and has him beheaded or what have you, over this issue.

Thu, 2010-02-25 14:23

Sean in Ottawa

Actually you don't have the right definition of a structural deficit: a structural deficit is one that won't be eliminated by an economic recovery. A deficit that you go in to because of a recession but that will go away as soon as the economy recovers is not a structural deficit. If you need tax increases OR spending cuts to get out of it then that is a structural deficit.

Proroguing parliament is not a policy loss. That is a strategic political loss and only if their support remains low over the longer term. They effectively changed the channel on a session going badly for them. It remains to be seen if the long-term price they paid will be that heavy and if the channel change worked. If their support goes back up over the next few months and the budget changes the channel and the issues they shut down don't fully come back up. At issue of course is that things will continue but some of them will now be old news and this government is all about managing publicity. I suspect that they will have a political loss here but it is still early.

A policy loss would be something they have been forced to do that they did not want to do and could not turn to advantage. The only reversals I can think of are: removing the election financing (which I think they plan on using later given that it could actually be a political win for them); the stimulus (which I think they turned to advantage by using the money politically and bleeding out the federal ability to do the programs they want to cut anyway) and leaving the war in Afghanistan which has not yet happened but now looks likely (but the military may need the break anyway and we might almost immediately go in to another US adventure so we wait on that as well.)

As much as other parties want to continue the "torture" allegations-- it is possible if the budget is interesting enough few will be listening. Brings me back to the assumption that they will not allow this to be a real do-nothing budget. They will need some controversy to get people talking about that instead of the issues they want to bury. That means something controversial that they feel they won't lose on -- brings me back to election financing, asset sales and perhaps something else.

Thu, 2010-02-25 14:43

Sean in Ottawa

Yeah the theletes know they are non longer competing for medals-- they have to impress the PM to keep their funding...

Thu, 2010-02-25 14:44

remind

Funnily enough it only took 1 day for them to change their mind about discontinuing their discontinuance of funding athletes.

Thu, 2010-02-25 14:48

remind

I don't know, I think it is more than that, as I believe the biz community has put pressure on Harper to continue, after Lunn's speech that they would not be and biz was going to have to pick up the slack.

This was kinda affirmed more with the 3 Dragons on CBC last night boosting a notion of people's commitments to funding sports too.

Thu, 2010-02-25 16:07

#10

thorin_bane

They want us to fund it through private donations.

I agree with Sean. They never stop and are relentless on the attack. I know they will do something the libs can agree enough with that will harm the common people. They LOVE the minority. People think they want a majority...maybe yes maybe no, but they are doing everything they want and everyone else is sharing the blame on the negaitives. So yeah a minority certainly works for them. If they had a majority they would have to stand on their record. This way they are free to do what hey want and blame other.

"Stimulus spending put us into deficit because the left wanted it" Sound familiar? Now they HAVE to cut programs to balance the budget, not the GST and business cuts that made the structural deficit to start with.

YOu need only look at how cons are always going into debt even with resources like oil and yet are considered fiscally the best party. I suppose the propaganda MSM spews certainly helps to keep all memory down the memory hole. The tories in ontario are on the upswing meanwhile it was harris that nearly destroyed the province. Some how everyone remembers the NDPs raedays...you know when people kept their job instead of being kicked to the street under harris. But yep them cons are the best thing we can hope for....Fidel has it right. Bananada....it seems to just always get worse.

Thu, 2010-02-25 16:40

#11

Sean in Ottawa

Thorin you have a big point on the minority--

I think Harper's ego wanted a majority desperately. However, the strategists understand the value of a minority.

Harper is a much more powerful PM in a minority-- especially this minority with a scared weak Liberal party and a BQ that is at times incoherent on pan Canadian issues and at times right on the mark but unpredictable nevertheless.

Harper has been able to push around this parliament as he wishes. Things would be much more difficult if he had a majority. The inconsistencies and divisions within his party would be impossible to paper over without the constant threat of an election. The Cons have cover for their worst excesses as they ultimately can get other parties to sign off on them just to avoid an election.

