[jeffkrol]

as most of you know I am a supporter of the "deficits are good" school for sovereign nations w/ fiat currencies so it is w/ great interest to follow the "new Canada"
Canada hikes retirement age to 67 in budget that tackles first budget deficit since mid-’90s - The Washington Post

first step:

stressed that the cuts are appropriate for the times to balance the budget by the 2015/16 fiscal year after adjusting for promised spending cuts.

The government’s plan to get ahead of its deficit is built largely on the back of $17.6 billion worth of savings over the next five years that will come from streamlining and reducing the operating and administrative costs of government departments. That plus a broadening tax base as the economy improves will be enough to bridge the gap, Flaherty said.

The budget outlined that 19,200 federal jobs are to be cut — some 4.8 percent of the federal workforce.

second ect. steps:

The budget’s business-friendly measures include streamlining environmental assessments to speed major resource projects — think pipelines — into existence; recasting research and development funds; tailoring the labor market, including immigration, to specific job shortages; and a focus on new free-trade deals.
There’s $500 million in government largesse for venture capital, $1.1 billion in directed research and development funding, and $205 million for a one-year extension of a temporary hiring credit for small businesses.

“What the budget is doing is handing off the baton from government to the private sector to carry economic growth,” said Craig Alexander, chief economist at TD Bank.

Employment insurance and immigration changes were also presented, aimed at ensuring there are trained workers available to replace the growing number of workers entering retirement. The budget signaled changes to the temporary foreign workers program, allowing more short-term workers to address looming skills shortages in the resource sector.

Modern Monetary Theory: What it means for Canada | rabble.ca

And then, what of the great waste of our most precious resource -- our people? According to Statistics Canada, in July 2011 there were 1.4 million people unemployed who were ready and able to work. When the more comprehensive R8 measure is used, one that includes the under-employed and others, the number rises to 1.7 million. All these people and so much for them to do: improve public transportation, infrastructure, daycare, homecare, etc, etc. For MMT full employment is a priority to be addressed by increasing growth and devising targeted non-inflationary employment programs. The mainstream long ago abandoned the notion of full employment, believing that some non-inflationary level of unemployment is the best we can manage.
One difficulty of gaining greater acceptance of MMT is that some of its conclusions are quite jarring and counter-intuitive, since they do not agree with our everyday experience. For example, the fact is that government of Canada bonds are not issued to fund expenditures but rather to help establish the overnight interest rate ... meaning that the federal government does not borrow to spend and could dispense with issuing bonds entirely! When I explain this* the reaction of most people is: no that just can't be, or, it is just printing money, or, it's too hard to understand, or, even if true it'll just confuse people because it doesn't apply to the provinces, or, simple stares of disbelief. There is no doubt that explanations of monetary operations are complicated and ways to get many of the MMT ideas across need to be developed

http://www.progressive-economics.ca/2011/08/12/mmt-what-it-means-for-canada/
More:
http://www.progressive-economics.ca/2012/03/29/conservatives%E2%80%99-small-...ils-canadians/
http://cupe.ca/budget/job-killing-budget-hurt-economy-drag

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Last edited by jeffkrol; 03-29-2012 at 10:51 PM.

[redrockcoulee]

Steady budget offers few surprises - Canada - CBC News

The Washington Post I think is wrong as the Conservative government has been running deficits for the last two years or more. They did inherit surplus budgets from the previous Liberal government however reduced revenues due to the economic downturn and increased spending due to the stimulus program put them into the red.

[jeffkrol]

Steady budget offers few surprises - Canada - CBC News

The Washington Post I think is wrong as the Conservative government has been running deficits for the last two years or more. They did inherit surplus budgets from the previous Liberal government however reduced revenues due to the economic downturn and increased spending due to the stimulus program put them into the red.

From an MMT perspective gov. "surpluses" should have set Canada on a recession trajectory........

Budget Surplus

A yearly $42 Billion deficit was eliminated by the fourth year with ever increasing budget surpluses after that.

He then began to pay down the national debt which reduced Canada's debt to GDP ration each year and eventually led to the best ratio of all G7 countries with a reduction from about 70% to around 50% by the late 1990's. Martin managed to reduce Canada's debt to GDP ration form 70% to about 50% after just 5 years.

The process which Martin instituted caused a certain amount of hardship with many of the social and cultural programs across the country and a the time of his actions the Liberal's were ideally suited to make the hard decisions over financial matters which Martin made. The conservative opposition had fractured into the Progressive Conservatives and the Reform Party in the West and the PC and the Bloc in Quebec. The NDP were unable to present themselves as a viable alternative during this period fro many reasons.

Many Canadians were deeply concerned about the budget deficits and were willing to endure the hardships asked of them in order to get the finances of the country back on track. This was also a period of high growth in the North American marketplace and as a result of the North American Free trade Agreement, the high tech economic boom and Martin's actions, the measures he took were even more effective then was expected.

http://www.themarknews.com/articles/8338-tory-deficits-and-the-austerity-budget-ruse

Given that lack of transparency, it is not surprising that Canadians overwhelmingly believe that the deficit was caused by the world economy and not the $30 billion that was pulled out of the fiscal framework by the Conservative government.

