statism watch

Not bad, Jim – only off by SIXTEEN BILLION. But it’s to ‘help the unemployed’ (claims Harper), so it’s ok then. See if you can guess who ultimately profits from the interest payments on our debt. Who, ultimately, holds BoC bonds? But it’s just a mistake, no one could have seen this coming, nothing to see here.

Les Whittington, Toronto Star
May 26, 2009

OTTAWA—Prime Minister Stephen Harper’s government will run up an annual budget deficit of more than $50 billion, it was revealed today.

It will be by far the largest deficit on Ottawa’s modern record. The biggest annual revenue shortfall to date was the $39-billion deficit recorded by the Mulroney Tories in 1992-93.

The Harper government’s previous forecast for the current 2009-2010 fiscal year was a $33.7 billion deficit, as set out in Finance Minister Jim Flaherty’s January budget.

“We are going through a deeper economic slowdown than anticipated,” Flaherty told reporters outside the Commons.

He said the government’s expenses are outdistancing revenues because of increased unemployment insurance, lower taxes and “substantial” auto bailout payments.

“As a result of all of that, we will run a substantial, short-term deficit which I would estimate at more than $50 billion,” Flaherty said.

He declined to say if the budget deficit will also rise next year.

Flaherty said the government has to overspend this year to try to jumpstart the stalled Canadian economy.

“It’s necessary in the short term to run a large deficit, relatively large, to make sure that Canada gets through this well.”

But he denied that a Conservative government would have to raise taxes at a later date to get Ottawa’s books back in order.

Partly, he said, that’s because the billions of dollars the federal government is spending to help the beleaguered auto industry will be a one-time payment.

Flaherty also said it would be a short-term deficit. There are “some encouraging signs” in the economy, he said, adding that some analysts expect economic conditions to improve later this year and into next year.

As the economy improves, so does Ottawa’s fiscal picture because corporate and personal income taxes increase and government payments to help the unemployed decline.

Flaherty’s bombshell followed the grim news that the number of Canadians collecting employment insurance jumped 10.6 per cent in March to 681,400 — the biggest EI surge since the recession started and viewed by economists as a warning sign of more bad things to come.

The jarring new estimate also comes just a month after Flaherty said he was not changing his deficit forecast.

“It’s not just a minor miscalculation,” Liberal House Leader Ralph Goodale said of Flaherty’s massive revision. “Their numbers are absolutely wonky and unreliable.”

NDP finance critic Thomas Mulcair was even less kind.

“He’s wearing the dunce cap of all Canadian finance ministers,” he said of Flaherty. “He swore up and down (last fall) that we would never go back to deficits. Then he said there was not going to be a recession.

“If we want to get out of this mess, the government’s got to start telling the truth and the whole truth.”

Despite the record deficit number, the country is still in better shape in terms of deficit-to-GDP ratio than in 1984. Back then, the deficit was nearly $39 billion, which made up a record share of almost nine per cent of GDP (total economic output.)

Flaherty was also raked in the Commons for his past record as a deficit spender during Ontario’s Common Sense Revolution.

“Mr. Speaker, in 2003 the finance minister was a senior member of the Mike Harris government and they ran on a balanced budget,” said Liberal finance critic John McCallum.

“Whoops, it turned out to be a big deficit.

“Last November, he projected never ending surpluses. Whoops again, two months later it was an $80-billion deficit (over two years), which the IMF says is now $120 billion. That is enough to wipe out all the debt reduction since Liberals balanced the budget in 1997.

“Why is the minister so bad with numbers?”

Prime Minister Stephen Harper retorted that the Liberals want to spend yet more by increasing EI benefits at a cost of $1.5 billion a year until the worst of the recession is over.

“Mr. Speaker, virtually every national government in the world is running a deficit. Ours, by comparison, remains much lower than our competitors.

