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Globe editorial

Anchors to secure the future

From Wednesday's Globe and Mail

Canadians sacrificed too much in the 1990s to bring their government into surplus for a return to an endless cycle of structural deficits ...Read the full article

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  1. Orest Zarowsky from Toronto, Canada writes: Who was it that the G & M endorsed for PM during the last two elections? And who is it that has pissed away the surplus - and cut revenues with cheap political grandstanding?

    Oh yeah, that would be one Stephen Harper and the CPC.

    This editorial is a very bad joke.
  2. Mark Dip from Canada writes: With an unemployment rate four times the national average, the spouses of Canadian government employees serving overseas have been fighting EI inequities for over 3 decades and in the meantime it has been calculated that we lose over $1 million per year from being forced to pay overseas for EI while being ineligible for benefits. Quitting their job to accompany their partner and getting one’s EI revoked on arrival at an overseas capital has become the Canadian Foreign Service’s version of a diplomatic hazing ritual to welcome you to your posting. The way it typically goes is that spouses are forced to pay EI premiums overseas because CRA defines them overseas as Canadian “Factual Residents” (Residents of Canada) due to diplomatic status, but then they later get their EI social benefits revoked afterward because HRSDC says they’re not physically “Residents in Canada”. If a spouse manages to land a menial embassy McJob while overseas, CRA still sticks its hand out again for their cut, especially for EI premiums. At the end of the contract, you even get another pretty Record of Employment, followed by a letter from HRSDC stating that the EI social benefits for which you were just paying overseas have been revoked yet again. BTW, this also happens to non-diplomatic Canadians defined as “Factual Residents” by CRA while overseas, including paying $900 a year for OHIP that you’re not entitled to access because the Ontario Government also says that you’re a non-resident. Another bitter pill for any Canadian spouse that has been sentenced to 3 years less a day of overseas servitude to our foreign service is that although Corrections Canada won EI benefits for inmates being released from prison without having contributed to EI, for decades DFAIT Management has tried and failed at gaining this for its spouses. Apparently, Canada thinks that spouses would perform better at helping to represent their country overseas after being disenfranchised by their own government.
  3. Ruth Walker from Canada writes: The past 3 years have been a very dark time for fiscal conservatives.

    Federal spending has grown at least 25% during PM Harper's reign, while taxes were cut in ways that prove it was for the most expedient of reasons.

    The PM has used a heap of our money to buy a few votes, and that has left us weak at a time when we need to be strong. Let us make sure this doesn't happen again.
  4. sveneggs blogspot from Nanaimo, Canada writes: Economic Survival Plan (ESP)

    Simple, short and effective. Every Canadian Citizen, will, for the next twelve months, receive a $2000 monthly payment. If you make more than $35,000 per year, it will be progressively taxed to ensure it gets to those whom need it the most. Simple.

    This programme will run for one year only. Short.

    As the lower income earners all know, this money would enter the economy almost completely, as there is little or no room for most to squirrel away their money. People could spend this money to buy a car, thus bailing out the auto industry. Or they could choose to spend it on housing, thus bailing out the housing industry. Or they may decide to invest in more education and go back to school, thus bailing out the education sector. What matters here is that the PEOPLE would decide where to put OUR hard earned tax dollars. The politicians would then be able to see where we chose to put our money and they could then craft legislation to reflect these investment choices made by Canadians. Effective.

    Karl Marx felt that the underclass, the majority, would need the direction of the Party during the first stages of the revolution. I have turned this on its head and called on the population to direct the Governments policy. Canadians would have to start thinking about their collective desires and dreams and engage in responsible political behavior, voting to start with, wise consumer choices to follow.

    Fine print...this offer requires that in order to be eligible, Canadian Citizens would have to register to vote and include proof of this in their application for the programme.
  5. Brian C from Canada writes: The G&M editorial board change their mind as often as the LPT. A few weeks ago they were espousing the benefits of a reduction in the GST to spur spending. The rationale was that the GST is a consumption tax, and thus a reduction in that tax should increase consumption, thus stimulating the economy. Now, they describe the GST cuts as ill-advised.

    Can anyone explain what a structural deficit is? The best I can figure out is that it is a situation where, if left unchanged, a deficit will persist indefinitely. However, what government on earth has ever not changed their funding and spending in any given year? This type of deficit would only persist due to negligence of the government, thus this term speaks more of the government and not the deficit. It is absolutely inane to be using such a term.

