Thursday, January 29, 2009

Thoughts On The Budget — It Could Have Been Worse

Compared to what's going on in the US and in Europe - it could have been much worse. So, a Liberal-Conservative budget with ballooning program spending, minuscule tax cuts and a $34B deficit (2.15% of the GDP) is probably the best we could have for the time being. The only other alternative would be a Liberal-NDP budget; one that would have come with a similar deficit, except there would have been tax hikes for businesses and maybe - a GST hike to pay for much more wasteful spending.

Still, it's quite frustrating to witness dozens of special interest groups getting themselves sheltered from the recession at our expense:
  • $200 million over two years for the Canadian Television Fund.

  • I'm betting most of you have never heard of the Canadian Television Fund (though you probably suspected some such boondoggle existed). Read about it here. Suffice to say it "supports the production and broadcast of high-quality Canadian television programs." Because Canadians won't make high-quality television programs unless the government pays them to.

  • Over $335 million in support for culture and the arts — recognizing the importance of our artistic institutions and the role they play in Canadians’ lives.

  • They should just hire a guy with a flag, who could wave it at Quebec and yell: "Yoo-hoo, Quebec? Over here! $335 mill for the arts! See, we DO care. We LOVE the arts. Can't live WITHOUT it! Especially that stuff on Quebec TV. Hoo-boy, how did you guys get so TALENTED?
    Yep, those guys are really talented. At least when it comes to selling dollar store items for millions as "art" and then successfully lobbying the government for even more handouts. We can only look forward for next year, hoping that the economy recovers faster than expected so that government could trim some of those spending in its attempt to get the country out of deficit a little faster than 2013.

    Update: The CHP describes the Budget as disappointing:
    Deficit spending-anything that increases the National Debt-is stealing from future generations; it is theft! "Our government would have solved the liquidity crisis by creating the needed money, interest free, through the Bank of Canada, instead of borrowing it from the chartered banks. We wouldn't have had to steal the "stimulus" money from our children and their children," Hnatiuk said.

    Canada has faced similar challenges before and successfully overcome them without borrowing money. In 1945, with the prospect of two million soldiers returning from overseas, the Liberal government of MacKenzie King was concerned about the economic stability of our nation. Unlike yesterday's budget, King's government made a bold move. He instructed the Bank of Canada to create money to make loans that were virtually interest-free to provinces, municipalities and other local public authorities, for infrastructure projects. This bold move kicked off an unprecedented economic boom.
    Jim Hnatiuk is right. It is disappointing to see the government borrowing at a private market instead of using the government owned Bank of Canada and a Business Development Bank of Canada (BDC). It's even more disappointing to see the government using borrowed money to bankroll special interest groups. Still, with the conservatives lacking some 12 seats to majority and with not a single CHP MP to balance out the left-wing opposition, this disappointing budget is unfortunately the best we can get :(

    No comments: