Thanks a lot, Conservative assholes

[aerius]

Toronto Star link

Ottawa's '09 deficit may hit $14B
Les Whittington
OTTAWA BUREAU

OTTAWA–An independent parliamentary review of the Harper government's finances concludes the federal Conservatives are likely to run budget deficits "in the near term," possibly beginning this year.

The report by Kevin Page, the new Parliamentary Budget Officer, says the weaker economic outlook poses a risk to the government's attempts to achieve its "short-term and medium-term fiscal targets."

Assuming no changes in Finance Minister Jim Flaherty's policies, "the downgraded economic outlook suggests the government would record modest and temporary deficits in the near term,"according to the analysis released this morning.

While a budget surplus is still possible this year, the report warns the negative impact on government revenues because of the turmoil on financial markets is not yet known.

"As a result, a deficit for this (2008-09) fiscal year is a distinct possibility."

Page says the deterioration of the federal government's financial picture in the first nine months of 2008 is not so much the result of the weakened economy as Flaherty's policies, particularly the latest reduction in the GST tax and reduced corporate income taxes. This has caused federal revenues to decline by $353 million in the first nine months of this year.

The budget office projects a budget deficit of $3.9 billion in 2009-10, although it adds that, if the economic downturn proves worse than expected, next year's federal deficit could hit $14 billion.

The budget office was created in 2006 to provide independent fiscal forecasts for parliamentarians. This is Page's first budgetary study.

National debt goes up, debt servicing costs go up, healthcare & the rest of our social safety net get cut. Which will fuck over pretty much everyone. And the government has shown every intention of bailing out and spending our way out of a recession. Ask Bob Rae how well that one worked for Ontario.

I can guarantee the downturn will be much worse than expected. The consensus case right now is still a mild recession, as if somehow our manufacturing will be completely unaffected by cratering US demand, and our resource sector is going to stay afloat with crashing prices. It's bullshit. I'd put good money on a $15-20 billion deficit by this time next year.

[Admiral Valdemar]

Your banks are doing a bit shit too.

[aerius]

Yup, my recent research into the Canadian banks has turned up a surprising amount of crud. They have a lot more exposure to bad loans & structured finance products than is commonly thought. RBC for instance is tied up in multiple lawsuits in the asset backed papers market and they'll lose billions there, and all the banks have way too many 5% down or even 0% down mortgages on their books. In the next quarter or so a crapload of those will be underwater. They're all going to be hurting.

Which I guess is why I'm getting weekly offers for a $300k line of credit, as if I'm stupid enough to take it.

[Ekiqa]

The other problem for us, is if the Big Three US automakers go into bankruptcy protection.

I just heard on CBC that if they do, one of the things they'd be forced to do would be to shed excess capacity, and it would most likely be the capacity in Canada that is shed. Which would hurt our economy a lot more.

But maybe Toyota and Honda would like to buy pre-existing plants that they can build hybrids in?

[Ma Deuce]

But maybe Toyota and Honda would like to buy pre-existing plants that they can build hybrids in?

Toyota and Honda already have a glut of excess capacity themselves: Both have announced steep production cuts in almost all their North American plants (especially with new plants still scheduled to open that have been planned or under construction for years; plants which at this point they'd rather not have), and Toyota has even been talking about laying off many of it's temp workers, who comprise about a third of it's North American workforce. Additionally, J.D. Power is predicting the entire global auto market will significantly contract next year, leaving almost every major automaker worldwide with more capacity than they need. I have no idea where you got the notion than any automaker will have any interest in acquiring vacated factories in light of that. Perhaps some can be re-purposed by other industries, but most of them are probably feeling the pinch as well, so I doubt it.

[Sea Skimmer]

So revenue dropping 350 million from tax cuts is the cause of a 3.9 to 14 billion dollar deficit? Sounds like a very outlandish example of the blame game from people who don’t want to look at the fundamentals. That much money can’t close your deficit gap, but maybe just maybe it could help keep the recession from being even worse.