    Speaking of terms, what's with 'squandered'. No responsible person could reasonably describe debt repayment and reducing taxes as 'squandering'. Spending $350M under the promise of appeasing Quebec on ad firms that give kickbacks to the governing party is squandering. Lucky for the G&M editorial board that there are no ethic standards required in journalism.
  6. tom g from upper ottawa valley, Canada writes: We bankrolled politics when we needed policies and now our policy options are narrowed. The government spent what should have re-capitalized our future on things like our our glorious missions and our corporate welfare state. The government spent our money to preserve the old economic order. We bankrolled the banks with tax money, and we're doing the same for branch plant corporations that lack sellable products. After years of a supposedly business-oriented government. We remain one of the few countries that lack a national economic strategic plan or energy policy.

    The government fiddled at politics rather than attended to the economy that it claimed incessantly it could manage. Now, with few options and few interested trading partners, we're stuck with what Thomas Friedman (recent der Spiegel interview) calls the economy from hell (meaning it depends on things from underground). We're stuck just at the time when the world needs to make a gesture of virtue towards climate control. Oh yes, and we're also stuck with our elite that rewarded themselves so well and their country so little. We got same old same old from our elite when we needed to infuse liquidity into our society, mobilize our innovation, and learn to live in an economy that does not depend on consumer debt for prosperity. We got liquidity dumped into banks instead.

    A UK perspective on bank bailouts is here.

    http://www.guardian.co.uk/commentisfree/2009/jan/21/treasury-banking-keynes-demand

    So, is it too late for constructive thought and works. I hope not! But it really is too late to go forward with our present elite (public and private). They are tied to the past and are about as relevant as our rages of regionalism. Borrowing from Friedman: We are now dealing things to come rather than with things from the past for the first time in a long while. We cannot afford the past. It is too expensive. We must be free of it.
  7. Hugo Hall from Calgary, Canada writes: Regardless of who is at fault, I do agree that we need to ensure deficits are short-lived.
  8. bill williams from Guelph from Canada writes: -

    Hugo Hall summarizes several paragraphs of vacuous Globe editorializing very nicely: "Regardless of who is at fault, I do agree that we need to ensure deficits are short-lived."; a difficult position to discredit.

    If we all (most) agree that stimulative spending is required but that it shouldn't be on things that become part of our national economic policy 'setting', that leaves the options that don't involve tax reduction (almost impossible to undo) and programmme spending beyond the increases that already come with the ups and downs in the economy: Leave benefit levels where they are; payouts are going to increase because more people will claim them.

    There are lots of ways for the government to spend money on a 'one-time' or 'short-time' basis: The oft-referenced 'shovel-ready' infrastructure is one. And as long as we are spending money in a way that invests in our future ... great!

    One thing that hardly anyone is talking about is the dire financial straits that our universities are in. Universities produce the (a) people, and (b) research that can fuel innovation and wealth in our future. University endowment funds have been ripped apart by the market collapse. Economic gloom has cut off their other usual sources of funding. Universities can absorb, and use very effectively, huge amounts of money to see them through the current crisis and help mount the effort to build our future.

    Universities desperately need an infusion of federal dollars to sustain themselves and to allow them to make the valuable contribution of which they are capable. It's great to have a new overpass, but what about another few hundred grads and a slew od Canadian patents?

    -
  9. Doug - from Canada writes: bill williams from Guelph....

    Universities... ok but how many patents come out of the English or History departments??

    What you really mean is the Engineering depatments, maybe chem and phy. To do that you don't give it to the Universities you increase the NRC grants to Eng profs to fund research and students doing masters and PhDs. The companies that came out of U of Waterloo came out the Eng dept. not any other.
  10. AddingMy Voice from Vancouver, Canada writes: I disliked the GST reduction when it came in during a prosperous time. Wrong move as the article points out. But, maybe a short term GST reduction to 2% for a fixed 1 year period followed by a rise to 10% as the economy improves to pay off the interim deficit would reward those who are helping us out of this depression, provide an incentive to spend now and make a good tax more efficient later. Then start reducing personal income and business taxes while keeping the GST efficient (@10%) so there is an incentive to earn more in Canada.
  11. Doug - from Canada writes: All this blame on Harper, well I'm not sure about that. He had a minority, its hard to be tight fisted in a minority. On the right there were some who saw surpluses as over taxation. On the left , well , there is always something to spend money on.

    I felt good about the surpluses and not about the Klien bucks. But then again I didn't return it.

