Quotulatiousness

June 21, 2012

Conservative government, but only in name

Filed under: Cancon, Government — Tags: , , , — Nicholas @ 00:03

Andrew Coyne on the palpable absurdity of the “Harper government” stonewalling the very office it insisted on setting up for oversight of government spending:

The reality is that the PBO has been given anything but the “free and timely access” that Parliament demanded. Time and time again, rather, he has been given the back of the government’s hand — stonewalled by the bureaucrats, ridiculed by the politicians, and lied to by both.

When, for example, the Department of National Defence at last consented to share the cost of the F-35 fighter jet purchase with the PBO, it provided only the most rudimentary figures, without any indication of how they were arrived at. These figures, on which the last election was fought, were later shown to understate the true costs of the jets by at least 40% and probably 60%, in violation not only of Treasury Board rules but the department’s own stated policies. For the crime of having been right, the PBO was subjected to a volley of ministerial insults, while the department pretends to this day not to have understood the office’s clearly stated requests.

More recently, the PBO (Kevin Page is his name) has been trying to get government departments to explain how they plan to achieve the $5.2-billion in largely unspecified “efficiencies” pencilled into the 2012 budget. How much of these, Page wanted to know, would be achieved by reducing costs, and how much by reducing services? How would federal employment be affected in either event? In other words, what did the budget mean by “efficiencies”? This would seem useful information for Members of Parliament considering their vote, assuming — you’ll indulge me here — MPs do indeed consider their votes.

Power corrupts, as Lord Acton reminds us, and the discipline that Stephen Harper enforced over his unruly caucus on their way to winning a minority government is now extended to the majority he enjoys today. What affronted him about Jean Chretien’s imperial ways now seems quite normal and unexceptional. Power does indeed corrupt.

June 14, 2012

What is at stake in the amendment process to the omnibus bill

Filed under: Cancon, Government, Law — Tags: , — Nicholas @ 00:02

As Andrew Coyne points out, if nothing else the stack of amendments the opposition have proposed does accomplish something (even if none of the amendments are accepted):

The House of Commons was to begin voting Wednesday night on several hundred amendments to Bill C-38, the 425-page monster known as the omnibus budget implementation bill. The voting was expected to go on all night and all day Thursday.

Viewed one way, the whole thing is quite silly. Given the government’s majority, none of the amendments is likely to pass, nor is the bill itself in any danger of defeat. Viewed another way, however, this is an important moment. For the first time since the last election, the opposition is putting up a serious fight against the abuses this government has visited upon Parliament: not only the omnibus bill, which repeals, amends or introduces more than 60 different pieces of legislation, but the repeated, almost routine curtailing of debate by means of “time allocation”; the failures of oversight, misstating of costs, and abdication of responsibility in the F-35 purchase; and the refusal to provide basic information on spending to Parliament or the Parliamentary Budget Officer — to say nothing of the stonewalling, prorogations and other indignities of the minority years.

What’s the point? Once, as in the famous “bell-ringing” episode of 1982, the point would have been to hold up parliamentary business until the government relented: not on the substance of the bill, which a duly elected government is entitled to pass, but on the principle that the bill should be split, that Parliament is entitled to vote on each of its several major parts separately, and to give each the kind of informed scrutiny and debate it warrants. Again, that is not only in the opposition’s interests, or even Parliament’s, but the nation’s: it makes for better legislation.

May 26, 2012

Andrew Coyne on Harper’s real “hidden agenda”

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 09:32

We’ve been hearing about Stephen Harper’s “hidden agenda” for nearly a decade and it’s about time for some of it to finally come to light — what’s the point of having a hidden agenda if you never actually implement any of it? Andrew Coyne thinks he’s detected the real thing:

It is becoming more difficult to accuse this government of having a hidden agenda. Not because it hasn’t tried, mind you. But while it remains as obtuse as ever about its intentions, the signs of an agenda are by now unmistakable. Where before it had attitudes, or at best stances, it is beginning to sprout what look remarkably like policies.

To be sure, they are modest, even piecemeal. They are often poorly communicated, where the Conservatives deign to communicate them at all. More often they are simply dropped on the unsuspecting public without consultation, or jammed through Parliament with little debate or scrutiny, quite apart from monstrosities like the omnibus bill.

