Fri, Jul
25
2008

The New Conservative Federal Deficit Begins?

Fri, Jul 25, 2008

deficit.jpg

It seems so counter-intuitive, but the Liberals and liberal-style governments of North America seem to have a better handle on the governments’ finances than the Conservatives. The latest example almost passed like a ship in the night on the mainstream media: after balancing the books and running surpluses for the last ten years (eight of those under Liberal governments), the federal government has racked up a half-billion dollar deficit during the first two months of this fiscal year:

The federal government ran a deficit of $517 million over April and May, the first two months of the current fiscal year, mainly due to lower corporate income tax and GST revenues.

Over the same time period last year, the government ran a $2.8 billion surplus.

The federal finance department said Friday that during this April and May revenues declined by $1.6 billion, or 4.1 per cent.

(link) (Hat tip to the much missed Crawl Across the Ocean)

Now, it’s still early in the fiscal year. There is plenty of time for the situation to be reversed, and plenty of opportunities. Government revenues and expenditures naturally rise and fall over the course of a fiscal year, and the government does have reserves to dip into to prevent a deficit. They could even, as Declan notes, sell assets — a trick the Harris Conservatives used to cover up a deficit in the lead-up to the 1999 Ontario election.

But if current rates continue, we are on the cusp of a $3 Billion deficit this year, and that’s something that this Conservative government should be ashamed of, especially considering that it was their GST cut that seems to be largely responsible for the shortfall — a cut that most economists agree did little to enliven the economy, and indeed, made an expensive tax even more wasteful to collect.

From the article:

GST revenues dropped by $1 billion, or 20.9 per cent, partly as a result of the one percentage point reduction in the GST rate, which was effective Jan. 1.

Spending on programs rose by $2.1 billion, or seven per cent, on higher transfers and other expenses.

Yes, spending also increased as well, so there is some opportunity there for some savings, I suppose. So it’s time we put it to the Conservatives, then: what do you intend to cut to bring in a balanced budget this year?


On Obama and McCain

Obama in Berlin

Here in the Nebraska, I’m getting a strange treat: American news and commentary that we don’t actually hear much about back in Ontario. The election is the talk on a lot of locals’ lips here in this usually reliably Republican state, and Obama is turning heads. There are rumours, believe it or not, that Obama may ask Nebraskan Republican Senator (and noted Iraq War critic) Chuck Hagel to be his VP choice.

You occasionally get this speculation about a bipartisan ticket to stick it to the other side, and show how much of a different politician you are. Indeed, in the 2004 election, there were rumours that John Kerry asked John McCain to be his running mate. A Obama/Hagel ticket would be just the sort of across-the-centre platform that would, on paper, appeal to those sick of Democratic/Republican infighting. However, things start to get a little weird when, in response, McCain brings in Joe Lieberman as his VP running mate.

At this point, I really hope this doesn’t happen, as an Obama/Hagel vs McCain/Lieberman campaign means that the campaign is about the Iraq War and only the Iraq War, and there are other important issues that Americans need to talk about in this election.

In other election news, Obama drew 200,000 attendees to a rally in Berlin. I strongly suspect the crowd far outnumbered the number of Democrats Abroad in Germany, and the pictures certainly add to Obama’s presidential cachet. In response, McCain spoke to… far less than 200,000 attendees in a German restaurant somewhere in Ohio, a move that just seems bush league in campaigning, and emphasizes the disparity of interest and ability between Obama, a passionate orator, and McCain, a doddering old senator. No wonder some left-of-centre bloggers are anticipating the coming debates and rubbing their hands with glee.

But hold on a minute. A part of me wonders if McCain is playing possum at this point. For one thing, consider the season. I’m only really hearing political talk in America at this point because I have in-laws and relatives who are active politically. The real campaign doesn’t start until September. And McCain does not get to be a longstanding senator with a maverick reputation by being slow on the draw. This was the man, after all, who turned the 2000 Republican primary into a fight, running with very little money against a billionaire son from a billionaire family that was quite happy to buy his way to the presidency. Even as McCain lost South Carolina in 2000, there was enough interest in him for commentators to call for him to run for president on Ross Perot’s old ticket. There’s got to be something there.

And I wonder, if downplaying expectations and then exceeding them is such a winning formula in politics (and it is), if we aren’t well into the phase of downplaying expectations in the McCain campaign.

I guess we’ll see come September.


Finally, a site I’m checking out regularly is electoral-vote.com, which cobbles the latest state-by-state presidential opinion polls and calculates the implications to the American Electoral College. It really helps to illustrate where the battlefield states are.

This election is shaping up to be almost as odd as the fictional election from the last season of The West Wing. Obama is showing surprising support in states that used to be deep Republican red. I mean, just three points behind in North Dakota? Four points behind in South Dakota? Ahead in Montana? Unthinkable.

It’s worth noting that, as tight and as heated as this election could still be, all Obama has to do is hold those states that John Kerry won in 2004, and win one more. Right now, we have possible Democratic pick-ups in six states (Colorado, Indiana, Iowa (pretty solid too), Montana, Nevada and New Mexico) and Republican pick-ups nowhere. This is the site to watch.


On This Day

blog comments powered by Disqus