    I don't think most Canadians understood why we were fighting the deficit. Was fighting the deficit part of an election campain? No. Its was a good idea and good gov't.
  12. C K from Vancouver, Canada writes: Doug - from Canada... while I broadly agree with your remarks about the university funding being directed to sciences (I'd fund basic less than applied as the latter can rely on / raise corporate $$) rather than humanities, I have to ask whether you have read anything written by our recent engineering or sciences students. I have, and I have to say that one or two extra English classes would not do them any harm. This is especially the case since most of our engineering students are ESL speakers/writers.
  13. bill williams from Guelph from Canada writes: -

    Doug,

    I disagree. My youngest son is at school in engineering with my heartiest support and approval, but I feel very strongly that society develops on the basis of a totality of interests and knowledge. To the extent that a university 'sells' anything, specific skills are only part of the package. One of the most valuable aspects of university life is the generalized intellectual ferment. The people who are there only or mostly for the job skills training or hard economic value of hard science inevitably turn out to be - albeit quite competent and good citizens - relatively less creative.

    -
  14. bob adamson from Victoria, Canada writes: In the early 1990s a general consensus held that Canadian public debt was growing at an unsustainable rate and that government deficites must therefore be reduced and eliminated in a fundamental fashion. This proved to be the right consensus position and course of action at that time and Canada is in a sounder economic and fiscal situation now as a consequence. One major cost of this generation of surplus financing, however, is run down public services and infrastructure. The economic needs now are fundamentally different than those of the early 1990s. The general consensus now (a view I share) is that deficit public spending at a dramatic level is needed while the privat sector financial system delevers its massive debts. This need may continue for longer than we currently hope but, regardless, public deficit spending will be needed for the duration to avoid the evil that sustained economic deflation would pose. While we will need to take appropriate measures now and in the future to avoid the re-emergence of high inflation and structural public deficits, we can not predict the time frame within which our current challenges will subside and these new dangers become current. Let us therefore avoid restricting current efforts to renew public services and infrastructure over the next 5 or so years by restricting our measures to inappropriate tax cuts and short term measures. Both the current shortfall in public capital (infrastructure and services) and need to replace falling private sector expenditures by those in the public sector demand that now is the time for more than a short term frenzy. In short, avoiding long term structural deficits is a worthy goal and reasonable measures to achieve it are appropriate (i.e. avoid unsustatinable long term tax cuts) but this must not hinder us seizing the moment to repair the public infrastructure and services deficit in an intelligent manner.
  15. Doug - from Calgary, Canada writes: Bill, but your point was to send money to Universities to stimulate the econ. , generate wealth & jobs by developing patents etc.

    "but what about another few hundred grads and a slew od Canadian patents?"

    That why I would say if you want to generate the next RIM , Open text etc, allow the top of the Engineeering class of 09 to go on to grad school.

    C K from Vancouver- true to a point though much truer for Engineers who graduated from other countries. But even 20 years ago when I graduated from Eng school that was the case.
  16. Cdn Expat from Washington, D.C., United States writes: For Brian C.: the structural deficit is that part of the deficit that would remain if the economy were at full employment and growing at its trend rate of growth. It measures whether taxation levels are in sync with expenditure levels in normal times.

    Personally, if I were looking for a tax expenditure to boost the economy, I would think about a temporary cut in payroll taxes. Payroll taxes are essentially a tax on hiring, never a good thing if one can help it and especially pernicious in times when labor demand is low.
  17. David Young from Edmonton, Canada writes: Your editorial states" A broad consensus has formed around the idea that a plunge into the red is a frightening but unavoidable consequence of the economic downturn, and the fiscal laxity that preceded it."

    The "broad consensus" MAY have formed because the overwhelming media coverage of this current concern has almost universally reinforced "the sky is falling". The voices that have tried to bring reason and true historical perspective to the debate have been few and far between. Small wonder our politicians (don't call them leaders) don't exhibit the necessary fortitude to stand steady for a while and see where the ride really takes us before they start spending taxpayer money.
  18. Robert MacDougall from Canada, writes: Finally a sane perspective, attacked from the hacks on both the right and left. Any stimulus should be limited to preventing another CBC annointed godlike Trudeau figure to once more bury us under three decades of debt. This is not what Keynes meant and we might not find another Paul Martin to dig us out from under it. I don't think long term deficits are what either Iggy or Harper want. But the government and the official opposition are both weak, so to all you people who once again voted for a minority government....
  19. sveneggs blogspot from nanaimo, Canada writes: It is interesting to follow the discussion here. Spend short term, invest in universities, shovels in the ground....No one seems to be giving the PEOPLE a say. We followed our leaders from the beginning and all we ended up with is a country based on greed and one upmanship. True democracy requires the voice of the majority to be heard. Unfortunately most of the majority are poor and unable to join the conversation. So if the polarization between the haves and the have nots is to decrease, the voice of the common women/man must be given a pulpit. The system we have is based on the premise that the collective will be taken care of by the excess of the upper class. Really what this country needs is to stop and look at what our values are. I support healthy families, educated persons, just laws and the enshrinement of diversity. Moreover we need to see that unlimited growth is no longer an option when the planet is limited in it's carrying capacity. You can only blow a balloon up so far before it breaks , although the surface area will increase exponentially, so the appearance of more is there, the reality is the end will always come with a bang. Peace
  20. Fake Name from Canada writes: "Orest Zarowsky from Toronto, Canada writes: Who was it that the G & M endorsed for PM during the last two elections?"