But put them together and they have all the markings of an agenda:

  • Reform of Old Age Security, not only raising the age of eligibility by two years (starting in 2023, and phased in over six years) but offering higher benefits to those willing to keep working past the standard retirement age.
  • Free trade agreements, now being negotiated with virtually everything that moves: Europe, India, Japan, the Trans-Pacific Partnership, the ASEAN group.
  • Reform of immigration policy, across every category: skilled immigrants, refugees, investors, entrepreneurs, with an emphasis on recruiting immigrants with demonstrable economic prospects.
  • Reform of employment insurance, announced this week, to give repeat users, in particular, fewer excuses to refuse available work.
  • Moreover, the government is at last beginning to implement the Red Wilson report on productivity, four years after it was delivered, with recent reforms opening the door to foreign takeovers in the telecommunications sector (for companies with less than 10% of the market), and raising the threshold asset value for automatic review of foreign takeovers to $1-billion.

May 22, 2012

Reason.tv: Is Austerity to Blame for Europe’s Economic Woes?

Filed under: Economics, Europe, Government, Media — Tags: , , , — Nicholas @ 11:50

May 8, 2012

Absurd meme of the month: that European countries have imposed draconian fiscal austerity

Filed under: Economics, Europe, Government, Media — Tags: , , , , — Nicholas @ 11:00

For all the gasping about the impact of fiscal austerity on weakened European economies, it’s hard to detect from the actual numbers:


(Image from the Mercatus Center)

See all those coloured lines dropping precipitously? Me neither.

Veronique de Rugy asks where the “savage” spending cuts can be seen:

Austerity is destroying Europe, we are told. In fact, this “anti-austerity” slogan was a big reason for the victory of newly elected socialist François Hollande to the presidency of France. Interviewed in The Economist a few weeks ago, Hollande’s campaign director said “We are not disciples of savage spending cuts.”

But then, I look at the data and I am asking: What “savage” spending cuts?

Look at [the chart above]. It is based on Eurostat data which you can find here. Following years of large spending increases, Spain, the United Kingdom, France, and Greece — countries widely cited for adopting austerity measures — haven’t significantly reduced spending since 2008. As you can see on this chart:

  • These countries still spend more than pre-recession levels
  • France and the U.K. did not cut spending.
  • In Greece, and Spain, when spending was actually reduced — between 2009–2011 — the cuts have been relatively small compared to what is needed. Also, meaningful structural reforms were seldom implemented.
  • As for Italy, the country reduced spending between 2009 and 2010 but the data shows and uptick in spending 2011. The increase in spending represents more than the previous reduction.

In addition to failing to curb spending, several governments have raised taxes (which has a negative effect on growth in the economy and can — contrary to popular wisdom — actually reduce the total tax collected as people and companies change their habits to minimize the impact of the tax change).

April 8, 2012

The F-35 program is “Military Keynesianism”

Filed under: Bureaucracy, Cancon, Economics, Military — Tags: , , , , , , — Nicholas @ 11:25

Wayne K. Spear explains the ordinary and the extraordinary parts of a military procurement process, as illustrated by the F-35 project:

A straight-shooting bureaucrat will admit that procurement processes are often initiated with the final selection a foregone conclusion. If you know in advance what you need, and you furthermore know who’s most qualified to deliver, then formalities intended to promote transparency and accountability are at best inconveniences to circumnavigate — and every public servant knows well how to steer that ship. That this occurs regularly within the bureaucracy is an open secret.

The Joint Strike Force program, at the centre of which is a proposed purchase of F-35 fighters, introduces disturbing wrinkles to an otherwise unremarkable bureaucratic occurrence. On military matters I refer to the self-described “prolific Ottawa blogger” Mark Collins , who has been training his keen eye on this fiasco for years. At his site you’ll find links to a range of useful resources, for example a DND PowerPoint which makes it clear that military leaders chose the F-35 and only later manufactured the selection criteria. Again, not unusual in procurement. The department however did so on grounds no one has yet admitted, never mind defended. That’s only one of many problems.

Reviewing the Auditor General’s report and the media coverage of this issue, I infer that the F-35 achieved the status of a foregone conclusion for the following reasons. 1) Canada had invested millions of dollars into the F-35 program as early as the 1990s; 2) Lockheed Martin Aeronautics lobbied aggressively, and more effectively, than its rivals (and employed Prospectus Associates, a consultancy firm with the inner track to Defence Minister Peter MacKay); and 3) the F-35 series of fighters — although years from completion and with many important details unclear and ever-changing (including year of completion, engine cost, cost to maintain) — were the only “fifth generation” fighters on the table. As the Auditor General points out, fifth generation “is not a description of an operational requirement.” My own research suggests this phrase means something like ”Ooo!” — which is what I often say when I see a jet fighter in action.

