Marc Lee predicted a deficit a year ago (in a paper that graciously acknowledged comments from Toby and me.) Our blog was also ahead of the curve on some other aspects of Budget 2009. I flagged the Equalization cuts the morning after the November 2008 Economic Statement, when they received little attention. These cuts have since become a Budget hot potato because […]
Read moreThe more I read Budget 2009, the less stimulus I see. The very first page of text in the Budget Plan commits to “inject fiscal stimulus of 2 per cent of gross domestic product (GDP)†(page 9). For 2009-10, the Budget introduces new spending and tax cuts worth $18 billion, about 1.2% of GDP (page 217). But it accounts for […]
Read moreJanuary 26, 2009 The Honourable James M. Flaherty Minister of Finance Department of Finance Canada 140 O’Connor Street Ottawa, Ontario K1A 0G5 Dear Mr. Flaherty: I write regarding the 2009 federal budget on behalf of the United Steelworkers union, which represents 280,000 men and women working in every sector of Canada’s economy. To address the worst economic crisis since the […]
Read moreThe Fraser Institute, Canadian Centre for Policy Alternatives, Informetrica, Bank of Montreal, and yours truly square off in today’s Toronto Star (page A17).
Read moreThere was a noteworthy discrepancy in how our two national newspapers covered the $64-billion leak. The secondary headline printed in yesterday’s Globe and Mail began, “Finance Department’s deliberate leak . . .” While the story’s text identifies the leaker only as “a senior government official,” a pull-out quote in the print edition identified him or her as a “Finance Department official.” […]
Read moreI watched this movie last night and highly recommend it. I am often struck that criticism of Israeli military operations is more accepted in Israel than in North America. However, the movie won a Golden Globe and was just nominated for an Academy Award, which may add some welcome nuance to the dominant North American perspective.
Read moreI assume that Marc is stuck in a news conference, so here is the 2009 Alternative Federal Budget. The Canadian Centre for Policy Alternatives has also released some litmus tests for next week’s budget.
Read moreToday’s Consumer Price Index suggests that Canada is lunging toward deflation. The annual inflation rate plummeted to just 1.2% in December, 2.2% lower than only three months ago. If this pace continues, the national inflation rate will turn negative in the next few months. Two provinces, Nova Scotia and New Brunswick, already recorded negative inflation rates in December. Of course, […]
Read morePolitical watchers are waiting with baited breath to see whether Michael Ignatieff will acquiesce to Tuesday’s Conservative budget, to the applause of Bay Street Liberals, or whether he will defeat the budget and seize the opportunity to become Prime Minister of a progressive coalition government. It strikes me that there is a third possibility: he might propose explicit amendments to […]
Read moreThe Bank of Canada did not cut its target interest rate enough this morning, leaving it a full percentage point above the US central bank rate. As I argued last week, the Bank of Canada should have matched the American Federal Reserve and cut to zero. Astonishingly, the Bank of Canada’s press release acknowledges that we are headed for deflation: […]
Read moreIt’s noteworthy that the week before a budget that will supposedly accelerate infrastructure spending, the Finance Minister is announcing new management for PPP Canada. Budget 2007 dictated that provinces and municipalities seeking federal infrastructure funding “be required to demonstrate that the option of undertaking the project as a public-private partnership has been fully considered.” As I have pointed out, given the […]
Read moreLast year was a momentous one for Relentlessly Progressive Economics. Of course, some of us continued using the blog to disseminate media commentary on behalf of our respective organizations. However, the Progressive Economics Forum (PEF) itself attracted media coverage a couple of times. Early in the year, The National Post and other CanWest papers cited it for documenting some striking similarities […]
Read moreThe Parliamentary Budget Office (PBO) was established in response to the systematic underestimation of federal budget surpluses. Its job was to provide independent estimates of the available surplus to keep Finance Canada honest ( “truth in budgeting” as the Conservatives said at the time). With the federal government headed into deficit, the PBO’s purpose is less clear. In theory, it […]
Read moreThe Maclean’s cavalry has ridden over the hill to help Bill Robson defend the conventional wisdom against Keynesian fiscal policy. Here are four problems with Andrew Coyne’s “Special Report” (which I am having trouble finding online) in the latest edition of Maclean’s magazine: 1. Coyne presents as evidence of failed deficit spending a 1991 paper by Christina Romer, who is now […]
Read moreThe Bank of Canada should announce a target interest rate of 0% on Tuesday. This move would match the action taken by the US Federal Reserve a month ago. Recent experience suggests that the chartered banks would not pass along the entire cut. But such a dramatic announcement by the Bank of Canada would place strong pressure on the chartered banks to noticeably […]
Read moreSupporters of various American wars have sometimes proclaimed, “Freedom isn’t free.” This idiom could also be applied to Tax-Free Savings Accounts, which entail a cost in terms of lost federal and provincial revenues. When Budget 2008 unveiled TFSAs, several writers on this blog pointed out that their initially low fiscal cost would grow exponentially over time. At least one high-profile TFSA […]
