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Playa24_7 BILLION DOLLAR DEFICIT

Political scandals aside, it's not surprising, nor do I think it's alarming for provincial governments to go into deficits during a recession. It's kind of impossible not to - especially in Ontario, where corporate tax revenues from the auto and manufacturing sectors are bound to be weak. Add to that the onus on governments to increase spending to stimulate the economy, and it comes down to simple math.

The revenue side they can't do anything about.
On the spending side of the equation, they are damned if they do and damned if they don't. There is no good solution here. A balanced budget isn't necessarily best during a shit economy.

quote:

Originally posted by Skipper Political scandals aside, it's not surprising, nor do I think it's alarming for provincial governments to go into deficits during a recession. It's kind of impossible not to - especially in Ontario, where corporate tax revenues from the auto and manufacturing sectors are bound to be weak. Add to that the onus on governments to increase spending to stimulate the economy, and it comes down to simple math. The revenue side they can't do anything about. On the spending side of the equation, they are damned if they do and damned if they don't. There is no good solution here. A balanced budget isn't necessarily best during a shit economy.

Here is the problem though.. they have raised taxes at record levels, they have already cut program spending, and they are about to do more cutting and raise more taxes. They say that the revenue is similar to 2005 levels. Great! so why not keep spending at that level??? I dont recall 24.7 billion deficit in 2005. Its disgusting to see this mismanagement on top of being asked to fork over a lot more money to them.

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Originally posted by VERTiG0 Playa24_7 BILLION DOLLAR DEFICIT

cmon, i can't be the only one who lol'd at this.

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quote:

Originally posted by Skipper A balanced budget isn't necessarily best during a shit economy.

Oh? I'd like to know where you picked this up. Everything I've ever read on the subject says that running significant budget deficits during a recession (or at any other time really) is trading short-term relief for long-term misery.

Just think about the interest on that debt. The higher those payments get, the harder it becomes to get back in the green, and the longer the "recession" will drag on.

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Originally posted by DigiNut Oh? I'd like to know where you picked this up. Everything I've ever read on the subject says that running significant budget deficits during a recession (or at any other time really) is trading short-term relief for long-term misery. Just think about the interest on that debt. The higher those payments get, the harder it becomes to get back in the green, and the longer the "recession" will drag on.

It's contrary to the whole Keynesian "prime the pump" philosophies of macroeconomics. A significant contributing factor the great depression was the incessant ideology that balanced budgets would right the economic turmoil at the time. I think this is what she may be alluding too. John Kenneth Galbraith's "The Great Crash" would be a good start (not to mention probably the best written piece of literature on the great depression).

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Originally posted by slingshot It's contrary to the whole Keynesian "prime the pump" philosophies of macroeconomics. A significant contributing factor the great depression was the incessant ideology that balanced budgets would right the economic turmoil at the time. I think this is what she may be alluding too. John Kenneth Galbraith's "The Great Crash" would be a good start (not to mention probably the best written piece of literature on the great depression).

i see your studies are going well

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quote:

Originally posted by slingshot John Kenneth Galbraith's "The Great Crash" ... [is] probably the best written piece of literature on the great depression

...seriously?

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Originally posted by DigiNut ...seriously?

Galbraith is arguably the best economic writer of our time...this is actually a pretty widely held view amongst economists as well. The man could write. I'm not sure what you're trying to imply here?

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the implication is that TA is full of brilliant economists and historians while Galbraith is a hack. take from that what you will

correct me if I'm wrong, but isn't it a particular type of spending that Keynes advocated, namely on 'things' (to be overly simplistic) or things that provided future returns? e.g. investing in infrastructure, education, etc? the idea being that doing so is not merely short term relief or band-aid solution, but rather provides lasting future returns in addition to having an immediate impact (e.g. on employment levels, which has obvious spinoffs benefits)

point being that to simply say "during a recession, deficit = bad" is ignoring the nature of that spending.