From: cbbrowne@csi.uottawa.ca (Christopher Browne)
Newsgroups: can.politics,soc.culture.canada
Subject: Deficit, Deficit, who's got the Deficit? was: NDP "communism?"
Date: 24 Jan 93 16:00:09 GMT
Article-I.D.: csi.1993Jan24.160009.16676
Organization: Dept. of Computer Science, University of Ottawa

In article <93024.0053342893684@QUCDN.QueensU.CA> Andy <2893684@QUCDN.QueensU.CA> writes:
>In article <C1B22B.7qA@mach1.wlu.ca>, dmccrea6@mach1.wlu.ca (doug mccready F)
>says:
>>
>>In article <93022.0220182893684@QUCDN.QueensU.CA> Andy
>><2893684@QUCDN.QueensU.CA> writes:
>>>>Perhaps Bob Rae knows how to get Mulroney re-elected - he has taken to
>>>>accusing Mulroney for all his problems which is simply untrue. While I may
>>>
>>>Well, Mulroney cutting transfer payments to Ontario is largely the cause
>>>for the increased deficit in Ontario. So Rae does have reason to complain
>>
>>I am familiar with federal transfer payments having written my doctoral
>>dissertation on federal transfers. I don't think the federal government had
>>any choice and I think that should be clear to anybody with a head on their
>>shoulders.
>
>Instead of degree dropping (ie "I know what I'm talking about so I can make
>statements without substantiating them") could you please explain why you
>don't think the federal government had any choice?

Maybe the reason is something along the line of this:

Provincial transfer payments have been growing faster than both:
a) Inflation, and
b) Federal revenues.

If transfer payments grow faster than Federal revenues, then it is
clear that transfer payments take an increasing share of the federal
monies.

Taken to the limit, (allowing it to go on for another five years :-))
this would eventually mean that ALL money received by the Feds would
get passed on to the provincial governments.

Since:
a) The Federal government DOES have specific programs that it is
required to fund, and
b) The Federal government doesn't want to cut their own spending, and
then "throw it away" to the provinces.  They could pare their own
budget down to a bare minimum, and get "shot" by the populace over the
increasing tax burden which is in fact PROVINCIAL FUNDING for a set of
provinces that are NOT being fiscally prudent, and
c) The Federal government doesn't get any credit for provincial
matters,

it was very clear that transfer payments absolutely HAD to be capped.
Ignore or disparage a), b), and c), if you like, but the FACT is that
transfer payments have been growing faster than federal revenues, and
THAT cannot go on indefinitely.  A deficit may go on indefinitely, but
not exponential growth in the SHARE of a resource.

>>>>not want to see the present PM remain in office, I would prefer that to
>>>>seeing Bob Rae retaining influence so I am going to vote against Bob Rae
>>>>even if it means voting for his opponents. Who knows maybe the PM
>>>>will carry 
>>
>>I am not a Mulroney supporter (even though I used those words that I would
>>prefer him to Rae. I find myself here being a realist. Rae can't blame the
>>federal government when he is responsible for his own deficit. The federal
>>government would have done this even had the Liberals or the NDP been in
>>power.
>
>How is Rae responsible for the cut in transfer payments?

He's responsible for the cost of provincial programs.

If he's not, then there really isn't any point to having a provincial
government.

>>>So do you blame Bob Rae for all our problems? Sounds like it!
>>>
>>>Again, read up on the federal cut in transfer payments, effectively
>>>transferring part of Ottawa's deficit to Ontario.
>>
>>Yes, and who is responsible for the federal debt? The federal Liberals were
>>the ones who got it up in a few years from zero to $38 billion and the
>>Conservatives have not been doing enough to control it - sounds like you
>>want them to continue it at many billlions more than it is currently - our
>>dollar would be in trouble, our interest rates would be with Swedens at over
>>300% per annum and we would be the laughing stock of the world for
>>mismanagement. I say the federal government took the only route it had and
>>Bob RAe is being less than honest to blame somebody else when it is only him
>>who can fix it.
>
>Less than honest? Again, how is Rae to blame for the cut in federal transfer
>payments? Do you deny this has a direct impact on the provincial deficit?
>You only say the feds had no choice, you don't explain how Bob Rae is
>responsible for the cut or how the cut isn't the cause of the deficit
>increase. 

There are THREE numbers that are MOST relevant to the Ontario
government, at the end of the budgetary year.

I) Direct Tax Revenues
II) Federal Transfer Payments
III) Spending on programs

The Ontario government has control over TWO of those numbers.

The Federal government controls ONE of those numbers.

Someone who wants to be difficult can blame EITHER government for a
deficit if they wish.  If you want to, you can blame the Feds, because
they control II).  If you want to, you can blame the province, because
it controls I) and III).

What the Feds did was to put a LIMIT on II) Federal Transfer Payments.
Rae and his government are still quite free to change I) and III) so
that they will match.

Provincial spending has been outstripping that of the Federal
government, which means that III) is in fact out of line.  You can
complain about II), but that doesn't change the fact that there is a
problem with III).

-- 
Christopher Browne                |     PGP 2.0 key available
cbbrowne@csi.uottawa.ca           |======================================
University of Ottawa              | Genius may have its limitations, but
Master of System Science Program  | stupidity is not thus handicapped.
Newsgroups: can.politics