It’s a given that the Royal Canadian Air Force needs to address the rapidly aging CF-18 fleet before 2020 (the estimated end-of-life for the current fighters). The choice had appeared to be simple: follow on our pre-existing development deal with a purchase of F-35 fighters. The problems were that the development schedule had slipped multiple times, the estimated costs had climbed and climbed again, and the technical “teething” issues were still promising longer delays and higher costs. Canada had intended to buy 65 aircraft — in my opinion at least 33% less than the RCAF actually needed — at a “fixed” cost.

The F-35 is still years away from being in service in any air force, there’s no way to be sure that the government’s budget will be enough to buy the minimum number of aircraft, and the CF-18 isn’t getting any younger.

We need (some) new fighter aircraft in the next eight years, but the F-35 is no longer the automatic choice to fill that role.

There’s another root problem, and it’s also to be found in the 2012 federal budget. This document superstitiously relies on the notion that everything the feds do creates jobs. Every spending initiative in the budget creates jobs. Every departmental trim, and every restraint, ditto. Having gone through the budget, I wonder if Mr. Flaherty thinks a job is created when he sneezes. At the same time I was reading the budget, I was reviewing the federal government’s 2010 F-35 sales pitch — which, coincidentally, was the DND’s and Lockheed Martin’s sales pitch. Again, it’s all about “industrial benefits.” Lo and behold: the F-35 program creates jobs!

One name for this line of argument is “Military Keynesianism,” the idea that a brilliant and effective way to create jobs and boost the economy is to give folks like Lockheed Martin billions of dollars of public money. In the 1980s, the American public heard many Pentagon procurement stories concerning $40 staplers and $200 hammers, all part of a federal stimulus effort which by 1988 had tripled the nation’s deficit. There are distinctions to be made between this and the present case. Nonetheless, these staplers and hammers came to my mind as I dug down into the bogus F-35 procurement process and my shovel chipped the Reagan-era bedrock.

The Military-Industrial Complex lives

Filed under: Military, Politics, USA — Tags: , , , , — Nicholas @ 10:55

From Strategy Page, where the US Army doesn’t want any more tanks right now, but the politicians (and their crony capitalist “friends”) want the tanks to continue to be built and upgraded:

The U.S. Army is fighting the politicians to avoid having to buy more M-1 tanks, or upgrade some older ones that do not need upgrades. What it comes down to is that the politicians want to keep the only American tank manufacturing plant open. It’s all about political posturing, votes and getting reelected. But the army wants to spend its shrinking budgets on things that will save lives in the next battle. At stake is several billion dollars. The generals cannot openly say that this is about buying votes versus buying lives, but that’s what it comes down to.

So far, over 9,000 American M-1 tanks have been produced and most of them subsequently updated at least once. But the army, seeking to save a billion dollars, wants to close the plant that builds and modifies the M-1. The closure would be for three years, and when it was reopened there would be a backlog of upgrades and parts orders to fill to keep the plant open until, perhaps, an M-1 replacement comes along. At the moment the generals do not have any firm plans for an M-1 replacement.

Politicians and the operators of the plant want to keep the plant open in order to save jobs, votes, and operating profits. This is basically a largely political decision that involves getting the money (from the taxpayers) to stay open by pretending that the army wants this. But the army leadership has not cooperated and has openly opposed this plan. How long the plant will remain in business is uncertain, as is the future of the M-1 tank.

April 2, 2012

Kelly McParland: Judge Harper not on what he says, but what he does

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 09:14

In the National Post, Kelly McParland scrutinizes the entrails of the federal budget to determine what Prime Minister Stephen Harper is really thinking:

It’s pretty self-evident that prime ministers reveal a lot of their own character in the content of their budgets, but it may be particularly so for Stephen Harper. The guy is an economist, after all. Messing around with graphs and figures was what he planned to do with his life, if seizing control of the country’s government didn’t work out. And since we know he’s a bit of a micro-manager, it’s probably safe to say there’s at least as much Harper as there is Jim Flaherty in the nitty gritty of the latest budget document. So let’s use it to figure out what Stephen Harper believes — really believes — when it comes to running the country.

We know what he says he believes in: smaller government, fewer bureaucrats, restrained spending, less intrusion, an end to taxpayer-financed welfare for businesses and governments. Accountability, prudence, fairness. Individual responsibility rather than the smothering embrace of the nanny state. No more currying favour with every special-interest advocacy group that captures the attention of congenitally correct.