    None of the other parties get a free pass on this either. They're the ones that threatened to gang up and oust Harper if he didn't run a massive deficit (oh, I mean 'stimulus package'; in opposition la-la land bailouts are funded by the mystical money tree).

    Of course, I'm not defending Harper - if he hadn't engaged in the inane vote-buying spree during his first term, the government would still have a surplus to throw at the recession. I'm just disgusted with the lot of them, right now.
  21. Fake Name from Canada writes: "Brian C from Canada writes: The rationale was that the GST is a consumption tax, and thus a reduction in that tax should increase consumption, thus stimulating the economy. Now, they describe the GST cuts as ill-advised."

    Well that was a moronic editorial. Retailers charge the highest price the market will bear; consumers don't notice whether they're paying that total to the government or to the seller. Reducing a consumption tax just means the sellers will raise prices.
  22. Fake Name from Canada writes: "Doug - from Canada writes: All this blame on Harper, well I'm not sure about that. He had a minority, its hard to be tight fisted in a minority. On the right there were some who saw surpluses as over taxation. On the left , well , there is always something to spend money on."

    I don't know about the latter; I doubt most liberal voters (Martin supporters, anyway) would have seen any problem with debt repayment. This business about the right seeing surpluses as overtaxation is mostly the uneducated ideological ones, not the fiscal conservatives to whom the idea of paying interest charges forever doesn't particularly appeal.

    And I'm not just calling them uneducated ideologues to be gratuitously nasty; I have yet to encounter one of the overtaxation complainers who can form an intelligent answer when confronted with the amortization tables to prove that not repaying debt costs more in a present-value analysis.
  23. Ian B from Canada writes: it is good the Cons and Libs didn't listen to NDP and eliminated the national debt.
  24. Comments closed, censored, hidden, deleted, disappeared from Mini Bush-Obamatieff village, Canada writes: "Canadians sacrificed too much in the 1990s to bring their government into surplus for a return to an endless cycle of structural deficits..." --- That is no argument... and it does away much too lightly with what has got us into this Great Mess in the first place, i.e. institutionalized greed and corruption, as an essential, permanent part of the system. --- It would take more than the stroke of a pen to rid ourselves, and this country, of those well-known forms of terminal cancer: institutionalized greed and corruption.
  25. Doug - from Calgary, Canada writes: Fake Name "I don't know about the latter"

    I would agree with your clasification. That is why i did not agree with GST cuts in good times or Klien bucks in very good times.

    But I think of Canadians had a problem with surpluses. that is why both Liberal and Con gov't always underestimated them in order to avoid the pressure to spend it. It was always OPPPs its bigger oh well lets reduce the debt.

    The NDP always wanted to spend it on programs that would be permanent. So when bad times came woops you can't pay for them but now you can't get rid of them.
  26. Ed Long from Canada writes: Further to my innovation rant.

    Apple has just released record results during a disastrous fourth quarter in a recession.

    And Canada debates tax cuts vs. interim spending vs. long term spending.

    Do we only know government???

    Capital must be created to provide the tax or the programs or the stimulus or the government payrolls.

    Let us start asking how are we going to create capital.
  27. Michele K from Ottawa, Canada writes: Doug wrote: "I don't think most Canadians understood why we were fighting the deficit. Was fighting the deficit part of an election campain?" (aside - 'cam-pain' - I like that - that's exactly what they are).

    Doug, of course fighting the deficit was part of the election, in the platforms of both Conservative (you have a short memory if you don't remember their, 'no deficits under any circumstances') and Liberals.

    But the difference is that the Liberals lived it, while all the Cons did was bald-faced lie to us.

    And what do we have to show for a mere 2 years of this Con lie, proflagate spending, and vote buying?

    $64 BILLION deficit over the next 2 years - $64 BILLION!!!!!!

    I don't believe in capital punishment per se, but this government should be hung at sunrise on Parliament Hill.