Instead of this minority being a question of holding the government to account and subject to cooperative governance it is an instrument of blackmail used against the other parties.

If Harper is as smart as he thinks he is, he will realize in looking at the Wildrose Alliance that he is safer in a strong minority situation pushing around and blackmailing his political enemies than he would be having to beat up on his right wing friends just to hold power. Right now the right wingers will be satisfied with less and he can concentrate on the backdoor hidden agenda without having to expose his own party's divisions for all to see.

Thu, 2010-02-25 21:32

#12

Summer

Sean: "do you think it's easy to make priorities?" :p

Seriously though: I agree with your OP and your post #10. I hadn't thought about how the strategists might actually [i]prefer[/i] a minority but there's probably something to it. They really can railroad over everyone. Funding-wise it's great for them as they can always convince their base that an election is looming so they need money now. In the long run, maybe it's better for the country for the Cons to get a majority - we'll have four years of conservative ideology/cuts etc but maybe we can recover faster than from the minority situation which seems like it will go on longer. Thoughts?

Quote:
People need to learn that they are more likely to get hurt by a party that is competently going in the wrong direction than one that is trying to go the right way but screwing up. This has always been true and we are delivered masses amounts of propaganda designed to convince us that the right direction is actually incompetent and the wrong direction is in fact competence. There is no hope in expecting a government that has fundamentally the wrong priorities to achieve any good. If they screw up, we will suffer because they wasted resources. If the succeed we will suffer because they spent those resources on the wrong priorities. People need to get out there and discuss this political reality before we can consider anything concrete about budget solutions.

I'd like to pick up on this quote. It's very astute. Part of the NDP's message is that the Libs and Cons are the same party with two different names. Maybe this benefits the Conservatives as well: the two parties have essentially the same end goal but the cons are able to paint themselves as the competent option as opposed to the liberals (see my quote above). Why have conservative-lite, when you can have the real-deal?

I believe that Canadians have shifted to the right (socially) while the cons have been in power. For example, I recall hearing of a poll that more Canadians favour the death penalty (no link sorry, and I don't recall whether it's a majority of Canadians or just more than the last time the question was asked). This is purely anecdotal, but people I speak to seem to be espousing more socially conservative views - this is at work and among friends. I think that the longer a conservative gov't is in power, the more conservative Canadian views get and I think it's because we get used to hearing conservative views (i.e tough on crime bs) and become more accepting of them as we hear more about them. I was among those that thought that Harper would crash and burn: he would show his true colours and Canadians would figure out that he was the devil. Well, I think he's showing his true colours all the time but he has not crashed and burned. If anything, Canadians are more comfortable with him now than we were in 2006 and 2008. (I think that Iggy also subscribed to the crash and burn theory, not sure if he's changed his game plan yet). The longer the Conservative gov't is in power (be it minority or majority), the more conservative values/ideologies/spending cuts/tax cuts will implemented, Canadians will slowly get used to it and things will get progressively worse. Please someone, tell me I'm wrong, that there have been studies and that my theory is incorrect!

Ideology is extremely important to the Harper gov't. While I'm no fan of Iggy, I find Harper's brand of politics and ideology particularly repugnant and I'm not ready to put the two in the same book - yet. Unfortunately, Harper's very good at what he does (ie - playing political and strategic games) and I'm not terribly optimistic that our political climate will change any time soon.

Apologies for the long and pessimistic post - I'm usually more upbeat, I swear!

Edited to Add: And here's an ideological tax increase now (oh excuse me, "security fee")

Thu, 2010-02-25 21:59

#13

Frmrsldr

Sean in Ottawa wrote:

Actually you don't have the right definition of a structural deficit: a structural deficit is one that won't be eliminated by an economic recovery.... If you need tax increases OR spending cuts to get out of it then that is a structural deficit.

That's what I said:

Frmrsldr wrote:

... a structural deficit, a deficit that cannot be paid off by cuts alone. Taxes will have to be raised.

