Good News for Lucky Jim

According to the Canadian Press, a new analysis by the Conference Board of Canada indicates that the Harper government “will easily manage to avoid slipping into a deficit position despite the slumping economy and will almost certainly record higher surpluses than forecast.”

The Conference Board says that higher-than-projected inflation, along with other factors, have boosted government revenues and almost completely offset the impact of slower growth and tax cuts that went into effect in January.

“Federal revenues should have been down nearly $20 billion in the first quarter, given the measures set out in last fall’s economic statement,” said chief economist Glen Hodgson. “Instead, only a ($1.1 billion) reduction is showing up in the national accounts” for the first three months of the fiscal year.

The Board’s report concludes that this “will create scope to pay down debt, reduce taxes, and/or introduce targeted increases in spending.”

Needless to say, while this highly optimistic outlook is an absolute godsend for the Conservatives, it’s a hellish kick in the nuts for poor old Stéphane Dion. Should be fun watching Liberal bloggers try to spin this one.

11 Replies to “Good News for Lucky Jim”

  1. Heh.. you’re a Liberal blogger too, aren’t you?

    I think it’s a nice coincidence personally… but I think the listeriosis outbreak will far overshadow this bit of tiny good news.

  2. Well, I’ll give it a stab ; ).

    First, I’m not sure how rosy it is to predict there won’t be a deficit because of a higher rate of inflation. Hardly sounds like the “old-fashioned” way of avoiding a deficit, that being having a good budget.

    It won’t help in an election, but I’ve seen this before . . . in the US. Not many recall but Bush’s tax cuts were all about giving the people back their hard-earned money from surpluses – egads! There was a slope alright, right back down to deficit spending.

    Before anyone says, “But the war . . .” you’d be amazed at how much of the US Iraq war debt stays “off the books” in the deficit figures. Let’s just say the term generally accepted accounting practices is generally not accepted.

    I still say the election is being called now because they know where this is heading. They just hope to have a majority in place when it does. Many other shiny objects to point at by then, I’m sure.

  3. Scott —

    Yeah, but I’ll confess to being thoroughly stumped by this bit of news. My reading of things was far less optimistic than this report would have us believe. So I was hoping perhaps brighter minds could enlighten me. 😉

    Casting doubt on its veracity doesn’t seem the way to go because it seems fairly logical and its premises are reasonably sound. I note that there’s been an uptick in the U.S. economy that’s now showing a 3.3% rate of growth in the second quarter of 2008. The Commerce Dept’s earlier estimate had been just 1.9%.

    I suppose one could argue that it perhaps makes the prospect of the “Green Shift” a somewhat less scary proposition…

  4. Hey RT – I like your last point. Isn’t Harper’s big attack (besides the false “tax on everything” claim) that it is wrong to add a tax in these uncertain economic times?

  5. Scott — I think the listeriosis outbreak will far overshadow this bit of tiny good news.

    I couldn’t disagree with you more. As Carville infamously said: “It’s the economy, stupid!”

  6. Perhaps the Liberals overhyped the “we’re in a deficit” based on the first month’s deficit when the second month was back in surplus.

    Now they’ll just look silly as they did with armed soldiers on the streets of Toronto nonsense.

  7. Well you can’t blame them for having done that. There has been a huge drop in the surplus while at the same time, spending is (as the Conservatives would surely call it if the Liberals were in power) “out of control.”

  8. I don’t believe the liberals have “Over-hyped” anything. They were wise to not jump all over figures for two months.

    It has been talked about a lot on blogs, but I hardly think that is the same thing as the party having press conferences. Was there even a press release?

    And even personally, all I am saying is I firmly believe they know where their tight budget numbers based on rosy estimates will end up and hence they want an election now.

    I actually don’t think the liberals can run on that, though I do think they can confront the conservatives on their budget priorities – and should. But I will stand by my assertion that I believe the conservatives know where the numbers are heading. I’ve watched this song and dance before. I believe the citizens of Ontario have as well.

  9. I seem to recall John McCallum and Ralph Goodale huffing and puffing a fair bit. “Hand-wringing” is the usual term applied, I think. 😉

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