Terence Corcoran has a woefully bad article in the National Post this morning in which he seems to imply that the budget deficit has ballooned largely due to the home renovation tax credit (never mind the impact of the recession on revenues, that's just an excuse used by politicians in Corcoran's world) and "out of control" government spending. Strange that he doesn't mention the impact of bad policy like cutting the GST. Must have slipped his mind.
As usual when an out of his depth journalist makes a stupid economic argument, Stephen Gordon pounces.
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The point is well taken that the current spike in the deficit is *not* the result of spending increases, but the article does hit on an important (dangerous?) trend in spending.
According to the Public Accounts, the first year end spending for 2003 was 183.26 billion, for fiscal ending 2008 it was 232.82 billion (over 20% increase). Note that the dollar value of the difference is identical to the current deficit. So, while it is not accurate to claim Flarety's recent $50B deficit projection is "due to" spending it *is* accurate to claim the following: If spending remained at the 2003 level, we would not have a deficit today.
Good point - it is true that the Conservatives haven't exactly lived up to their name in the area of government spending. Any idea what the composition of that extra $50 billion was?
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