Wednesday, March 19, 2014

Flaherty’s $56-billion deficit wasn’t caused by stimulus spending

Flaherty is getting too much credit for balancing a budget mess he created in the first place with reckless tax cuts.

An article from the Canadian Press associates Flaherty’s $56-billion deficit in 2009 with a stimulus package to help cushion the blow from the 2008 global economic meltdown. (A package the Cons were originally opposed to.)

Clearly the journalist who penned the article flunked high school accounting. The fact is, the stimulus package cost $20-billion a year for two years. By 2011, the stimulus spending was over and no longer a part of the budget or the deficit.

So why did the Flaherty still have a whopping $26-billion deficit in 2011, after inheriting a $14-billion surplus in 2006? The answer lies in the 2009 budget itself:

Tax Relief Since 2006 Including Measures in Budget 2009

Fiscal Year 2008 2009 2010 2011 2012 2013
(In billions of dollars)
GST cuts 11.6 11.5 12.2 13.1 13.8 14.6
Personal tax cuts 12.0 15.3 13.1 13.6 14.2 14.9
Business tax cuts 5.3 7.1 8.6 10.4 13.8 14.9
Total tax cuts 28.9 33.9 33.9 37.1 41.8 44.4

Here the budget says the total tax cuts — excuse me, “tax relief” — will add up to $44.4-billion/yr by the fiscal year 2013.

That goes a lot further to explaining the $26-billion hole still left in the budget in 2011. It also explains the myriad of reckless spending cuts that followed the reckless tax cuts — most of which went to the rich.

Conclusion

Given the Harper Government’s practice of Soviet-style secrecy that includes withholding public budget documents from Budget Office it created, it will be impossible to know what the real budget numbers are until we get a more trustworthy government.

It should also be noted that Flaherty said a $5.6-billion deficit was a balanced budget while finance minister in Ontario back in 2003. He has certainly not given Canadians any reason to believe he ever repented of his fraudulent “creative accounting” ways.

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