Sean in Ottawa wrote:

... and leaving the war in Afghanistan which has not yet happened but now looks likely (but the military may need the break anyway and we might almost immediately go in to another US adventure so we wait on that as well.)

In the summer of last year, Stephen Harper and Peter MacKay were talking about some Canadian troops remaining in Afghanistan beyond 2011. In the fall of last year, Chief of Defense General Walter Natynczyk essentially shot this gambit down when he gave a General Order to his staff to draw up plans for an orderly scheduled complete demobilization from Afghanistan. The process of demobilizing (disengaging) from Afghanistan will take 12 to 18 months.

There are indications - http://news.antiwar.com/2010/02/24/as-test-operation-flounders-nato-eyes... - that the current Helmand offensive will be repeated in the spring in Kandahar province.

The Canadian military can't militarily disengage in a meaningful way and militarily engage (in the Kandahar offensive) in a meaningful way both at the same time. We can only do one or the other.

Now we know that the top Canadian commander on the ground in Afghanistan Brig. Gen. Daniel Menard and PM Stephen Harper et al are drooling over the prospect of most or all Canadian troops remaining in Afghanistan and engaging in this offensive.

The question is, will the war weary Canadian public allow them to get away with this?

Or will we have a near revolution on our hands, and like Nixon, will the Harper administration fall due to the combination of our engagement in an unpopular war with no end in sight, Torturegate and the Depression (II)?

Thu, 2010-02-25 23:02

#14

neiloneill

Quick note to build on Frmsldr...

On the House 2008 motion to 'disengage' in Afghanistan: the motion states clearly that the CF will disengage from Kandahar, whatever the state of the "COIN + PRT = warfighting" operations. The door is wide open for waging war by other means elsewhere in the country, or in contexts typically framed by Canadian political elites as 'benevolent' or 'humanitarian'. While the CF's leaders have stated the need for an operational pause due to the meta-mission creep resulting from the war and the overall operational tempo, the Afghan deployment is wecolmed by many in the CF as huge experimental and 'lesson learning' opportunity. Plus, US forces will undoubtedly be in-country for sometime, a crucial hinge for any Canadian politico pushing to continue any kind of engagement.

Thu, 2010-02-25 23:33

#15

Frmrsldr

neiloneill wrote:

Plus, US forces will undoubtedly be in-country for sometime, a crucial hinge for any Canadian politico pushing to continue any kind of engagement.

To me, and probably to most Canadians, this is a case of "Who cares? it's America's damn war, let them fight it."

The only legal ground, in this case, the War Party has to go on is the scrap of paper that is the NATO Charter (or whatever it's called) that apparenty states that "An attack against one member is to be considered an attack against all members."

Even so, that statement is subject to interpretation. NATO was created in 1949. Its "enemy" was the Soviet Union and its Communist Bloc allies. The purpose of NATO was to protect Western Europe (not the U.S.A. and Canada - that was the purpose of the U.S. continental based military and NORAD) against a Russia and allies military attack. Civilian criminal acts of terrorism, which is what 9/11 was and did not constitute military aggression; act of war, were not envisioned by this document.

This argument is starting to wear thin. See the Netherlands.

Fri, 2010-02-26 19:34

#16

ottawaobserver

Sean in Ottawa wrote:

People need to learn that they are more likely to get hurt by a party that is competently going in the wrong direction than one that is trying to go the right way but screwing up. This has always been true and we are delivered masses amounts of propaganda designed to convince us that the right direction is actually incompetent and the wrong direction is in fact competence. There is no hope in expecting a government that has fundamentally the wrong priorities to achieve any good. If they screw up, we will suffer because they wasted resources. If the succeed we will suffer because they spent those resources on the wrong priorities. People need to get out there and discuss this political reality before we can consider anything concrete about budget solutions.

I also thought this was right on the money, and one of your better insights, Sean.

