⚖️📉🌍Good on ya, Jim⚖️📉🌍
In his November 2011 Federal Economic Update, Jim Flaherty had to retreat from his aggressive debt payment plans. The Canadian economy is sluggish—downright comatose. Minister Flaherty no longer sees the goal of a balanced budget by 2014 as possible. He now thinks that 2015 may be a more achievable goal.
Financial pundits are lampooning this statement. The Political Wags are all having a field day. They claim the Tories are not keeping their promises. The Tories would do the same if the Liberals were in power, and the reverse was true.
📊 Balanced Budget Under Pressure
This illustration visualizes Canada’s fiscal balancing act, with spending cuts and global instability tipping the economic scale.
The Canadian Economy is in a shambles? The Government’s programs are driving the country into the ground? Canada is teetering on an economic precipice? None of that is likely (although who knows these days). The entire global economy is causing markets worldwide to be ludicrously unstable. This instability is causing all economies to be in a right mucked up state. (That is an actual economic term that John Kenneth Galbraith used to use).
All this instability is causing companies to cut back on spending. Folks are starting to lose jobs (again). This of course is cutting the government’s income base. Unemployed people pay a lot less (if not no) taxes, the major income base for the governments. Fewer people are working. This leads to less income. With less income, there are fewer programs without spending cuts. Deficit financing must come into place. We are back where we were in 2008. Yes, a hugely over simplified explanation, but it does sum it up (in my opinion).
I actually respect Mr. Flaherty for being honest enough to say that the Government was being too aggressive in their goals and they must rethink and change their plans (like we all should do, should problems arise, we must sometime change our plans to reflect the new reality we live in). Yes, I am disappointed that the Government can’t get back to a balanced budget. However, there is really not much to be done about it. Shutting down many government programs sounds great. Then you see who is affected by these cuts.
Is Mr. Flaherty to blame here? I don’t think so, but what do you think?
📚 External Resources: Canada’s 2014 Balanced Budget Effort
- Government of Canada – Budget 2014: Plan to Return to Budget Balance
Official fiscal strategy to eliminate the deficit by 2015, focusing on economic growth and cost control. - Reuters – Canada Posts Budget Surplus in 2014-15. This happened earlier than expected.
A report on Canada achieving a budget surplus ahead of projections due to spending cuts and revenue uptick. - Canadian Labour Congress – Federal Budget 2014: What’s in it for Us?
A critical review of the 2014 federal budget, examining whether austerity was the right call for workers and growth. - Wikipedia – 2014 Canadian Federal Budget
An encyclopedic summary of the 2014 budget, its contents, political context, and economic impacts.
I agree with your assessment of Flaherty.
He does seem genuine (for a politician!). His efforts to talk plainly about the country’s current deficit issues are to be commended.
I find it interesting that his critics on the one hand complain that he has broken his promise of debt reduction, but in the next breath say he must go into deficit spending mode to get the economy going again!
totally agree with you government should rethink over their plans