[Fiji_Fury]

The whole deficit situation for next year isn't squarely to blame on the Conservative government, but there are indications of mismanagement:

http://www.cbc.ca/canada/story/2008/11/ ... pdate.html

The report acknowledges a worsening global financial climate has hit Canada, but says the Harper government's economic policies were partly to blame for the disappearing surplus.

The report singles out the second one-percentage-point cut in the goods and services tax and cuts in corporate income taxes for the shrinking surplus.

This isn't to say "increase taxes right now!!" Rather, I mean to point out that Conservative plans have overestimated Canada's economic strength and stability and both Flaherty and Harper were outright lying on the campaign trail this past October by badly misrepresenting the future predictions for government revenue and economic outlook.

[Ekiqa]

This isn't to say "increase taxes right now!!" Rather, I mean to point out that Conservative plans have overestimated Canada's economic strength and stability and both Flaherty and Harper were outright lying on the campaign trail this past October by badly misrepresenting the future predictions for government revenue and economic outlook.

Of course they were lying. They are Reform Party members.

And the tax cuts that they implemented were the worst kind. They only benefitted the rich. The GST taxes should be raised, and matched by a corresponding decrease in the lowest income tax bracket. That way, more people will have more money in their wallets.

[Glocksman]

I'm not Canadian, so I don't know the ins and outs of the GST, but wouldn't a GST tax hike hit the poorer disproportionately in comparison with a straight hike of income tax rates on the upper brackets?

[Ekiqa]

I'm not Canadian, so I don't know the ins and outs of the GST, but wouldn't a GST tax hike hit the poorer disproportionately in comparison with a straight hike of income tax rates on the upper brackets?

Not really, because 1% on say $1000 of goods a year is only $10 saved, whereas 1% on a $30,000 toy or car, is $300 saved.

If you lower the bottom bracket, by 1%, which is $38,000 currently, would save someone $380. Which for someone living under the povertyline, is a lot of money.

[Glocksman]

Interesting.

As you're probably aware, sales taxes in the US are imposed by individual states and not the federal government.
The current rate here in Indiana is 7%, but some items such as grocery foods and newspapers are exempt.

In other states, newspapers are not exempt.
I found this out the hard way when I bought a $.50 newspaper when travelling in Maryland several years ago and was charged sales tax.

It was embarrassing to have plunked down two quarters and have started walking out when the clerk asked 'where's the rest of the money?'

[Phantasee]

GST is charged on most things, excepting basic staples like bread and stuff. Provinces also charge sales tax, unless you're cool enough to live in Alberta Some of the provinces charge 8%, some 7%. I think the Atlantic provinces have HST, Harmonized Sales Tax, and it's a combination of the GST and some PST.

[Ekiqa]

GST is charged on most things, excepting basic staples like bread and stuff. Provinces also charge sales tax, unless you're cool enough to live in Alberta Some of the provinces charge 8%, some 7%. I think the Atlantic provinces have HST, Harmonized Sales Tax, and it's a combination of the GST and some PST.

HST was 15% before Harper screwed with the GST.

Alberta has no sales tax, because of the oil revenue. If the Alberta government were smarter, it would have sales tax, but reduced income taxes.

[Stargate Nerd]

Another unbalanced budget due to responsible, fiscal conservatism.

[Ekiqa]

Another unbalanced budget due to responsible, fiscal conservatism.

But these guys aren't responsible, fiscal conservatives. They're what the Americans just got rid of.

In fact, Canada now has the most right-wing leader in the G7.

Although Obama is close on environmental issues, as he and Harper have come to an agreement.

[Glocksman]

Another unbalanced budget due to responsible, fiscal conservatism.

All bullshit aside, the so-called 'conservatives' forsaking simple fiscal sanity is why this 'Reagan Democrat' became an 'Obama Republican' despite my uneasiness with him WRT gun rights.

That, and McCain's 'die in the street' health plan.

[Surlethe]

In an economic contraction, isn't running a deficit, if you're able, a good thing to help spur the economy? If you're fiscally sensible, like Canadians generally have been, you can raise taxes and pay off your debt after the economy recovers.

