Back into deficit?

We're dangerously close, according to Barbara Yaffe of the Vancouver Sun:

Tax cuts and big spending have left the federal cupboard depleted to the point where some are now raising the possibility of a budget deficit.

Jean Chretien's Liberals eliminated a $42-billion deficit 10 years ago and a balanced budget has become a part of the national psyche ever since.

Canadians have grown confident about the country's economy as year after year Ottawa has run robust surpluses.

But the mood is changing. The latest Angus Reid poll shows, among male voters, the economy has become the top electoral issue. When both genders respond, the economy is right behind health care and the environment.

The anxiety undoubtedly relates to the narrow margin of error Conservatives have taken to allowing themselves in their budgeting.

Conservatives have forecast a relatively modest surplus of $2.3 billion for 2008. That tally is predicated on a 1.7-per-cent growth target that no longer is expected to materialize (it has been downgraded to 1.4 per cent.)

The budget surplus projected for 2009 is slimmer still, at $1.3 billion.

Finance Minister Jim Flaherty was feeling sufficiently secure as recently as last October to dole out $60 billion worth of tax cuts over five years.

But events have conspired to present a challenging situation for a government that must face the electorate within the next 18 months.

[...]

In fact the Liberal talent for balancing budgets was strongly tied to major reductions in transfer payments to provinces as well as extremely high levels of taxation.

And, with $100 million worth of questionable and fraudulent spending associated with the Quebec sponsorship scandal, many would scoff at the party's money-managing prowess.

But both main parties understand that, after the pain Canadians endured through the 1990s in the quest to balance the budget, running a deficit would be akin to waving a cape in front of a bull. (via Kinsella)

The one thing for which we right-wing death beasts praise Chretien and Martin was their fiscal leadership. If Harper and Flaherty mess that up, they will not deserve re-election. (Lucky for them, they're up against a moribund, hapless Liberal party that doesn't deserve to win.)

Damian P.

Posted by damian at May 1, 2008 09:31 AM