Federal Budget 2016: $29B Deficit

[polak]

So any details on where the spending is going geographically speaking?

And anything earmarked for some diversification of any kind? I'd be okay with Alberta getting less if it meant that Canada can add some eggs to it's basket. Ideally that egg would be in Alberta though

[Street Pharmacist]

Originally Posted by heep223

Care to elaborate? The ruling party tables legislative and fiscal policy no? (I am not that educated in this)

Banking regulations and monetary policy are shaped with almost always long term effects. The biggest reason we weren't swept up in the crisis were our banking regulations which are in effect for decades.

Assigning credit or blame to recent governments for economics is almost always a fools game. Trends are usually from many different factors and governments really can't change things much (without destroying things) short term.

For example, how long did it take to see the benefit of the infrastructure spend from the conservatives? A long, long time if at all

[Parallex]

Originally Posted by Jacks

The truth is that Liberals are not good at balancing budgets.

... The last Conservative to leave federal office having accrued less debt during his tenure then when he entered was (IIRC) Deifenbaker. Ergo...

Originally Posted by Jacks

The truth is that Conservatives are not good at balancing budgets.

Fixed that for ya. Although if you want to argue that the federal government in general isn't good at it I'd have no issue.

[Enoch Root]

Originally Posted by polak

So any details on where the spending is going geographically speaking?

And anything earmarked for some diversification of any kind? I'd be okay with Alberta getting less if it meant that Canada can add some eggs to it's basket. Ideally that egg would be in Alberta though

Well, I am willing to bet that this part is going primarily to Quebec:

"$1.9 billion over five years to support Canadian arts and culture organizations and cultural infrastructure, including the CBC and national museums"

[heep223]

Originally Posted by Street Pharmacist

Banking regulations and monetary policy are shaped with almost always long term effects. The biggest reason we weren't swept up in the crisis were our banking regulations which are in effect for decades.

Assigning credit or blame to recent governments for economics is almost always a fools game. Trends are usually from many different factors and governments really can't change things much (without destroying things) short term.

For example, how long did it take to see the benefit of the infrastructure spend from the conservatives? A long, long time if at all

Alright. Well at least the CPC responded the right way to the global meltdown by implementing accommodative policy and then committing to rebalancing the budget when it passed. Though I think you meant to say fiscal policy, as you used an example of infrastructure spending. Monetary policy has immediate impacts.

The issue is that once you start the cycle of very loose fiscal policy, it becomes very difficult and unpopular to reverse course. If the Liberals actually follow through on decreasing the deficit after this cyclical macro weakness, I will be impressed.

Originally Posted by Parallex

... The last Conservative to leave federal office having accrued less debt during his tenure then when he entered was (IIRC) Deifenbaker. Ergo...

You need to look at the size of the debt load compared to the size of the economy. What if a conservative took on $1 more of debt but grew the economy by an additional $1B? Ridiculous example but shows the over-simplicity of what you're saying.

[Red]

Originally Posted by heep223

Alright. Well at least the CPC responded the right way to the global meltdown by implementing accommodative policy and then committing to rebalancing the budget when it passed. Though I think you meant to say fiscal policy, as you used an example of infrastructure spending. Monetary policy has immediate impacts.

The issue is that once you start the cycle of very loose fiscal policy, it becomes very difficult and unpopular to reverse course. If the Liberals actually follow through on decreasing the deficit after this cyclical macro weakness, I will be impressed.



You need to look at the size of the debt load compared to the size of the economy. What if a conservative took on $1 more of debt but grew the economy by an additional $1B? Ridiculous example but shows the over-simplicity of what you're saying.

Well the Cons were trying to deregulate banks, USA style. Thankfully that didn't pass or we would have had a US style crash.
Harper and Flaherty did bail out the auto industry. They sold those investment last year to show a surplus in an election year. From what I read, they sold at a loss.
They kept the housing market afloat by extending mortgages to 40 years and 0 down payments. They have since been reversing those changes as they realized what bubble they created.

They lowered the interest rates to boost the economy. The public has since gotten themselves in highest levels of debt ever. We read about new highs every month or two.

So yup, we did alright in the short term.