Maybe on some plane he does honestly hold those values dear to his heart. But we all profess to believe in ideals we never quite get around to displaying. Mr. Harper has been Prime Minister for six years, and since last May has had the majority needed to have his way with legislation. Yet, as Andrew Coyne has so clearly demonstrated on more than one occasion, Mr. Harper’s actions habitually belie his words. If he were applying for membership in the True Conservative Believers Club of Canada, they’d turn him away as unqualified.

March 30, 2012

Looking ahead to the next federal budget

Filed under: Cancon, Economics, Government — Tags: , — Nicholas @ 08:29

In the Globe and Mail Economy Lab, Stephen Gordon thinks he can accurately predict the overall shape and content of the next budget:

The main features of the expenditure side of next year’s 2013-14 federal budget should be fairly easy to predict:

  • Transfers to persons will be about 4 per cent of GDP, and future projections will be consistent with this share.
  • Transfers to other levels of government will be about 3.2 per cent of GDP, and future projections will also be consistent with this share.
  • Direct program spending will be at or just above 6 per cent of GDP, and this share will be projected to decline throughout the forecast horizon.

The reason we can make these predictions with a certain amount of confidence is that these paths were set out by the Conservative government several years ago, and they have shown little sign of wanting to deviate from them.

Even if they wanted to — and it can be fairly imagined that they do — cutting transfer programs would generate a certain amount of political blowback from the people and provinces that are on the receiving end. The Conservatives have doubtlessly concluded that limiting the rate of growth of transfer payments to that of the economy — which is the same as keeping them at a constant share of GDP — is probably the most restraint they can impose without incurring lasting political damage.

March 29, 2012

Federal budget highlights (and lowlights)

Filed under: Cancon, Economics — Tags: , , , , , — Nicholas @ 15:26

My local MP also happens to be the federal Minister of Finance, who got his moment in the spotlight today as he unveiled the government’s 2012 budget. The media folks who were in the budget lock-up are just starting to publish their reports on the “wins” and “losses” as they see them in the new budget.

Initial Tweets concentrated on these headline-friendly moves:

  • Old age pension eligibility will rise to 67
  • Civil service will shrink by 19,000 positions
  • Coinage change: we’re abandoning the penny (they cost 50% more to make than they’re worth, and we didn’t make it up in volume)
  • Return the budget to balance by 2015-2016 and begin running a surplus after that
  • Pravda The CBC, our government-owned TV/radio network, will see a 10% cut in funding

I’ll update this post as new information gets published.

Update: John Ivison at the National Post calls it “A grand vision of still-big government”:

For a government that has forsworn the vision thing to this point, Budget 2012 is Obama-esque in the audacity of its hope for the future.

“We see Canada for what it is and what it can be… Today we step forward boldly, to realize it fully — hope for our children and grandchildren; opportunity for all Canadians; a prosperous future for our beloved country,” said Jim Flaherty in his speech to the House of Commons, boldly going where no Conservative Finance Minister has gone before — save perhaps Sir George Foster, who served Sir John A. Macdonald.

Mr Flaherty summoned up Sir George in his speech, quoting the need “for long vision, the fine courage of statesmanship and the warm fires of national imagination….Let us climb the heights and take a look forward.”

If the rest of the contents fail to live up to that level of rhetoric, they do at least amount to a serious attempt to move beyond the naked bribery of budgets past.

Paul “Inkless” Wells calls it “Harper’s very political budget”:

Revolution, ladies and gents! Light the torches! In his December year-end interviews, Stephen Harper used the term “major transformations” a half-dozen times. He made fun of earlier majority prime ministers. They let the bureaucrats put them to sleep! For years! No chance of that happening to Harper. Major transformations, coming right up.

Fast forward to this afternoon. “We will eliminate the penny,” Jim Flaherty told the Commons. It was literally the first new policy measure he announced. “Pennies take up too much space on our dressers at home.”

Now you know why Trudeau and Mulroney and Chrétien were such snoozers. It was the pennies. Weighing them down all day. Cluttering their dressers at night. Pennies wear a guy down. Harper, the Interac Prime Minister, will be fleet of foot, full of vim, and ready for —

— major transformations? No. I don’t have a searchable electronic text of Flaherty’s speech, but I do not see the word “transformation” anywhere in it. The rhetoric is altogether more reassuring. “The reforms we present today are substantial, responsible, and necessary,” he said, and “We will stay on course,” and “We will maintain our consistent, pragmatic, and responsible approach to the economy,” and “We will implement moderate restraint in government spending.”

