I just saw Michael Ignatieff on TV warning that Canada could hit “the deficit wall.†I assume he means “debt wall.†(I would not fault a slip of the tongue, but the written text of a recent speech also incorrectly calls it “the deficit wall.â€) The concept is not that a country hits the wall because a particular annual deficit […]
Read moreDuring tonight’s Hockey Night in Canada I got to see the new ads for Canada’s Economic Action Plan (OK, I think they are new; I don’t watch TV except for hockey). Now that it is October, I find it interesting to hear the government trumpeting the plan they tabled back in … when was that again? … oh, yes, January […]
Read moreLast week the United Nations Environment Programme (UNEP) published an update for the G20 Summit on its call from earlier this year for a Global Green New Deal. Â This update showed that Canada is close to the bottom in the stimulus funds it is committing to green economic areas. According to the UNEP, only 8% of Canada’s stimulus spending is […]
Read moreShould we care that the marginal effective tax rate on capital is higher in Prince Edward Island than in Serbia? Of course, this question is a joke. But the C. D. Howe Institute actually did put out a press release (PDF) last week singling out PEI for its allegedly high business taxes compared to an average of 80 countries, among […]
Read moreThank you, Jim Flaherty and Stephen Harper. I just finished the first leg of a long-contemplated kitchen renovation that got pushed over the top by February’s federal budget tax credit for home renovations. This year only! Act now before it is too late! The credit is worth a maximum of $1,350 per family if you spent a full $10,000 or […]
Read moreIn its first major economic policy announcement, the freshly re-elected BC Liberal government announced that it would be harmonizing the 7% Provincial Sales Tax (PST) with the 5% federal GST, as of July 1, 2010. What is striking about the new Harmonized Sales Tax (HST) of 12% is that it did not feature in the recent BC election in any […]
Read morePolitical debate and media reporting on today’s economic “Report to Canadians” have emphasized one of the first tables in the document, in which the government claims to have “committed” 80% of budgeted stimulus spending (page 14 of 230). Equally interesting, but perhaps less noticed, are the two “Fiscal Outlook” tables near the end of the document (pages 219 and 221). […]
Read moreIn my career of writing letters to my hometown newspaper, my favourite headline supplied by the Regina Leader-Post was “Deficit Caused by Tax Cuts,†for a letter arguing that Saskatchewan’s mild deficit a few years ago resulted from provincial tax cuts rather than from alleged overspending. Today’s inane press release from Finance Canada, lauding the fact that “Tax Freedom Day” […]
Read moreThe 2009/10 federal deficit is now projected to hit $50 billion, the largest ever in nominal terms. The media seem to be obsessed with the nominal number, even though Canada’s economy has more than doubled in nominal terms since we saw the previous record of $39 billion in 1992/93. If that deficit number holds (and it most surely will not […]
Read moreMarch’s large increase in Employment Insurance (EI) recipients was no surprise given mass layoffs and February’s record-high number of EI benefit claims. But when compared to Labour Force Survey figures on March unemployment, today’s figures provide a sobering reminder that well below half of unemployed Canadians receive EI benefits. Employment Insurance Coverage, March 2009   EI Recipients Unemployment EI […]
Read moreCanadian governments should revisit planned corporate tax cuts in light of President Obama’s proposals to more fully tax American firms operating outside the US. The basic argument for lower corporate tax rates is that they will attract multinational firms to locate operations here as opposed to other jurisdictions. This argument assumes that profits are taxed only where they are generated. But […]
Read moreOn the first of this month, I appeared before the Senate’s Standing Committee on National Finance regarding the Employment Insurance (EI) provisions of the 2009 Budget Implementation Act. The Senate recently posted the transcript online. A fellow panellist was Michel Bédard, former Chief Actuary of the EI Fund. Last year, he and I appeared in the same panel before the […]
Read moreMedia coverage of the Bank of Canada’s much anticipated Monetary Policy Report inevitably focuses on the prospect of “unconventional” measures, such as quantitative and credit easing. But the verbs in today’s headlines – “may use” , “ready to” , “lays out” , “sets stage” – reflect how little was actually announced. The Bank provided three pages explaining quantitative and credit […]
Read moreJeffrey Simpson has a good assessment in today’s Globe: Mr. Obama’s budget – hugely consequential for the United States and of importance to Canada, too – represents a U-turn from the disastrous policies of the Bush administration and of the Republican political revolution that began decades ago. Imagine a U.S. budget that simultaneously offends rich farmers, everyone making $250,000 a […]