Sun, 2010-02-28 11:46

#17

Sean in Ottawa

Frmrsldr]</p> <p>[quote=Sean in Ottawa wrote:

Actually you don't have the right definition of a structural deficit: a structural deficit is one that won't be eliminated by an economic recovery.... If you need tax increases OR spending cuts to get out of it then that is a structural deficit.

That's what I said:

Frmrsldr wrote:

... a structural deficit, a deficit that cannot be paid off by cuts alone. Taxes will have to be raised.

Hi Frmrsldr-- can you read those two quotes that you last requoted again? Do you see the difference?I'll try again because this is important:

A structural deficit is one that cannot be managed through a recovery in the economy. It can only be addressed by EITHER spending cuts or tax increases. Spending cuts or tax increases is a political choice nothing to do with the type of deficit. A non-structural deficit is one where the government does not have to do anything -- it can just wait for the economy to improve and will not require either cuts or tax increases.

You are saying that a structural deficit is one that cannot be managed by spending cuts. A deficit that can be managed through tax increases can generally be managed through spending cuts-- but a deficit that can be managed essentially by doing nothing and waiting for the economy to improve is a non-structural deficit. Is that explanation clearer?

You might remember that the Cons first said we had no deficit in late 2008. Then through the first half of 2009 they said that it was a non-structural deficit that they could wait out. Only recently have they acknowledged that it is a structural deficit that will require action.This is important because a non-structural deficit is one that is related to the economic downturn and it would go away as the economy improves and the stimulus spending ceases. A structural deficit is caused by the government having either increased permanent spending too much or having reduced taxes too much or both. When they cut the GST they said we could afford it. That we are in a structural deficit situation is proof that they either lied or got it wrong and that we would have gone in to deficit even without the recession.

But the whole story is not out there yet: The Conservatives are now saying that they will make spending cuts to things other than health, education and pensions. Many people who are paying attention have already concluded that this will not do it either and the government will either have to make cuts to transfers to provinces or individuals or raise taxes.The deficit is too great to eliminate on such a narrow spending category (the bulk of federal spending is to transfers to individuals and provinces). We also need to remember that not all the tax cuts are in place yet and there are further corporate tax cuts that have been announced that have yet to take place.

The bottom line is the Conservatives are purposefully and dishonestly breaking the finances of the government to make sure that we can no longer afford those things people want that we used to afford. Indeed I predicted this at the time they were elected. At that time there were many popular spending items they wanted to cut for ideological reasons but the government was in surplus and the only way they could get at them was to put the country in to a structural deficit. This they did through military spending and tax cuts. Canadians need to understand that the pain we are about to go through has been purposely inflicted in order to advance an ideological agenda. That is why it is so important that people understand exactly what a structural deficit is because that cannot be caused by a recession and while the government is blaming the stimulus spending that is not what it is about.

Now the accord made with the provinces on transfers for health is about to run out-- expect the government not to renew it and that will effectively be the first major health tax cuts.

Sun, 2010-02-28 21:34

#18

Frmrsldr

Sean in Ottawa]</p> <p>[quote=Frmrsldr wrote:

Sean in Ottawa wrote:

Actually you don't have the right definition of a structural deficit: a structural deficit is one that won't be eliminated by an economic recovery.... If you need tax increases OR spending cuts to get out of it then that is a structural deficit.

That's what I said:

Frmrsldr wrote:

... a structural deficit, a deficit that cannot be paid off by cuts alone. Taxes will have to be raised.

Hi Frmrsldr-- can you read those two quotes that you last requoted again? Do you see the difference?

The difference between you and I is slight. You believe that a structural deficit can be paid off by cuts and/or taxes. I believe that a structural deficit cannot be paid off by cuts (a reduction in the federal government's income, how can it?) Taxes will have to be raised to pay it off. I later talk about the economy and make the case that if it (the economy) remains the same or worsens, this could hurt the Cons politically. I do not make the argument that an improved economy and GDP will be able to pay off the structural deficit - these are used to pay off the federal debt.