“That member, who was once an esteemed economist, should know that when interest rates are zero and we have a recession like this, and we have the strong, long-term fiscal position we have, that we put money into a deficit to make sure we are helping (unemployed) people in this country.”

Source | See also under Economics: Ranks of EI recipients jump by 10% in March: StatsCan | Canadian households $1.3-trillion in debt | Autoworkers accept GM deal in 86% vote | Economic stabilization may rely on carbon economy, economist says | Crisis spurs spike in ’suburban survivalists’ | Digital Money Forum Pushes For Electronic Currency | Report from the 2009 Bilderberg Conference | GM, CAW reach new labour deal | Canada eyes arms sales to Pakistan | CNBC analyst echoes warning of ’sucker’s rally’ | GM Canada plans to cut 40% of its dealer network | Oshawa truck plant closes | Geithner To Take Orders From Global Elite At Bilderberg | Quebec pension fund managers boosted derivatives holdings despite warnings | GM execs dump stock, shares plummet | The rich, shadowy Bilderberg group | Recovery within sight, central bankers say | Leaked 1955 Bilderberg Docs Outline Plan For Single European Currency | GM bankruptcy likely, CAW says | 10 U.S. banks fail stress test, but regulators confident | Leaked Agenda: Bilderberg Group Plans Economic Depression | Fiat aims to be global powerhouse by acquiring Chrysler, Opel | Chrysler Canada assembly plants shut down | Banker at heart of credit crisis leads plan to buoy auto sales | With interest rates at zero, Fed looks at going negative | Almost 80,000 jobs lost in February | US Economy Shrank 6.1% in First Quarter | Ontario mulls equity stake in GM | US government may take controlling share of General Motors | EU approves free-trade talks with Canada | Fed says U.S. banks breezed through stress tests | Will recession spark global food crisis? | Bank of Canada poised to print money to buy bonds | Credit companies seek to avoid regulation, create global debit system | After Three Amigos rendezvous, White House confirms there’s no plan to reopen NAFTA | Stocks in triple-digit losses on Bay, Wall streets | A Bigger, Bolder Role Is Imagined For the IMF | US govt considers becoming bank shareholder | US to put conditions on bank bailout repayments | Harper Pledges to Double Funding to International Bank at Americas Summit | NRTEE Carbon Market Panel is ‘Round Table on Socialist Planning’ | TSX moves up for 6th week | Climate panel presses for federal cap-and-trade system | Congressman: Reckless Spending And Taxation Prolonged Great Depression | Barclays, Lloyd’s, RBS join Goldman-Sachs in the black | U.S. retail sales fall unexpectedly | Goldman-Sachs to repay TARP loan, resume private operations, bonuses, at “earliest time” possible | Which Banks Will Rule? | Ontario can’t cover GM pensions, premier says | GM chief says company is preparing in case it files for bankruptcy | Another 663,000 jobs lost in March in U.S. | G20 deal part of ‘unprecedented’ response to crisis: Harper | UK PM reveals G20 plan to boost IMF by $1 trillion, hails new world order (again) | Global stock markets surge | World Bank President Admits Agenda For Global Government | Financial Rescue Nears US GDP as Pledges Top $12.8 Trillion | Gordon Brown chooses pulpit as latest platform to push New World Order | Whitehouse fires General Motors CEO | Will U.S. financial woes lead to new world order? | U.N. ‘Climate Change’ Plan Would Likely Shift Trillions to Form New World Economy | US backing for world currency stuns markets | UN & IMF Back Agenda For Global Financial Dictatorship | Geithner wants a bigger stick | Geithner Plan Will Rob US Taxpayers: Stiglitz | Ontario to merge GST, PST in ‘harmonized’ tax hike | EI, individual bankruptcies spiked in January | US unveils P3 plan to monetize debt, nationalize banks | G20 warned unrest will sweep globe | Bank crisis spawns new kind of gold rush | Wall Street’s Big Takeover | U.N. 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