Read moreIn the last few months, governments here and abroad have made every effort to “turn on the taps” of credit — in Canada, we have more than half a dozen such programs (and counting) under the banner of the EFF (Extraordinary Financing Framework), including (but not limited to): the IMPP (InsuranceMortgage Purchase Program); the CSCF (Canadian Secured Credit Facility); the […]
Read moreJust before Christmas, and lost between a trip to the mall and turkey with stuffing, David Laidler wrote a phenomenal piece on how we should be thinking strategically about a coordinated monetary and fiscal policy. I have reposted the key excerpt below because it should really be part of the mainstream discussion about how we address the growing crisis in […]
Read moreThe Canadian Bankers’ Association must be happy. They’ve somehow managed to convince pundits south of the border, and even a few here who really ought to know better, that they’ve somehow been able to weather the economic and financial storm with absolutely no help from the federal government. The most recent evidence for this position is this editorial by Newsweek […]
Read moreA year after crunching the numbers and coming to the conclusion that an economic downturn spelled deficits, I got this hat tip in Maclean’s: It’s true that there was no consensus forecast, through most of last year, that saw Canada suffering a deep recession in 2009, and a return to staggering deficits in Ottawa. However, it’s false to suggest that […]
Read moreToday’s Statistics Canada release of January employment numbers reveals staggering job losses: Employment fell by 129,000 in January (-0.8%), almost all in full time, pushing the unemployment rate up 0.6 percentage points to 7.2%. This drop in employment exceeds any monthly decline during the previous economic downturns of the 1980s and 1990s. More jobs were lost in January than in […]
Read moreOver at Worthwhile Canadian Initiative, Stephen has posted a nice graph comparing the average projections from the private sector (as compiled by the Parliamentary Budget Officer) and the Bank of Canada with the paths of the last two recessions. He is poking a hole in a story that there is a gap between the more optimistic Bank view and the […]
Read moreI admit to not keeping up with all of the progressive reaction to the new Liberal-Conservative coalition. But among mainstream political pundits, there seem to be two main explanations for Igantieff’s decision to not substantively amend the budget. First, he was unwilling to go through with the progressive coalition or risk an election, so he tried to sound tough without proposing […]
Read moreIn his latest rabble.ca column Duncan Cameron takes on a piece of the federal budget that got little play in the media: Budget 2009 and the Bay St. bailout Duncan Cameron Why did the Liberals support the Conservative budget when the analysis is clear: the Finance Minister ignored the vulnerable, punished women, did not provide a serious stimulus to a […]
Read moreAlarmist media reports on “Buy America” rules for steel used in US public infrastructure projects have emphasized the value of Canadian steel exports allegedly threatened, but have largely ignored the similar value of American steel imported by Canada. In fact, in the most recent month for which data is available (November 2008), Canada bought more steel from the US than […]
Read moreFrom Kathleen Lahey, a Law professor at Queen’s University: Budget 2009: Designed to Leave Women Behind – Again The big picture:   Women make up slightly more than half the population of Canada, and are directly responsible for caring for the majority of minor children in the country on a day to day basis. The expectation:   As an ‘economic recovery’ and […]
Read moreCUPE has a set of eleven a dozen really good issue sheets on-line with analysis on different topics about what was in the 2009 Federal Budget, what wasn’t in it, what it means, and what would have been better choices. The topics include: Employment Insurance, Municipal Infrastructure, Privatization, Pensions, the Environment, Aboriginal Issues, Post-secondary Education, Health Care, Early Learning and Childcare, […]
Read moreMarc 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 moreHarper “stimulus†budget falls far short  Faced with the prospect of losing their grip on power, the Harper government has made a big show of taking action to address the economic and financial crisis, but it still falls far short of what is needed to revive the economy, create jobs and protect the vulnerable. In particular, the budget fails […]
Read moreThe leakiest budget in Canadian history is now in the public domain, and will not lead to the fall of the Harper government. The budget was preceded by numerous press conferences held by Ministers (with the PM uncharacteristically out of sight), leaving some details to be filled in on budget day, largely tax measures, but in the end it featured […]
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 […]
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