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There Will Be Deficits

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There will be a deficit: Although the Harper government claims it had a balanced budget, it only did so by selling assets and making unrealistic projections. The tiny technical surplus that Finance Minister Joe Oliver promised is like the periscope of a submerged submarine – the ship is under water, but technically it has broken through the surface.

Mr Harper has been Deficit Man – running up a series of 8 deficits after starting with a decent surplus inherited from the Liberals. He did this intentionally by cutting the GST that former PM Brian Mulroney brought in partly to encourage growth. Mulroney was told you can have a good tax or a bad tax to deal with YOUR deficit and he chose a good tax. Harper chose the deficit. Repeat after me: Harper CHOSE the deficit.

To fight this election he has been promising tax cuts and new projects every time he leaves home. The strategy seems to be to leave the cupboard bare for the next government – promise money so that the next government won’t be able to spend it. And he hasn’t budgeted for all the new government pensions for all the Conservatives who will lose their seats. There will be a deficit.

Mr Mulcair knows there will be a deficit too, so he is promising to balance the budget from 2016 forward. Good luck. When you rent a house to bad tenants you expect to have a mess to clean up and a lot of repairs to do. Mr Mulcair has budgeted for the unpaid rent, but not for the cleanup.button1

That leaves the Liberals and the Greens. The Liberals have essentially adopted a version of the Green platform with two big exceptions. They admit there will be a deficit. They are now focusing on the infrastructure deficit. They plan to spend on infrastructure, and they emphasize that this will provide economic stimulus. So far so good.

The Greens go farther: They want to eliminate the infrastructure deficit – that will take more than a 3-year stimulus package. The Greens would commit 1% of the GST for transportation improvements and an additional $3 billion annually and permanently for infrastructure upgrading. This represents a move back toward the days when the Federal government funded a much larger fraction of Canada’s infrastructure. Those were prosperous times with a declining Federal debt and the Federal government spending helped drive that prosperity.

The Greens go farther in another way. The party platform does not talk about “environmental deficit”, but that is really what we have. Every molecule of CO2 added to the atmosphere is an addition to the world’s environmental debt. Only the Green Party has a plan that deals effectively with carbon emissions. Mr Harper hopes to make poor countries pay for the Canadian share. Mulcair and Trudeau are committed to costly and inefficient cap-and-trade systems. The Green Party is committed to taxing emissions directly and making sure the revenue goes back to Canadians.

By being honest about what needs to be done, and honest about the fact that we will have to pay for infrastructure and emissions, the Green Party is dealing with another huge Canadian deficit: the Honesty Deficit in Canadian politics. Let’s eliminate the Honesty Deficit this October!



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