Sunday, May 31, 2009

David Dodge: Federal deficit of $50 billion OK

When it comes to the appropriateness of the federal deficit, who are you going to believe: former Bank of Canada Governor David Dodge, the talking heads over at CBC and CTV or Michael Ignatieff? I’ll put my money on Dodge—so too will most Canadians I believe.

As reported at, David Dodge, who was a former deputy minister with the Finance Department, said in remarks at an economics conference in Toronto:

“The Canadian federal deficit of 3 per cent of GDP, in a year where the output gap is as large as it’s going to be, is certainly not inappropriate.”

Parliamentary budget officer Kevin Page—no friend of Harper’s government—offered nothing like Ignatieff’s doom and gloom in the interview Mr. Page had last week with Steve Paikin of TVO’s The Agenda.

Why then is opposition Liberal Party Leader Michael Ignatieff calling for Finance Minister Jim Flaherty’s resignation? Crass partisan politics, that’s why.

Here in Canada—through no fault of our own—we are facing our first recession since 1992. Our economy is struggling. Shipments of cars and lumber to the United States have declined, and the overall economy has contracted at an annual pace of 3.4 per cent in the last quarter of 2008. The Bank of Canada estimates that growth in the first quarter may shrink at a 7.3 percent rate, the biggest drop on record.

To this the Grits say little of value, preferring to damn the government for a recession it does not own. I believe that during wars and economic crises we should pull together for the betterment of Canada and not try to scratch out each other’s eyes.

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© 2009 Russell G. Campbell
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  1. I disagree with the part "no fault of our own". Certainly we face an economic recession that has affected the global markets, but the Conservative government has exacerbated the situation with massive spending increases, corporate bailouts, program expansions, new programs, and larger bureaucracy. There is certainly an argument to be made, a strong one, that we are facing a more difficult time owing to the choices of our government.

    Now you can argue that the Liberals would have done worse, and that's a fair argument, but I'm tired of people saying that we cannot blame the current government for anything. That's $50 billion in new and fresh debt, and to say we couldn't have avoided it is to be blind to the choices this government has made.

  2. That I hope was partisan on your part because no deficit is acceptable.
    there is no reason on earth we should run deficits, if we don't have the money for all our extras beyond what the government is duty bound to sustain, cut them out and lay them off.

  3. Yes, our conservative government is handling the economic slowdown much better than most other developed nation's governments. They do not deserve derision.

  4. ''there is no reason on earth we should run deficits'' anon

    And what money tree is there that you would shake to pay for
    -increased EI, social assistance?

    Would you fire all the civil servants so as not to have to pay their wages?
    Shut down government buildings so as not to pay expenses?
    Tell the Premiers there will be a cut to all transfer payments?
    Create triple the unempolyment!
    Where's the money coming from?
    Reversing the $6B cut to the GST won't fix it.

    Raph, were you against military spending,
    fiscal imbalance spending,
    development in the North spending,
    Residential school and land claim settlement spending?

    If it's just the GST cut (which the UK did immediately to stimulate their economy),
    then the cuts are $6 Billion/year.
    Which is offset by the economy's $6 B/yr structural surplus.

    Oh, and this government stopped the EI over charging, so didn't raid the EI fund to fake surplus'.
    Like the Liberals did, to the tune of $54 Billion 2002-2005

  5. A record sized deficit is the conservative way? I don't think so.

    I don't know what Harper stands for.