Sun, 2010-02-28 23:53

#19

Frmrsldr

Sean in Ottawa wrote:

Frmrsldr-- The difference in definition is not slight and it is not one of belief-- sorry but you are wrong on this. A structural deficit is one that an improved economy cannot resolve. The other kind of deficit is called a cyclical deficit caused by an economic downturn- by definition it resolves when the economy improves (it may still leave a debt but the deficit goes away).

Your logic is faulty: you ask how a structural deficit can be paid off by cuts. Well if you spend more than you bring in either you spend less or you bring in more. The difference between the two is about political priorities and choices not finances. The difference between a cyclical deficit and a structural one is about finances-- one will be resolved at the end of an economic cycle and the other would remain. These are not slight differences. A cyclical deficit you can wait out -- the other requires policy changes-- either increases in revenues or cuts to spending.

I don't make the distinction about cyclical deficit, unless my definition of federal debt is changed accordingly. Concerning structural deficit, where the government chooses to make the cuts, is political.

For the rest, I defer to you as you understand it better than I do. I'm going to stop talking now and start listening and learning.

Sun, 2010-02-28 23:53

#20

Sean in Ottawa

Frmrsldr-- The difference in definition is not slight and it is not one of belief-- sorry but you are wrong on this. A structural deficit is one that an improved economy cannot resolve. The other kind of deficit is called a cyclical deficit caused by an economic downturn- by definition it resolves when the economy improves (it may still leave a debt but the deficit goes away).

Your logic is faulty: you ask how a structural deficit can be paid off by cuts. Well if you spend more than you bring in either you spend less or you bring in more. The difference between the two is about political priorities and choices not finances. The difference between a cyclical deficit and a structural one is about finances-- one will be resolved at the end of an economic cycle and the other would remain. These are not slight differences. A cyclical deficit you can wait out -- the other requires policy changes-- either increases in revenues or cuts to spending. In the case of a structural deficit it does not matter if you choose to turn to tax increases or spending cuts it is still a structural deficit if you need either to fix your problem. If you can wait it out and it will fix itself then it is not a structural deficit.

Then you go on and say you do not make the argument that improved economy will pay off a structural deficit-- well nobody does. Deficits are not paid off-- they are eliminated. It is debt that is paid off (or not). But you suggest that a structural deficit may not be paid off (eliminated) by spending cuts and on that you are absolutely wrong. In fact that is how the Paul Martin budget eliminated the Mulroney deficit as taxes were cut during that same period.

Now it seems you are also unclear about the difference between the debt and a deficit.

Debt is the net accumulation of deficits minus surpluses -- it is what you owe at a certain time. Deficits are shortfalls -- the difference between the amount brought in and the amount spent and are for periods of time - like an annual deficit. Debt is an amount of money owed as per a given date (a balance sheet item). Deficit is a spending shortfall (an expense or profit/loss item).

If you have a structural deficit it will not go away without change-- and of course niether will the public debt.

Please spend a little time learning about this before arguing but clearly you are at the moment way out of your depth. You can google the basic concepts but please untill you have done a little reading don't mislead other people.

So to recap: please look up the meanings of the terms debt; deficit; structural deficit; cyclical deficit.

Then you can rejoin the conversation about the political issues behind the fact that the Conservatives lied about the existance of a deficit; then the fact that it was structural and now about the policies needed for us to get out of it.

By the way, economists are breaking down the current deficit of about 56 billion in to three parts: the part that is a shortfall due to reduced revenue due to lower taxes being paid during the recession (about 25 billion some say); the amount of the stimulus spending (some 19-20 billion) and a structural deficit of perhaps as much as 10 billion. The first two will go away with an improved economy as the government will bring in more money and will not have stumulus spending. The rest can only be managed through some combination of tax increases and or spending cuts. There is little agreement on many of these numbers as they are based in part on projections of how well the economy is expected to do. There is no debate about what these words mean. A structural deficit has a specific meaning- while some may argue if we have one nobody debates the definition of the term.

