Thread by @timethief

🧵The #fiscalconservativemyths around good government being dependent on #balancedbudgets and ridiculous comparisons of government budgets to household budgets is about to arise yet again. Let's check these myths out.

Do economists believe that the budget should be balanced each fiscal year? No, a budget should be balanced only on average; it can be in a deficit during a recession and offset by surpluses when the economy is doing well.

A balanced budget refers to total budget expenditure being equal to the total budget receipts. Adam Smith and other classical economists advocated the concept of balanced budget. They claimed a balanced budget is the best since it has a neutral effect on the economy.

#cdnpoli When was the last time Canada had balanced budget? 1969 Canadian federal budget.
This was Canada's last balanced budget until Paul Martin's budget of 1997-98.

It is a myth that Conservatives are better managers than the Liberals, or anyone else, for that matter. In fact, running #deficits is not a sign of being fiscally irresponsible; sometimes deficits are necessary to stimulate the economy, as we’re seen during the pandemic.

Conservatives don’t really care about deficits. In fact, they will either create or increase existing deficits as a way to justify doing what they really want to do: cut social programs. thestar.com/opinion/letter…

Conservative politicians and pundits constantly seek a balanced federal budget. Rules aimed at forcing #balancedbudgets make #recessions deeper and longer by requiring #spendingcuts or #taxincreases during hard times, and they can be manipulated through accounting gimmicks.

Most federal spending goes to health care, social programs & interest on the debt. Any serious plan to lower the debt must involve significant #taxincreases and/or major #spendingcuts. Programs politicians typically target to balance the budget deprive and harm low income people

The argument of #Keynesian macroeconomic policy is that the government needs to lean against the wind, spending when times are hard and saving when times are good, for the sake of the overall economy. thecanadianencyclopedia.ca/en/article/key…

Balanced budgets are a popular political idea, but the economic merits behind such proposals are questionable. Most economists accept that fiscal policy needs to be flexible enough to accommodate unforeseen expenditures, such as wars, pandemics or recessions.

Who are the holders of Canadian debt?
Overall, about 76 per cent of Government of Canada market debt is held by #Canadianinvestors, such as #insurancecompanies and #pensionfunds, and #financialinstitutions and #governments. canada.ca/en/department-…

Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. Canada’s finances are better managed than those of the USA or the UK.

Canada has never defaulted in it's debt. What is Canada's current debt to GDP ratio? The answer is 98.72% expected to reach 99.00 % of GDP by the end of 2023.

Canada is also expected to have the lowest net debt burden as a share of GDP in the G7 countries. The IMF is projecting that real GDP in Canada will expand by 3.3 per cent in 2022 and 1.5 per cent in 2023.

G7 is 7 member countries accounting for 27% of Global GDP & 14% of global GDP growth in the past 10 years. The G7 are home to over 0.8 billion people with an average life expectancy of 82 years and a current median age of 43 against a global average of 30. worldeconomics.com/Regions/G7/

Since the 1990s, Canada has successive governments that aggressively tackled the debt. The most successful was the Liberal govt under Chretien, who slashed the debt in half. The Harper government sacrificed long-term economic growth to improve Canada’s debt position slightly more

After that was the first Trudeau Liberal govt that also improved Canada’s debt position. Canada’s credit rating remains at a AAA rating. Economic forecasts show growth above the rate of inflation in the next year, and the balance of trade in Canada’s favour.

The 2023 federal budget is the government’s plan to build a stronger, more sustainable, and more secure Canadian economy—for everyone. Know that among all major economies in the world, Canada remains in an enviable position. #Budget2023
budget.canada.ca/2023/home-accu…

The budget expects a deficit of $43 billion for 2022-23 and forecasts deficits of $40.1 billion for 2023-24, and $35 billion for 2024-25. The budget does not change federal personal or corporate tax rates, it does make new changes to broaden the #AlternativeMinimumTax (AMT)

by disallowing certain deductions and increasing the AMT capital gains inclusion rate to 100% (from 80%), among other adjustments. The budget proposes several changes to calculation of the Alternative Minimum Tax (AMT), including to broaden the base on which tax is calculated,

raise the AMT exemption to approximately $173,000 (from $40,000) and increase the AMT rate to 20.5%
(from 15%). ⬅️Alternative Minimum Tax for high income individuals.
Read more 2023 Federal Budget Highlights assets.kpmg.com/content/dam/kp…

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