Federal budget

bill-morneauI don’t mind the budget deficit but the amount is to high. Our debt is around 600 billion and inflation is 2% with real growth of 2%. What the Liberals have done is maintain our debt to GDP ratio at the same amount or increased it. Allowing for the debt to go up 2% gives you a deficit half of what the government is going to do. The debt goes up at the rate of inflation so in constant dollar terms it’s frozen. Since there is real growth beyond that the debt to the size of our economy actually shrinks by a small amount. The pie plate gets bigger by 2% but the pie itself remains the same and so is smaller in relation to the plate.

Reduction of the debt to GDP ratio by attrition. These days it seems the idea of something in the middle is too moderate and we end up with going to far one way or the other. Either the constipated fiscal conservatives or the “let it flow” liberal spenders.


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