Stephen Harper: Big spending on COVID-19 now should lead to smaller government later

[Anonymous]

In a rare newspaper column, former prime minister Stephen Harper argues that the massive public spending — and the subsequent massive public debt — in response to COVID-19 right now must lead to smaller government action so the economy can recover and debt levels can recede.



If spending doesn't go down as soon as possible, governments could face a debt crisis down the road that requires "brutal" austerity measures, he says.



n the column he takes aim at "leftists" who see the pandemic measures as a sign that bigger government spending should be the new normal, and that taking on high levels of public debt will be easily manageable down the road.



The social distancing measures brought in by governments around the world may be necessary now, he writes, but they are "economically ruinous," and the "underlying assumption — that the economy can be restarted later as quickly as an idle automobile — is dubious."



Another problem, he says, is that public-sector balance sheets will be an "unholy mess," exacerbated by the fact public debt levels were already "dangerously high" before the pandemic hit.



He notes that Mexico faced default and Canada came close in the 1990s due to public debt, and many countries faced major debt problems in the 2008/09 financial crisis.



"This time will probably be much worse," he writes. "Governments began this episode with poorer balance sheets, and central-bank actions effectively nationalized much corporate debt...If they fail to practice mild austerity proactively, a brutal kind will be thrust on them."



Harper concludes by warning that governments will face pressure to keep spending levels high without raising taxes, particularly as those on public sector salaries have been spared the devastating effect of COVID-19 on their incomes.



Because of that, he says a smaller government response may not happen regardless of the evidence in favour of it.



"Governments that resist restoring free enterprise and fiscal responsibility will experience recession and stagnation," Harper says. "Those that do the right things will lead their countries to a far more prosperous future."

https://nationalpost.com/news/canada/big-spending-on-covid-19-now-should-lead-to-smaller-government-later-stephen-harper-argues-in-essay">https://nationalpost.com/news/canada/bi ... s-in-essay">https://nationalpost.com/news/canada/big-spending-on-covid-19-now-should-lead-to-smaller-government-later-stephen-harper-argues-in-essay



Socialists are using this pandemic to transform the West into a cluster of Venezuelas. If we don't return to fiscal sanity and free enterprise soon, it may be too late. We may all have to accept lower living standards, higher taxes and fewer services.



Canada's parliamentary budget officer recently estimated that the deficit this year could top $252 billion ; by comparison, Canada's biggest deficit during the financial crisis was $55.6 billion in 2009/10.

[Anonymous]

First thing is first, we must end these destructive lock downs that are killing people.

[Anonymous]

Compared to Justine, old Harper was an excellent pm.

[Anonymous]

Compared to Justine, old Harper was an excellent pm.

Compared to True Dope, a broken refrigerator would make a better pm.

[Anonymous]

Compared to Justine, old Harper was an excellent pm.

Compared to True Dope, a broken refrigerator would make a better pm.

I didn't like Harper, but I agree with this.

[Anonymous]

Covid-19 aid programs will have to end, others to be modified, Trudeau says

CERB has already paid out more than $41 billion, surpassing its $35-billion budget



The federal government is in talks with business and labour groups to figure out the future of billions in emergency aid, Prime Minister Justin Trudeau said one day after a warning that current spending was sustainable for only so long.



Emergency federal aid to date is approaching $152 billion in direct spending, which has pushed the deficit to an estimated $260 billion this fiscal year.

https://www.investmentexecutive.com/news/industry-news/covid-19-aid-programs-will-have-to-end-others-to-be-modified-trudeau-says/">https://www.investmentexecutive.com/new ... deau-says/">https://www.investmentexecutive.com/news/industry-news/covid-19-aid-programs-will-have-to-end-others-to-be-modified-trudeau-says/



Even Trudeau acknowledges this profligate spending is unsustainable.

[Anonymous]

The CERB benefit was originally only supposed to last until July, but I believe it's been extended to October.

[Thiel]

Tax hikes 'unavoidable' to offset raft of COVID-19 spending, federal budget watchdog says



'These measures have to be allowed to sunset, otherwise we'll be looking at a level of taxation that's not been seen since for generations,' Yves Giroux said



OTTAWA — The government will eventually make the "unavoidable" decision to seek new sources of revenues through tax hikes, as policymakers look to offset a raft of recent Liberal spending measures, the federal budget watchdog says.



In testimony before the Senate Finance committee on Tuesday, Parliamentary Budget Officer Yves Giroux said Ottawa will have to make a "sharp turn" in its fiscal approach in coming months. The Liberal government has introduced around $146 billion in financial aid programs since early March, aimed at shielding businesses and Canadians against the economic fallout from COVID-19.



But those programs will soon need to taper off as the Canadian economy gradually returns to health, Giroux said.



"It's not sustainable for more than a few years," he said.



"These measures have to be allowed to sunset, otherwise we'll be looking at a level of taxation that's not been seen since for generations."



The PBO on Tuesday also raised slightly its estimate for the federal deficit in 2021, from $252 billion to $260 billion. The office is planning to release official updated estimates for federal spending and GDP sometime in June, he said.



He also expressed concern over the "sweeping, broad powers" that Morneau gave himself with the passage of Bill C-13, which equips Ottawa with tools to address the economic fallout from COVID-19.



The legislation gave Morneau the "unprecedented" ability to borrow without limit, take stock options in companies, and create Crown corporations, all with without parliamentary oversight, Giroux said. It also provides the Employment Minister with the authority to retroactively amend the Employment Insurance Act, also without oversight.

[Anonymous]

Hey Thiel, good to see you again. Without question, municipal, provincial and federal taxes are going up. I've heard a rumour of the GST  increasing to nine per cent.