[Parallex]

Originally Posted by heep223

You need to look at the size of the debt load compared to the size of the economy. What if a conservative took on $1 more of debt but grew the economy by an additional $1B? Ridiculous example but shows the over-simplicity of what you're saying.

No, I don't. Jacks made a flat claim that Liberals are bad at balancing the budget when the truth is that no Conservative has left office having balanced the budget over the length of their tenure in 60 years.

His claim is just dumbass partisanship when the truth is that the federal budget is routinely unbalanced regardless of what political party controls the executive.

[heep223]

As a result, Morneau has opened the deficit floodgates, unperturbed by the prospect of the deficit’s lunar trajectory despite a growing economy and no prospect of balancing the books by the end of the government’s mandate.

What sort of benefit can the Canadian economy expect from these deficits? Very little, according to plenty of studies on the fiscal multiplier published by the NBER. The research demonstrates no net stimulus from fiscal policy in an economy with a floating exchange rate, like Canada’s, because it is offset by tighter monetary policy. The loonie’s recent rally above US77 cents is a good example. The surge was not all due to higher oil prices; it also reflected investors anticipating that the Bank of Canada’s infatuation with lower (or even negative) interest rates is over. The loonie’s upturn began almost to the day in January the Bank of Canada announced it would not cut interest rates.

While growth in Canada will benefit little from sharply higher deficits, the added debt will burden future governments and taxpayers. We have reduced the distortions of extreme monetary policy (such as a falling exchange rate and changed incentives for saving and borrowing) by increasing the distortions from extreme fiscal policy. Such is progress in today’s world of macroeconomics.

The appointment of a novice MP like Morneau–the first rookie at Finance since 1919–was a curious move. Usually, becoming minister of finance is the culmination of years of seasoning and learning how government works. It now looks like Morneau was picked precisely because he would have difficulty saying no to his high-spending cabinet colleagues.

An artful government could have boosted the economy without spending its own money. Private sector firms are waiting for the green light to build pipelines to both coasts, boosting infrastructure spending and permanently lowering the price discount for our oil exports which are trapped in the over-supplied U.S. market. Over the last decade, Canada has invested nearly $1 trillion in developing its energy assets. We need continued investments to maximize the return on these investments, not strand them with utopian plans for greening the economy.

Canada’s unfortunate experience with hitting the “debt wall” in the mid-1990s showed that deficits don’t fix themselves. Government in Canada subsequently developed an aversion to debt that served us well during the debt-fuelled financial crisis enveloping the U.S. and much of Europe in 2008. However, despite these vivid reminders of the dangers of debt, we are now plunging head first into the treacherous waters of large deficits in a growing economy.

http://business.financialpost.com/fp...seem-to-say-no

[Jacks]

Originally Posted by Red

Well the Cons were trying to deregulate banks, USA style. Thankfully that didn't pass or we would have had a US style crash.
Harper and Flaherty did bail out the auto industry. They sold those investment last year to show a surplus in an election year. From what I read, they sold at a loss.

For the second time in this thread that is false.

Originally Posted by Parallex

No, I don't. Jacks made a flat claim that Liberals are bad at balancing the budget when the truth is that no Conservative has left office having balanced the budget over the length of their tenure in 60 years.

I never said that any government was overly good at balancing budgets but for years now people have been going on that Liberals are great at it. With one exception they are not and in that exception they broke every major promise they ran on and dumped their debt on the provinces.

[Enoch Root]

Originally Posted by Red

Well the Cons were trying to deregulate banks, USA style. Thankfully that didn't pass or we would have had a US style crash.

Please expand on how they were going to de-regulate 'USA style'

Harper and Flaherty did bail out the auto industry. They sold those investment last year to show a surplus in an election year. From what I read, they sold at a loss.
They kept the housing market afloat by extending mortgages to 40 years and 0 down payments. They have since been reversing those changes as they realized what bubble they created.

They lowered the interest rates to boost the economy. The public has since gotten themselves in highest levels of debt ever. We read about new highs every month or two.

So yup, we did alright in the short term.

They didn't lower interest rates, that's up to the BOC. And personal debt is at all time records largely because, with low interest rates, housing prices are high, relative to incomes. This has nothing to do with the Conservative gov't. And how much of an issue it is is largely debatable.