[Fiji_Fury]

That could be a possibility, except that the current Conservative government is adamantly opposed to taxes. They are continuing a plan for instance that will continue to lower corporate taxes over the next several years. As a minority government, and with their ideological underpinnings, it's unlikely they will raise any taxes. Objections from the opposition parties come from the fact that up until the Conservatives came to power two and a half years ago and raised spending to the point where they have in fact become the most expense-happy government in Canadian history, the Canadian government was regularly posting significant budget surpluses. Because spending was increased, taxes were decreased and the Conservatives are just now "developing" a plan to address the waning economy, what could have been a surplus cushion to deploy against the current economic downturn is instead tied up in expenses or lost as cut revenue.

[Phantasee]

GST is charged on most things, excepting basic staples like bread and stuff. Provinces also charge sales tax, unless you're cool enough to live in Alberta Some of the provinces charge 8%, some 7%. I think the Atlantic provinces have HST, Harmonized Sales Tax, and it's a combination of the GST and some PST.

HST was 15% before Harper screwed with the GST.

Alberta has no sales tax, because of the oil revenue. If the Alberta government were smarter, it would have sales tax, but reduced income taxes.

We have 10% flat tax on income.

Having no PST does help make us more attractive than our neighbours, though.

[Stargate Nerd]

Another unbalanced budget due to responsible, fiscal conservatism.

But these guys aren't responsible, fiscal conservatives. They're what the Americans just got rid of.

In fact, Canada now has the most right-wing leader in the G7.

Although Obama is close on environmental issues, as he and Harper have come to an agreement.

That's assuming that there actually is a real concept behind fiscal conservatism behind the cynical tax breaks for corporations and the upper class. Because as far as I'm concerned that's what fiscal conservatism means in real world terms.

[aerius]

In an economic contraction, isn't running a deficit, if you're able, a good thing to help spur the economy? If you're fiscally sensible, like Canadians generally have been, you can raise taxes and pay off your debt after the economy recovers.

Only if the money's put towards a sensible use, for instance, building nuke plants & upgrading our electrical infrastructure or even subsidizing the tar sands projects so we can continue to have a secure affordable supply of oil. If we're blowing the money on stupid shit which we don't need like bank bailouts and pointless military adventures, then not only no, but fuck no.

In terms of fiscal responsibility, the last 15 years or so have been an exception, normally we're just as happy to run a deficit as you guys, and at one point we were so deep in the red that we damn near defaulted on our national debt.

[aerius]

It seems I was optimistic, and underestimated the government's ability to spend money on useless shit.

http://www.nationalpost.com/news/story.html?id=1635667

Liberals gleefully label Flaherty ‘fifty-billion-dollar man’
David Akin, Canwest News Service
Published: Tuesday, May 26, 2009

OTTAWA -- Liberal MPs hammered Finance Minister Jim Flaherty on his credibility Wednesday morning, hours after Flaherty announced that the federal deficit would be $50-billion this year, not $33.7-billion as he predicted four months ago or the surplus he was predicting just six months ago.

"This fifty-billion-dollar man has lost all credibility," Liberal finance critic John McCallum said on his way into his party's weekly caucus meeting in Parliament's Centre Block. "When he tells us will have surpluses forever in November and now it's $50-billion! What's he going to tell us next week?"

"Why didn't he listen to the parliamentary budget officer?" said Liberal MP Paul Szabo.

Shortly after the budget was tabled, the parliamentary budget office, the independent watchdog for the nation's books, predicted the budget would be $44-billion this year, much worse than what Mr. Flaherty said in his Jan. 27 budget. "He wasn't even in the range of all the economic forecasters. This is what you call a pattern of incompetence on financial management."

Conservative MPs, who meet across the hall from the Liberals every Wednesday morning, were largely mum on Mr. Flaherty's deficit bombshell. Those, like Quebec Conservative MP Maxime Bernier, who did speak, said the government was doing what it ought to do during recessionary times.

"We must do what we're doing right now to stimulate the economy," said Mr. Bernier, "but we must go back to surplus as soon as possible, like we do in our plan, and we're going to do that without taxing Canadians. That's important."

