No More Federal Deficits

[c9]

I don't know enough to know if this is actually a good thing, but I think it's a good thing. The federal government will be introducing legislation to require balanced federal budgets. Since 1997, it's been required by the PMO, but not actually legislated.

Certainly in cases of national emergency a deficit is understandable, and in cases of major upheaval / investment it might be warranted (like buying a house and carrying a mortgage), but getting us officially out of the habit of deficits seems like the right thing to do. We ought to spend what we have, not what we wish we had.

The National Post has more details.

Comments

[c9.livejournal.com]

All very good points.

1. This is one of my biggest pet peeves about financial reporting, both private and public sector. GAAP (Generally Agreed Accounting Principles) and even stricter requirements should be law as to how money is accounted for. The smoke and mirrors are a huge problem.

2. True, laws are often used as scapegoats and excuses. But there are lots of scapegoats and excuses now, so I don't know that this will actually materially alter the landscape.

3. I think that when deficits first appeared in government budgets, that was the idea: some good years, some bad years. But governments stopped understanding that balancing act, and the idea of financial cycles, and instead deficits got bigger and bigger and bigger with Trudeau and Mulroney both growing the country and growing the debt. I am somewhat partial to the idea of balanced budgets across a financial cycle, or a legislative mandate, rather than annually. But I can see it being abused too. To be honest, I don't see an obsession with debt reduction. We've gone from almost $600 billion in the mid nineties to almost $520 billion today -- our debt charges are still measured in the tens of billions of dollars that could be going to social programs too.

My angle on it would be that we could buy $2 billion in affordable housing today, or put it on the debt and free up tens of billions of dollars over the next 50 years, paying for much more including the housing. The downside of course is waiting for it.

4. Very true. Governing is always a battle of wits and a war of definitions. One benefit is that actual dollars, subject to #1 above, can't be redefined as easily. Hopelessly naive, I know.