Wednesday, November 19, 2008

Stephen Harper, The Honest Economist

On September 30 Stephen Harper, the Conservative Leader and former economist informed Canadians that "at a time of global uncertainty, we cannot allow our economy to be put at risk through higher taxes, through deficits and through out-of-control spending."

Today Bloomberg.com reports Harper "now says he may turn to 'deficit spending' to boost demand amid a global recession," and Canadians everywhere are left not only questioning the economic credentials of the Prime Minister, but his honesty as well.

Now those who suggest a deficit is necessary in light of the current economic situation are correct, certainly cutting spending to avoid a deficit would only make matters worse; however those who suggest the same circumstances clear Harper from any responsibility for creating said deficit are wrong.

Stephen Harper inherited a 12 billion dollar surplus from the Liberals just over two and a half years ago, and has since squandered it on record spending and ineffective tax cuts. As former Prime Minister and finance minister Paul Martin suggests as reported by CBC:

"Our deficit has not been gutted, not been eviscerated because of the financial crisis, but because the government cut the GST and then embarked on the biggest spending spree in government history."
Paul Martin is supported even by the Conservative governments' own estimates from the 2006 budget, cutting the GST alone was planned to cost the country 8.7 billion dollars in foregone revenue by this year.

The Vancouver Sun acknowledges the necessity of going into deficit due to the dire circumstances, but naively believes creating a law limiting the length of time the government can run a deficit would be effective. The article states:
"If the federal government wants to deliberately return to deficit spending, it should make it the law of land that the budget be balanced again within three years of incurring the deficit."
The problem with such a proposal is if it is needed our Prime Minister clearly already lied about not allowing deficits, and therefore circumstances justified him to go back on his word once, and since that was the case why can't they do it again?

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