On Tuesday, after question period, Mr. Flaherty told reporters that spiralling costs for unemployment insurance and the possibility of billions in bailouts for the auto industry forced him to revise that deficit number.

"I think Canadians know where we are in the world," Mr. Flaherty said Tuesday. "We're better off than most countries in the world. It's necessary in the short term to run a large deficit, relatively large, to make sure that Canada gets through this well. Compared to the United States, compared to the United Kingdom, compared to the rest of the G7, our debt-to-GDP ratio is very good. Canada is in good shape. This will be a short-term deficit and we'll be able to manage it."

Mr. Flaherty declined to say anything more Wednesday as he made his way into the Conservative caucus meeting room.

For Liberals, a ballooning deficit is a sign of economic mismanagement but a monster-sized deficit may not, by itself, be enough for the Liberals to force an election.

When Mr. Flaherty tables his next quarterly budget report to Parliament -- which could come as early as next week -- Mr. McCallum and the Liberals will want him to demonstrate that the government is moving stimulus money into the economy and that it is prepared to make it easier for more Canadians to qualify for employment insurance benefits.

Mr. McCallum, a former chief economist for the Royal Bank of Canada, also noted that May 27 is a benchmark Mr. Flaherty set for himself to move stimulus money into the economy. The Budget Plan, tabled in Parliament on Jan. 27, says: "Canada is in recession today. Measures to support the economy must begin within the next 120 days to be most effective."

"Today is day 120," Mr. McCallum said. "We've had a flurry of announcements but precious little money has actually gone out the door."

A Canwest News Service analysis of government announcements since the budget was tabled shows that there have been 679 press releases issued since then, announcing projects which have a combined value $33.87-billion.

Nearly $10-billion of that, though, was for extending employment insurance benefits and implementing the government's skills and training strategy. That money will be paid out over the next two years.

Infrastructure Canada, the department responsible for implementing the $12-billion infrastructure spending plan announced in the budget, has made 46 announcements since the budget for projects totalling $2.7-billion.

"Canadians have the worst of both worlds," Mr. McCallum said. "They have a massive $50-billion deficit, but were's the flow of the money? Where are they creating jobs?"

Conservatives say the 120-day benchmark in the budget documents actually refers to April 1, the day the budget money could legally be spent. The budget document, however, contains no such qualifier.

[FSTargetDrone]

Interesting.

As you're probably aware, sales taxes in the US are imposed by individual states and not the federal government.
The current rate here in Indiana is 7%, but some items such as grocery foods and newspapers are exempt.

In other states, newspapers are not exempt.
I found this out the hard way when I bought a $.50 newspaper when travelling in Maryland several years ago and was charged sales tax.

It was embarrassing to have plunked down two quarters and have started walking out when the clerk asked 'where's the rest of the money?'

Speaking of taxable consumer goods, in Pennsylvania, some kinds of clothing are taxed and others are not:

Retailers' Information (REV-717AS+)

(3) Clothing and Accessories

Generally, clothing is nontaxable except the following: (1) Formal day or evening apparel; (2) Articles made of real, imitation, or synthetic fur where the fur is more than three times the value of the next most valuable component material; and (3) Sporting goods and clothing normally worn or used when engaged in sports.

Amusingly, lingerie, garters and garter belts are not taxable.

[Solauren]

Looks like a Summer election in Canada.

After all, the Liberals said if he Conservatives fucked up the budget/spending, they'd force an election.

Well, $50billion is alot to base an election on.

Combine that with the GST-PST Harminzation in Ontario (which they can blame on the Federal Conservative and paint the provincal liberals as political victims), we might see Liberal Minority backed by the NDP, to a Liberal Majority.

Country Wide issue: 50 Billion in debt
Ontario Issue: We'll stop the Harmonization and save you thousands.

This could get ugly.

[Ekiqa]

McGuinty went along with the Harmonization in order to get the promised stimulus money flowing. But the Feds have yet to provide money from the current budget, the only money that's been provided was from previous budgets. At least, it was as of a month or two ago.