It is an entirely legitimate neo-conservative policy position to reduce tax revenues rather than maintaining a balanced budget. It is also an entirely legitimate neo-conservative policy position to use newly created deficits as an excuse to shrink government. Unfortunately, unless those policies are shared with the electorate, they lose their democratic legitimacy, making citizens even more cynical about the promises that politicians make during election campaigns.

The Conservative government did not run on creating a deficit. In fact, it denied that it would ever run a deficit. Nevertheless, it put the federal government in a deficit before the stimulus program was even launched, and has never tried to defend that.

Having successfully "starved the beast" with little fanfare or platform mandate, the Conservatives are now about to launch the follow-up austerity budget. In short, they got away with it.

http://www.themarknews.com/articles/8047-ensuring-canada-s-economic-recovery
Same old same old eh.........

Job creation is the best way to reduce the deficit and debt. Public investments that create jobs and grow our economy mean more tax revenues and lower spending on programs like Employment Insurance (EI) and social assistance.

Despite all this, the federal government plans a major new round of spending cuts amounting to at least $4 billion per year, perhaps going as high as $8 billion. These cuts will not only impact needed public services, but will also derail an already fragile recovery and lead to a further rise in unemployment.

Households, businesses, and exports are not going to take up the economic slack created by government spending cuts. Canadian families now have stagnant incomes and debt equal to 150 per cent [subscription may be required] of their annual income. They will be reluctant to spend more. Similarly, exports and business investment in manufacturing are weak because of the fragility of the global economic recovery and the high Canadian dollar. In short, the major economic engines other than government spending are idling.

The focus of the upcoming federal budget should be jobs, not job-destroying spending cuts. New job-creating public investments can be financed by reversing the corporate income-tax cuts, which have increased the deficit without increasing real business investment. Corporations have used their tax cuts to buy up their own shares, to increase dividends, and to increase their cash holdings. Non-financial corporations are now sitting on close to $500 billion [subscription may be required] of surplus cash. Meanwhile, real business investment in machinery and equipment, research and development, and worker training has been very weak outside of the booming oil and gas sector, which does not need tax cuts to invest.

[redrockcoulee]

I do not think the new prisons for the criminals who committed unreported crimes or the new fighter jets whose skin comes off if flown at top speed were cut. There is a fair amount of construction in my part of the country and now with higher oil prices more activity in the oil patch that we do not need the stimulus, not saying other parts do not still need them. We now have a provincial election coming up on the 23rd of April, was called earlier this week. This should have calls of more jobs and more cuts as the leading two parties are both right of centre or as Americans would say Socialist parties (they are more like Democrats or Rinos). Not sure why they need a whole month to run an election.

I think much of the country has been spared the brunt of the economic downturn and for that all governments have more room for dogma. Harper spent on the stimulus even though he said he did not like it or want to but he is a small government person in a big government country and all of our parties have been traditionally big government though not big in our private lives. Not sure what this new budget will mean to me but in some ways the British budget affects me as much if not more.

[SteveM]

the federal government in a deficit before the stimulus program was even launched, and has never tried to defend that.

Everyone is so fixated "not spending what you don't have" that they have become oblivious to what is happening. The world economies are slashing corporate taxes while blaming the missing revenue on a world economic crash, which does not stand up to scrutiny.

Cutting taxes sounds great.....provided someone answers the obvious question of "then what". Has the promises economic prosperity replace the missing revenue?

The theory is that "more money in consumers' pockets, which they spend, stimulates business growth and additional hiring, meaning a larger tax base". This has been repeatedly proven to be a fallacy, but since some individuals benefit from this, and the public accepts it, it is destined to play out yet again.

Reaganomics - Tax rates for the upper wage earners was slashed and corporate tax rates dropped from 48% to 34%. The result was that public debt rose from 26.1% GDP in 1980 to 41.0% GDP by 1988. In dollar terms, the public debt rose from $712 billion in 1980 to $2,052 billion in 1988, a three-fold increase. Reagan did not address how the missing revenue was to be addressed, other than by slashing spending, but this in turn reduced revenues. He had no ability to pay for the policies he introduced.

Greece - The corporate tax rate has gone from 25% in 2009 to 20% in 2010. On March 14th, 2012, the Greek conservatives announced a plan to drop the rate to 15%. Greece had no ability to pay for the lost revenue in 2010 and 2011, and if 15% is set, it guarantees a Greece default.

Canada continues to follow this trend, with a right wing government being unable to function without borrowing money. Even here in my province of BC, corporate taxes have been cut by 38% but there is no mention as to how this is to be paid for and the "economic prosperity" has not materialized. The province has gone from a yearly $1.5B surplus when the socialist government handed power to the Liberals (conservatives) 10 years ago to being deficit driven. Services have been slashed to the point where criminals are released simply because there are no judges or courts to serve the judicial process. The government is reeling from the public backlash caused by cutting services to the point that they can no longer function. Meanwhile, a constant barrage of propaganda from talk shows like "Money talks" continue to sway public opinion to agree to these over simplified and flawed ideologies.

