The probability of deficit
While the finance minister from the party that has not left office with a budget surplus in over a century accuses the Liberal party of wanting a deficit, I have to ask: has Minister Flaherty got us back in the hole? There is some evidence to suggest that this may already be the case.
In October, the treasury posted a $2.7 billion deficit, down from a $500 million surplus the previous October, which means Flaherty has already given us a real, actual deficit, just not an annual one.
The month of November showed a meager $100 million surplus. Take out the $6 billion a year, or a $500 million/month revenue loss from cutting the GST another point this past January 1st, and you have a recipe for a serious and ongoing deficit.
For the party that has not on its own given us a budget surplus since before the First World War, saying that the Liberals would put us in deficit while the Conservatives have already given us one in October, and are on track to give us one that they would not likely admit to in tonight's budget, is more than a little bit rich. Especially given Jim Flaherty's track record of giving us a deficit of over $5 billion in Ontario.
The federal government may already be cooking the books. There is some suggestion that the federal government is selling Crown office space and leasing it back, feeding the sale money back into our federal numbers. Liquidating federal assets is one way of going into deficit without borrowing any money.
The likelihood that we are back in deficit is, in my estimation, extremely high.
Posted at 10:24 on
February 26, 2008
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No MMP campaign issues final press release
The oft-missed point
Jim Jones writes at Tue Feb 26 12:57:18 EST 2008...
Wow, liberal much?
Lets at least wait and see what he says first.
David Graham (cdlu.net) writes at Tue Feb 26 13:08:53 EST 2008...
Think much? Or tory?
The point is that what he says is totally irrelevant. His track record, and his party's track record are of deficits and of hiding those deficits. He talks about a cautious budget but blusters about huge surpluses. Something is not adding up.
Jim Jones writes at Tue Feb 26 13:18:37 EST 2008...
Admittedly, I do lean a little right of center. And I'm sorry for the jab, it was unnecessary.
When CBC (a left wing publication in my eyes at least) writes that the budget will be a huge-ish surplus:
, it makes me feel like it will be a surplus. I just think we should give a chance to add up before saying it doesn't.
Jim Jones writes at Tue Feb 26 16:57:15 EST 2008...
I stand correct. :)
David Graham (cdlu.net) writes at Tue Feb 26 17:01:59 EST 2008...
Heh, not exactly. Flaherty asserted he had a balanced budget in Ontario, too, but we had to throw the crooks out to audit the books then and we will have to again now. He isn't going to stand up and say "I'm selling government assets to balance the books", that sort of defeats the point of cooking them.
What he did do was announce more tax shelters and thus more reduced revenue for the government which will only serve to reinforce our deficitward direction.
Jim Jones writes at Tue Feb 26 17:07:42 EST 2008...
Do you think they can hide 10 Billion dollars? I'm definitely no accountant, but that sounds too shady, even for government types.
David Graham (cdlu.net) writes at Tue Feb 26 17:10:07 EST 2008...
Yes, without a doubt. This same minister hid a 5.3 billion dollar deficit in Ontario, which is only 1/3 of Canada by population (and maybe by GDP? Not sure.). The federal equivalent would be hiding about $16 billion.
$10 billion is only a tiny portion of the total federal budget, and that can be offset with what they did in Ontario, namely selling government assets to rent them back. The government's own website (see last link in the post) says they are doing exactly that.
Jim Jones writes at Tue Feb 26 17:22:25 EST 2008...
Ok, I'll give you that the gov't has it in them to cook the books for 10B. But selling assets to hide these doesn't add up for me. As per the link: "The properties were sold to Larco Investments Ltd. for $1.41 billion." Can you give me a simple example of how one might use this quick cash grab to hide a deficit and make it look like a surplus of 10B? (fyi this is my last reply today, I won't take up more of your time on this and thanks for your insight.)
David Graham (cdlu.net) writes at Tue Feb 26 17:26:53 EST 2008...
The $1.41 billion they get from selling those assets is $1.41B less tax revenue they have to get to balance the books. It is a contribution to the deficit because those assets a) cannot be sold again, and b) will now cost the government rent money to use. Doing that is like selling your house to pay off your mortgage, and then renting it back so you have a place to live. Sure you don't have any debt any more, but nor do you have any assets. In the immediate term, your bank account is way up - by the value of your house, but now you no longer have that asset and next year you will still have your other expenses, plus you have to pay rent on that house. Not a very smart financial play.
The only reason the government would be doing this is to hide their dwindling bank accounts.