Mon, 2010-03-01 00:11

#21

Sean in Ottawa

Sorry I don't get your reference to "your definition" of debt. These are not yours or mine. These are words that carry a single meaning for all people in the discussion regardless of ideology.

Debt is for a country exactly what it is for an individual or a business-- it is the amount you owe.

Deficit is a loss over a specific period like a profit/loss statement is for a business or earnings for an individual. If the earning is positive for that period it is a surplus if negative it is a deficit.

Debt should never be confused with deficit.

If you have posted several years with big deficits and then start making small surpluses then you may be still carrying a debt from the deficit years although you are now in surplus years. This is where we were a few years ago. At that time there were arguments about what to do with the surplus-- apply it to the accumulated debt; put it to new program spending; or provide tax reductions. Now that we are in a deficit situation the choices are the opposite we can: do nothing and let the debt pile up; cut back on the deficit through program cuts or cut back on the deficit through tax increases. Doing the first is possible if the deficit is cyclical because eventually we would come out of it anyway but if it is structural then we either need to bring in more in revenue or cut some expenses.

Now one other wrinkle: unlike personal finance the government uses a current accounts system. This means the government basically measures cash flow and does not account for assets. This is dangerous as an irresponsible government can sell assets and the result will look just as good as spending cuts or tax increases because the value of the asset is not considered in the finances. Over the last few years people have tried to improve this accounting but the fact remains the same-- when you sell an asset the revenue shows up but the loss of the asset does not immediately present itself. This is one reason governments that are right wing can be so dangerous. At times they dump assets for a fraction of what they are worth and look good in the process even though they are depriving future governments of the value of the asset. Since business does not use this type of accounting when they dispose of an asset below value they actually post a loss for the difference between what the asset was worth and what they got for it.

Mon, 2010-03-01 00:19

#22

Sean in Ottawa

Sorry I should clarify-- the business may post a loss for the difference between what they paid for it and what they sold it for. (In some cases some assets are left on the books at cost and in others the increased value is calculated as earnings even if the item is not sold. In any case there is a book value included in the balance sheet that must be adjusted in the earnings side for standard business accounting.

With governments there is still a book value but this does not enter in to the earnings statement and so it can appear through creation or purchase and disappear through disposal without showing up in earnings. This is a problem to accountability. Governments are therefore not encouraged to make or retain long-term investments in the way business is from its earnings and balance sheets. Ironically, governments are better positioned to make these long term investments for other reasons. This is why some have argued that there needs to be better accounting for assets in government finances to allow for governments who squander long term investments to be punished and for governments who make them to be rewarded.

Mon, 2010-03-01 00:40

#23

thorin_bane

Sean the same as the cuts at the CBC. How do you provide when you are short. Production becomes worse just increasin the demand to get rid of it. Like you said, they are all about destruction from within. I knew they intended to have cuts as that is theri mantra. Small Government...except in places they enjoy the nanny state like prisons, military, subsidies to big business, too big to fail bailouts and relieveing toxic mortgages to free investors from short sightedness.

We won't even get into the issue of the olympics or airport security/afghanistan. Chomsky talks about this, When they cut funding to public transportation, THAT IS A TAX INCREASE! It is because it is not returned to us and we now have to pay more to ride something that is public. So it's about priorities. Why spend billions on building up the infrastucture here for our future needs(even if sold off cheaply to bell/telus like usual) when it can be spent on consumables in the from of military equipment.

Schools are rarely bad investments, unless you consider educating people and giving them more critical thought to be adverse to what you want out of them. Easily led herd instead of the unwise beast they think the public is. Everything you ever needed to know you learnt by kindergarden.

Mon, 2010-03-01 01:03

#24

Sean in Ottawa

This is so true. Services are indeed worth money to people. Cuts to services have exactly the same effect as tax increases. Good on you for pointing that out. I had not thought of presenting it that way but that is what I'll do when I am talking to people-- thank you.

I can even say that the loss of economy of scale provided by services amplifies the value of the service cut so the effect on the person is dollar for dollar greater for the same amount saved for the government than a tax increase.