[DiracSpike]

Originally Posted by Enoch Root

Well, I am willing to bet that this part is going primarily to Quebec:

"$1.9 billion over five years to support Canadian arts and culture organizations and cultural infrastructure, including the CBC and national museums"

Definitely going to Quebec/Horseshoe, along with most of the "transit infrastrucutre" money.

God I hate this Government already, trying to stimulate growth with gifting money to cultural infrastructure. Yeah I'm sure that'll create/preserve a lot of high-paying jobs. Meanwhile they'll never approve shovel ready pipelines that will actually generate value for this country.

Harper essentially got booted because he got painted as this big meanie and Trudeau was the sunshine and rainbows candidate.

[Locke]

I guess if you're campaigning for election you just have to promise to spend money you dont have on crap you dont need that you never intend to pay back.

Why do I bother paying my bills?

[Red]

Originally Posted by Jacks

For the second time in this thread that is false.


I never said that any government was overly good at balancing budgets but for years now people have been going on that Liberals are great at it. With one exception they are not and in that exception they broke every major promise they ran on and dumped their debt on the provinces.

I guess I missed it the first time. Sorry. Can you elaborate? I am only going by some media reports.

http://www.theglobeandmail.com/repor...ticle23814942/

[blankall]

Anyone surprised by this?

The Canadian economy is F-ed right now. No oil revenues. The cost of capital is out of control. Taxes are through the rough. Good luck starting your own business in that climate. Real estate is out of control in Canada's biggest cities and being sold off to the highest international bidders, meanwhile the taxpayer is covering the bill for the infrastructure required for that real estate.

[EldrickOnIce]

Bipartisan politics aside, at least in theory infrastructure spending can become a driver of the economy. And though I'm not so sure that it does that in reality, I will be happy, once the numbers are crunched out, to hear of some specific allocation of this infrastructure spending in Alberta that might boost the AB economy.

[Red]

Originally Posted by Enoch Root

Please expand on how they were going to de-regulate 'USA style'

They didn't lower interest rates, that's up to the BOC. And personal debt is at all time records largely because, with low interest rates, housing prices are high, relative to incomes. This has nothing to do with the Conservative gov't. And how much of an issue it is is largely debatable.

Sorry, not much time to look for more. Some reading on it...

And to your point of why the personal debt. That has everything to do with the poor policies that inflated housing prices among other things.

http://thetyee.ca/Views/2008/10/08/HarperEcon/

http://www.thestar.com/opinion/2009/...egulation.html

http://www.thestar.com/opinion/edito...anagement.html

http://www.macleans.ca/economy/busin...or-just-lucky/

[Azure]

Would be nice if someone figured a way out to track where all that money is actually going. A breakdown of project by project funding.

[Looch City]

#### it, let's move to US.

Wait...

[Jacks]

Originally Posted by Red

I guess I missed it the first time. Sorry. Can you elaborate? I am only going by some media reports.

http://www.theglobeandmail.com/repor...ticle23814942/

The sale of those shares went through in April and will show on the current year ending this month, it had no effect on the surplus last year. That revenue will help the fiscal picture this year but it's a moot point since Harper was only in power for 1/2 of the year.

Hard to say if they made or lost money on the shares, most sources say that money was lost but they lump the federal and Ontario sales together, Ontario sold at a different price. Also we don't know if the government converted the money from USD right away, at the time of the federal sale our dollar was at about $1.25

[Resolute 14]

Originally Posted by Parallex

... The last Conservative to leave federal office having accrued less debt during his tenure then when he entered was (IIRC) Deifenbaker. Ergo...

Mulroney inherited a giant mess left him by Trudeau - in terms of both policy and external factors. In this case, Trudeau the Younger inherited similar circumstances. Pity whomever inherits the outcome of this budget cycle, however.

Haven't looked at this budget too much overall, but doesn't seem like fighting for pipelines or much of anything else important to Albertans is a priority. So yeah, EI extensions seems to be the lion's share of what Alberta is getting. Yeehaw. Bombardier and the CBC seem to be higher priorities for Trudeau than we are.

I'm curious to know why Trudeau is being so conservative with predictions of GDP growth though. Is it just to avoid overestimating, or is he only doing it so that he can step up every three months and brag about how great he's doing because the economy grew more than he said it would, and therefore the deficits are smaller than predicted?