    To say they are liars and incompetents, while clearly true, just isn't sufficient to describe the actions of this government. $64 BILLION over the next 2 years? Un - freaking - believable!
  28. Doug - from Calgary, Canada writes: Michele K- I stand corected I didn't thnk that was part of the Red Book, I don't recall it being pushed. "It was the Leader himself, Jean Chrétien, and not Paul Martin, who took this particular bull by the horns and insisted that the elimination of the deficit must be specified as the ultimate goal of fiscal policy with an interim deficit target of 3 per cent of GDP set for the end of the third year in office. This did not necessarily mean that he wanted to talk in the platform about the cuts that might be required to achieve that particular objective. He was much too cagey to make that mistake like the Reform Party did. " But really if Paul martin had been in a minority gov't he would have spent too to stay in power . Not as much, as he would have had a party on his right. Harper had 3 parties on his left pushing for spending and the right wing of his own party wanting an end to "over" taxation. And really Martin cut a lot from defence which is fine as long the gov't doesn't commit to missions and allows missions to be deleted. I agree that I wish that the surplus had been bigger during the Harper years. But how much really talking about ~ 15 billion at most. The projected deficit i don't think would be any less with the liberals in charge. I do think they would be able to reduce the deficit in a faster time given they have less problem raising taxes and face less howls from reducing social programs.
  29. Misty Morning from Canada writes: This editorial was timely and offers some good suggestions for digging ourselves out of this money pit. I also think these same editorial staffers endorsed the Harper government before October 14, 08. Better to have seen the light later than never! The problem now is that we don't know what the Hapless Harperites did with the surplus they inherited, or why they told everyone to invest in the stock market! How would they spend $40 billion? We don't trust them to make up a grocery list let alone a Canadian Budget. They gotta go! Like next week!
  30. boz dobbs from toronto, Canada writes: Federal government spending has gone up 25% from October 2005 to October 2008(87 billion to 116 billion),yet some keep harping on a 2% gst tax cut,and the provincial numbers are surely worst under the guides of Mr.McGuinty and Mr.Charest.The orgies of spending have been going on for some time now.The Fiscal Monitor from the Finance department should be headline news every month,just after Paris Hilton,s latest adventures.
  31. Tom Z from Canada writes:
    I fully support this editorial from G&M.

    The proposed $64B deficit over 2 years is a trial balloon to gauge reaction. Here's my reaction: WAY OVER TOO MUCH!

    Canada is a country filled with people who never say no to handouts, bailouts, and ready to cry like babies the moment things get tough. There is endless cries for endless bailouts today as reality hits and as mass psychology gets overwhelmed.

    A country cannot have a market-based economy only when people are making money, suddenly turn to socialist type policies when there is a downturn. Upturns and downturns are both necessary and people should prepare for both.

    It is the responsibility of governments to maintain sound economic policies, no matter how much the pressure and temptation to do otherwise. It is precisely this lack of discipline that got the US into so much trouble. We must be firm and steadfast to avoid policy stupidity no matter how stupid the mass gets.
  32. Cameron Jantzen from Halifax, Canada writes: Have to say a good editorial. Seems the Ed. Board has realised dire times require straight talk. There have been policy minded editorials that have focussed on policy decisions prior and suggestions future. The Conservatives have failed us. Pity none of the failings were brought to light earlier. The number of bad policy ideas the Conservatives have floated recently, such as middle income tax breaks (that's me), still angling for votes over sound fiscal management, is boggling. The only thing that seems make their decisions sound is being held to account by others. Terribly sad. Hopefully coverage like this helps.
  33. Peter Lucas from langley, Canada writes: The editorial and most posters maintain that tax cuts have at best, dubious value. They accept this as a truism, yet no one cites empirical evidence.

    There is, however empirical evidence (Berkley published study) that demonstrate cuts in income tax rates that are perceived to be long term have a quicker stimulus effect and a greater multiplier.
  34. Mike Keith from Saskatoon, Canada writes: Harper must wear this deficit. Through out of control spending and ineffective tax cuts he's taken Canadians from a $13 billion surplus to a $40 Billion deficit. Maybe that could be his election slogan, "$53 billion blown in less than a full term"
  35. M. Mark from Victoria, Canada writes: Peter Lucas from langley, Canada: You cite sources dealing with a cut to income taxes. I believe most economists told the government that, if they were going to cut taxes, they should have cut the income tax and not the GST. That was a very foolish decision of the government done completely for political reasons. Regardless of that, I still think the government should never have made any tax cuts. We should have been saving our surplus during the boom years to help us during the inevitable recession. I'm always amazed that governments labelled as "conservative" take such a short sighted view of economic planning that they immediately want to take any "surplus" and use it to cut taxes.

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