Read moreHere is a note to Relentlessly Progressive Economics readers from Dr. Luis T. Gutierrez: The January 2009 issue of the E-Journal of “Solidarity, Sustainability, and Nonviolence” has been posted: The Sustainable Development Paradox As part of a series of articles on “dimensions of sustainable development,” the January 2009 issue shows the impossibility of integrating the social, economic, and political dimensions of sustainable development unless […]
Read moreDeclan picks up on Stephen’s suggestion that economists were too diffident to raise concerns about the real estate bubble: How to square the group of economists in the front pages of the paper offering a series of right wing prescriptions supported by neither fact nor theory with the economist unwilling to point out a housing bubble because it doesn’t fit […]
Read moreI have generally been underwhelmed by media coverage of AbitibiBowater’s prospective NAFTA challenge of Newfoundland and Labrador’s decision to reclaim natural resources that the company previously used to operate paper mills in the province. I watched a panel discussion on Mike Duffy Live (before his Senate appointment) that focussed entirely on NAFTA’s nondiscrimination provisions. But there is no suggestion that […]
Read moreEzra Klein at American Prospect has already commented on some footage that I just saw on CNN. Paul Krugman marshalled his critique of Obama’s stimulus plan from his blog onto the op-ed page of today’s New York Times. A front-page story in the same newspaper suggests that Democratic legislators have been reading Krugman. Obama responded by throwing down the gauntlet for […]
Read moreGenerally in recent months and particularly in November, there were pronounced job losses in the province of Ontario and the manufacturing sector. In December, the Ontario and manufacturing numbers did not change much. But job losses spread to other provinces and the construction sector. In effect, the only remaining bright spots in Canada’s labour market have been extinguished. Even adjusting […]
Read moreYesterday, the chief economists of the chartered banks called on the federal government to permanently cut taxes now and balance the budget after the economic crisis by cutting spending. An obvious but unstated implication is a smaller government when the economy recovers. While this outcome would undoubtedly suit the ideological preferences of bank economists, it would hardly be a sensible response […]
Read moreObama’s selection of pro-NAFTA politicians as his Chief of Staff, Commerce Secretary, and US Trade Representative worried those of us who hope that he is serious about renegotiating NAFTA. This afternoon’s news that Bill Richardson has withdrawn reopens the possibility of appointing a NAFTA critic to the Commerce portfolio. Anyway, hope springs eternal.
Read moreI always enjoy Gwynne Dyer’s commentary on world affairs, but do not read nearly enough of it. Very few Canadian newspapers print columns by this Canadian-born journalist. Exceptions include Dyer’s hometown newspaper, the St. John’s Telegram, as well as The Hamilton Spectator and Guelph Mercury. Dyer’s lengthy year-end column combines a review of events in most corners of the world with […]
Read moreWilliam Robson, President of the C. D. Howe Institute, mounted a rear-guard defence of the conventional wisdom against Keynesian fiscal policy in yesterday’s Globe and Mail. He argues that we should leave the economy to central bankers and monetary policy instead of calling on governments to use fiscal policy. There are at least four problems with his op-ed: 1.) Far […]
Read moreBriarpatch printed my article, “Dirty Deeds Done Dirt Cheap: Saskatchewan’s Multi-billion Dollar Resource Giveaway,†in its December 2008 edition. The magazine’s editor has a knack for excellent rock-themed titles: my previous contribution on Saskatchewan’s business tax cuts was entitled “Money for Nothing, and the Sultans of Spin Get Their Tax Cuts for Free.†When I submitted the article and spoke […]
Read moreThis blog has often criticized columns by Neil Reynolds. But he had quite an interesting one in yesterday’s Globe and Mail. In a nutshell, the column argues that used clothing donated from western countries has limited the emergence of garment manufacturing in Africa, thereby stunting that continent’s industrial development. Reynolds emphasizes this research as an example of the unintended consequences […]
Read moreLast week, The Toronto Star ran a front-page story, “Cut tax or risk jobs, banks say,” on the Canadian Bankers Association (CBA) pre-budget submission to Queen’s Park. While acknowledging the elimination of Ontario’s corporate capital tax and the slashing of federal corporate income taxes, the bankers argue that it is also imperative for Ontario to cut its provincial corporate income […]
Read moreIn November, prices fell for a second consecutive month and annual inflation fell for a third consecutive month. The Consumer Price Index declined from 3.5% in August to 3.4% in September, 2.6% in October, and 2.0% in November. A few more months of decline could turn this annual rate negative. While steadily falling prices would be a boon to individual […]
Read moreThe transcript of my pre-budget presentation is now available on the Ontario Legislative Assembly website. The content overlaps significantly with two recent posts. My budget-related testimony on the Ontario Health Premium is also online. Again, it reflects material already posted on this blog.
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