Canada Making Gov Deficits "ILLEGAL"

[Economy 52,844]

http://www.thestar.com/news/canada/2015/04/08/conservative-government-to-introduce-balanced-budget-law.html

 

The Conservatives have vowed to pass legislation while they still have a majority Government to pass a new law that would make it illegal for Canada to run budget deficits except in extraordinary circumstances (such as during severe recessions, war or natural disasters)

 

Under this law, failure to run a balanced budget for any other reason would result in automatic spending freezes and 5% pay cuts for Government workers until deficit is eliminated. The finance Minister says this is about removing the temptation of short-term gain by mortgaging our future and putting the debt on our children to deal with.

 

Canada expects a budget surplus this year and the debt-GDP-Ratio currently at 33% is projected to fall to 25% by 2019

 

[LePetitGAGABLover 21,234]

............ IDK if that's the best thing to do, but whatever

[darkchylde 14,857]

This sounds... promising? Right? Force them to do their job right like the rest of us are. Finally.

[Economy 52,844]

............ IDK if that's the best thing to do, but whatever

​why? the liberals ran HUGE deficits in the 1970s and 1980s which led to big pain in the 90s

 

These are preventive measures in case the Conservatives dont win future elections

[LePetitGAGABLover 21,234]

​why? the liberals ran HUGE deficits in the 1970s and 1980s which led to big pain in the 90s

 

These are preventive measures in case the Conservatives dont win future elections

​But still, I think that this will only create more problems. But I do see you're point.

[Economy 52,844]

​But still, I think that this will only create more problems. But I do see you're point.

​well, theres definitely downsides... as they pointed out in the article, the Government could sell assets during bad times (say when those assets values dropped) in order to run a balanced budget or surplus

 

it may also constrain the Government form making investments if they are really needed. For instance sometimes big infrastructure projects that will pay off long-term require some borrowing

 

But on the otherhand Governments in general seem to have a hard time resisting the temptation to just go beyond their means a give in to the citizens pressures to run programs they cant afford. Thats why the average developed Nation now has an average Debt-GDP-Ratio of nearly 100% which is scary!

 

Theres definitely downsides. But if this will force responsibility, i think the pros outway the cons.

 

Even as we speak Canada is wasting 8.9% of its budget purely on interest payments and our debt and interest rates are not even that high, imagine Countries with large debts! over the long term excessive borrowing bites u back big time!

[LePetitGAGABLover 21,234]

​well, theres definitely downsides... as they pointed out in the article, the Government could sell assets during bad times (say when those assets values dropped) in order to run a balanced budget or surplus

 

it may also constrain the Government form making investments if they are really needed. For instance sometimes big infrastructure projects that will pay off long-term require some borrowing

 

But on the otherhand Governments in general seem to have a hard time resisting the temptation to just go beyond their means a give in to the citizens pressures to run programs they cant afford. Thats why the average developed Nation now has an average Debt-GDP-Ratio of nearly 100% which is scary!

 

Theres definitely downsides. But if this will force responsibility, i think the pros outway the cons.

 

Even as we speak Canada is wasting 8.9% of its budget purely on interest payments and our debt and interest rates are not even that high, imagine Countries with large debts! over the long term excessive borrowing bites u back big time!

​Ok you convinced me

[Economy 52,844]

​Ok you convinced me

​lol

 

btw thanks for all the likes. i returned the favor :P

[Luc 4,776]

Good! :applause:

I would want this too, but even the conservative liberals think it's necessary to stop cutting the next few years. Only the christian party and liberal socialists want to keep cutting. At the same time the conservative liberals here actually want to lower taxes to make labour cheaper and more competitive.

This would be very good.. but can't the next government just scrap this rule? And is lowering government salaries actually the best way to cut, seeing as that will hurt consumption and trust?

[Woolfsmck 2,763]

Clinton tried to do this right after he balanced the budget.   It didn't last long tho.

[Economy 52,844]

Good! :applause:

I would want this too, but even the conservative liberals think it's necessary to stop cutting the next few years. Only the christian party and liberal socialists want to keep cutting. At the same time the conservative liberals here actually want to lower taxes to make labour cheaper and more competitive.

This would be very good.. but can't the next government just scrap this rule? And is lowering government salaries actually the best way to cut, seeing as that will hurt consumption and trust?

​well the next Government could change the rule... but unless they win majority Government its not easy to pass or change a law unless you also have some support from other parties

 

We currently have a majority Government so the Conservatives have relative ease passing budgets and laws such as this one. But most of the time we have minority Governments. We have 3 major parties (1 left wing, 1 centre wing and 1 right wing), so its difficult to have 1 single party win 50% of the votes or more unlike in the US where they only have 2 major ones

 

And lowering Government salaries would be a good incentive for the Government to take this rule seriously so their pay isnt cut. This applies to lobby Government workers only (senators, MPs etc) not general public workers like Doctors or teachers so the salary cuts would have little effect on over-all consumption

 

If anything the spending freezes which would become automatic should a deficit be run, would have a bigger impact on the Country. I think the Government pay cuts is more meant as incentive to force themselves to take it seriously cause it would have little impact on the budget.

[Economy 52,844]

Clinton tried to do this right after he balanced the budget.   It didn't last long tho.

​they amended it right after?

[Woolfsmck 2,763]

​they amended it right after?

​bush repealed it I think   ,,,  pretty much a political tug of war

[Economy 52,844]

​bush repealed it I think   ,,,  pretty much a political tug of war

​well probably cause of the balooning of war costs after 9/11?

 

under the law the Conservatives propose, war is one exeption of when they could run a deficit as well as periods of natural disasters or economic contraction (recession)

 

Justin Trudeau is getting quite a following now and likely the Liberals will win next election in a few months. That scares me cause his ideas are so stupid and involve over-spending

 

He vowed to cancel the conservatives tax cut of income splitting for families because "too few Canadians benefit from it". Instead he wants to lower the tax rate on the income bracket between $42,000 to $70,000 from 22% to 20.5%

 

First of all, almost half of Canadians make less than $42,000 a year and wont benefit 1 bit from this (household income doesnt count if he removes income splitting, each spouse must file taxes seperately).

 

Secondly, even the ones who do make it to this bracket, the portion of income this bracket covers covers is only $28,000 which means the most you could save if you make $70,000 or more with a 1.5% cut is $420 a year

 

He talks about helping the middle class. But his proposals do even less for the middle class than what the Conservatives propose. Not to mention the deficit plans

[Woolfsmck 2,763]

A lot of good ideas get screwed over because of party politics.  Defecit spending is necessary in emergencies, but leaders claime everything is in a state of emergency nowadays.