Recklessly cutting corporate taxes is as irresponsible as spending money that you do not have. Society and governments need to reign in spending, stop spending money irresponsibly, and stop giving the wealthy a free ride.

[jeffkrol]

Everyone is so fixated "not spending what you don't have" that they have become oblivious to what is happening. The world economies are slashing corporate taxes while blaming the missing revenue on a world economic crash, which does not stand up to scrutiny.

Err yes and no.. slqashing corp. taxes for soviergn nations is OK as long as you don't "slash" spending on necessary infrastructure and the consumer economy (don't slash benefits or start a downward wage spiral and then wonder why "consumer spending is dropping and conversely business output and expansion ) while your economy is not at full capacity of resources

Cutting taxes sounds great.....provided someone answers the obvious question of "then what". Has the promises economic prosperity replace the missing revenue?

The theory is that "more money in consumers' pockets, which they spend, stimulates business growth and additional hiring, meaning a larger tax base". This has been repeatedly proven to be a fallacy, but since some individuals benefit from this, and the public accepts it, it is destined to play out yet again..

I would need proof of that.. I haven't seen corporate tax cuts followed w/ large influx of "discretionary income" put in the same policy.... A $400 one time stimulus check certainly does not count when your "net worth" has been halved by stock retreats, and/or real extate values plummeting and/or wages/jobs being cut and/or benefit costs increasing.....

Reaganomics - Tax rates for the upper wage earners was slashed and corporate tax rates dropped from 48% to 34%. The result was that public debt rose from 26.1% GDP in 1980 to 41.0% GDP by 1988. In dollar terms, the public debt rose from $712 billion in 1980 to $2,052 billion in 1988, a three-fold increase. Reagan did not address how the missing revenue was to be addressed, other than by slashing spending, but this in turn reduced revenues. He had no ability to pay for the policies he introduced.

And we are still here..... seems the facts don't actually support the "sky is falling" theory does it.. See Japan for an example..

Greece - The corporate tax rate has gone from 25% in 2009 to 20% in 2010. On March 14th, 2012, the Greek conservatives announced a plan to drop the rate to 15%. Greece had no ability to pay for the lost revenue in 2010 and 2011, and if 15% is set, it guarantees a Greece default.

Irrelivent to the US, Canada, Japan, GB , Australia and any soviergn nation w/ complete control of it's own currency........

Canada continues to follow this trend, with a right wing government being unable to function without borrowing money. Even here in my province of BC, corporate taxes have been cut by 38% but there is no mention as to how this is to be paid for and the "economic prosperity" has not materialized. The province has gone from a yearly $1.5B surplus when the socialist government handed power to the Liberals (conservatives) 10 years ago to being deficit driven. Services have been slashed to the point where criminals are released simply because there are no judges or courts to serve the judicial process. The government is reeling from the public backlash caused by cutting services to the point that they can no longer function. Meanwhile, a constant barrage of propaganda from talk shows like "Money talks" continue to sway public opinion to agree to these over simplified and flawed ideologies.

Recklessly cutting corporate taxes is as irresponsible as spending money that you do not have. Society and governments need to reign in spending, stop spending money irresponsibly, and stop giving the wealthy a free ride.

No, not spending money on your people , the real "resources" of your society, is irresponsible. Allowing your "own" to needlessly suffer because of the false understanding of what your own dollar can and can't do AND giving the money away to corps is morally irresponsible..
Fine give all the tax cuts to business you want, but keep spending on your "own"...........
It's not that the gov. spends but what the government spends it on.........

No offense but your rant is a poster child of all the "urban legends" wrapped around the economy. don't feel bad you are NOT in the minority .......

READ Warren Mosler..
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

Then go to both Mitchell's......

Bill Mitchell – billy blog | Modern Monetary Theory … macroeconomic reality
#Monetary Sovereignty – Mitchell

Then get angry on how stupid your gov. REALLY has been..........

[jeffkrol]

." To achieve that goal, the Committee discouraged borrowing from a nation's own central bank interest-free and encouraged borrowing from private creditors, all in the name of "maintaining the stability of the currency."

The presumption was that borrowing from a central bank with the power to create money on its books would inflate the money supply and prices. Borrowing from private creditors, on the other hand, was considered not to be inflationary, since it involved the recycling of pre-existing money. What the bankers did not reveal, although they had long known it themselves, was that private banks create the money they lend just as public banks do. The difference is simply that a publicly-owned bank returns the interest to the government and the community, while a privately-owned bank siphons the interest into its capital account, to be re-invested at further interest, progressively drawing money out of the productive economy.

funny you were so close to getting off flat earth.............
Ellen Brown: Oh Canada! Imposing Austerity on the World's Most Resource-rich Country

If it had been borrowing from its own bank all along, it could be not only debt-free but sporting a hefty budget surplus today. That is true for other countries as well.

The Bankers' Silent Coup

Why are governments paying private financiers to generate credit they could be issuing themselves, interest-free? According to Professor Carroll Quigley, Bill Clinton's mentor at Georgetown University, it was all part of a concerted plan by a clique of international financiers. He wrote in Tragedy and Hope in 1964:

The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.

Each central bank... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.