Winston Churchill said “attempting to spend your way out of
debt is like standing in a bucket and attempting to pick yourself up”; the
Liberal government is in effect attempting to do this very thing.
"With the exception of the Child Subsidy, this budget was FISCAL FAILURE".
Counter Cyclical spending, the process of government
spending to stimulate the economy in the face of a down business cycle needs to
have a very sharp pencil. We need to be sure that the money spent generates a sufficient
increase in tax revenue to recoup money spent AND cover the cost of money. Perhaps the most important point in counter
cyclical spending is that it has very little stimulative effect, the Canadian
economy is approximately $2 trillion, the Federal Government Budget is about 10%
of that give or take. So think about how much 1% ($20 Billion) of the total
economy is going to do to simulate the economy just in nominal amounts –
nothing. Policy that uses the mass of the economy to drive growth, is policy
that works – government spending can be directed at facilitating the economy,
it will never grow the economy on its own.
The budget the Liberals just brought down, is the kind of
budget that brought us down in the 70s and 80s. Less than 20% of the total
budget is going to “investment” in capital projects and many of those are
nothing new, nothing that is going to do what capital spending is meant to do,
help us satisfy Canada's overall mission – they never got to the $10 Billion
they promised in “new infrastructure”. This burgeoning deficit is partly the product
of reduced resource revenues, but it is also indicative of a bad attitude toward fiscal management – this is like déjà vu la 1970s, the only difference is then we had an expanding tax base to save us, now we are facing some tough
demographic realities that will reduce government revenues and increase the cost of government. We need to invest in our First
Nations, the Liberal government has committed to that, yet they have failed to
insist the money invested in First Nations is subjected to generally accept
accounting principles, by avoiding mandatory reporting as precondition to
funding.
Capital spending when done in business means purchasing
assets or developing assets that generate benefit to the company mission;
government can do this as well. Had this
government trimmed government operational spending and upped capital spending, I would be praising them right now. The fact is they have done the opposite
and in so doing are robbing the next generation to fund nothing of
significance now.
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