Tuesday, June 21, 2005

You Mean, Deficits Aren't Satan?

Much left-wing commentary has maintained - throughout the long reign of Martin - that deficits are not, in fact, a sign of the apocalypse. Today comes the news that we have a new ally - a former analyst for the Bank of Montreal.
Ottawa — The federal government should stop fretting about balancing the books every year, an obsession that has contributed to a string of larger-than-expected surpluses, says a prominent Canadian economist appointed by Ottawa to investigate its poor fiscal forecasting record.

Former Bank of Montreal chief economist Tim O'Neill says Ottawa's rigid, no-deficit policy is a central reason for a series of windfall surpluses totalling about $60-billion since 1997-1998 -- and can be relaxed today.
And before you can bat an eye, Ralph Goodale is there to stomp out this heresy, like the inquisitors of old.
Finance Minister Ralph Goodale rejected the idea of abandoning the no-deficit policy, a defining feature of the Liberal government's record over the past decade, saying it has "served the country very well." Ottawa likes to boast that Canada is the only member of the Group of Seven industrialized countries consistently running surpluses.
And like all things financial, the Liberals and Conservatives are in total agreement:
Conservative finance critic Monte Solberg said he thinks Canadian voters would punish any government that contemplated backing away from the no-deficit rule. "It's crazy talk," Mr. Solberg said.

"The last thing that federal politicians need is an excuse to go ahead and blow the budget."
And here's where the "news" part of the article goes out the window:
The belief that Ottawa should never run deficits has achieved widespread support among Canadian federal voters in the past decade, becoming the dominant orthodoxy. In fact, it's hard to find citizens in other countries as strongly anti-deficit as Canadians when it comes to their national government.
Umm... huh? The article provides a quote from one analyst, but no statistics or anything that might be considered evidence for this assertion. Dalton McGuinty was until recently considered dead for the next election. Why? Because he chose a policy to reduce the provincial deficit. Polls indicated that voters didn't want taxes, but they didn't want service cuts either - they probably didn't put it that way, but they were endorsing deficit spending. Of course, it's more likely that they simply didn't know what they wanted. But that's not exactly evidence for the Globe's assertion, either.

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