From the Budget overview itself, a welcome change to Canadians who shop in the United States:

Every year, Canadians take some 30 million overnight trips outside of Canada, often returning with goods purchased abroad. Modernization of the rules applied to these purchases is long overdue. Economic Action Plan 2012 proposes the most significant increase in the duty- and tax-free travellers’ exemptions in decades. The travellers’ exemption allows Canadians to bring back goods up to a specified dollar limit without having to pay duties or taxes, including customs duty, Goods and Services Tax/Harmonized Sales Tax, federal excise levies and provincial sales and product taxes.

The Government proposes to increase the value of goods that may be imported duty- and tax-free by Canadian residents returning from abroad after a 24-hour and 48-hour absence to $200 and $800, harmonizing them with U.S. levels. This measure will facilitate cross-border travel by streamlining the processing of returning Canadian travellers who have made purchases while outside Canada. This change will be effective beginning on June 1, 2012. It is estimated that this measure will reduce federal revenues by $13 million in 2012–13 and by $17 million in 2013–14.

Campbell Clark at the Globe and Mail says the budget marks a strong change in the government’s formerly pro-military stance:

The Harper government is slashing spending on Canada’s international presence, with deep cuts to the military, aid and diplomacy.

It marks a reversal to the Conservatives long-ballyhooed policy of beefing up the military: It’s no longer just slowing the growth of Defence spending, but cutting it back, and delaying billions of dollars in capital spending on military hardware for seven years.

[. . .]

In fact, neither the budget nor the host of government officials attending a lockup to explain it provided a figure for the Defence budget for the coming year, and in the years affected by the cuts. Officials said that information was not being presented on budget day.

Still, it was clear that the impact will be deep. Since 2006, the Harper government has touted year-over-year increases for military spending, even when it announced two years ago the growth would be slowed. Now it’s cutting.

By 2014-15, more than $1.1-billion a year will be lopped off the regular Defence budget. But that’s not all. In addition, $3.5-billion in capital spending — the sums the military uses to buy equipment like planes, ships, trucks, tanks and weapons — will be put off until seven years from now, so that the government can save an average of $500-million a year.

Hmmmm. Slowdowns in major equipment purchases? I wonder if we’re about to get a Defence White Paper. We’re probably overdue for one of those…

March 28, 2012

“[T]he Government of Canada is [like] a big national insurance company with a side business as a tax collector for the provinces”

Filed under: Cancon, Economics, Government — Tags: , , , — Nicholas @ 10:17

Kevin Milligan in the Globe and Mail:

The first question to ask of any budget announcement is whether the dollars are recurring or one-time only. If we change a tax that brings in $1-billion a year, the budget changes not just this year but in future years as well. […] Politicians and commentators often choose the time frame that suits their current argument. Confusion results. A good economist keeps her eye open to these tricks and tries to ensure we compare numbers on similar time-frames.

Next up is properly adjusting future dollars to account for inflation and our ability to pay. Dollars spent in the future are different than dollars spent now. Imagine that inflation averages 2 per cent a year, and inflation-adjusted economic growth is 1.5 per cent a year on top of that. In just 20 years, prices will increase by 50 per cent and the size of our economy — and our ability to pay for programs priced in nominal dollars — will double.

[. . .]

As a final note, it is always useful when crunching the numbers to keep in mind what the Government of Canada actually does with our tax dollars. Transfers to individuals for insurance programs (such as Employment Insurance and Old Age Security) are 25 per cent of spending. Transfers to provinces and territories (health and other transfers) are another 20 per cent. Interest takes a further 11 per cent. The best way to think of the Government of Canada is a big national insurance company with a side business as a tax collector for the provinces. (This is only slightly different from the US Government, which has been called by Ezra Klein an insurance company with a standing army.) Everything else the Government of Canada does — from fisheries management to culture to the military — takes the remaining 44 per cent. Making any change to the trajectory of total spending when insurance and inter-government transfers are both projected to grow rapidly requires very large changes to that residual 44 per cent.

March 22, 2012

GAO latest to attempt to shoot down the F-35

Filed under: Australia, Cancon, Japan, Military, Technology — Tags: , , , — Nicholas @ 12:08

The situation is looking grimmer for all potential purchasers of the F-35, not just the RCAF:

The F-35 Joint Strike Fighter, the supposed backbone of the Pentagon’s future air arsenal, could need additional years of work and billions of dollars in unplanned fixes, the Air Force and the Government Accountability Office revealed on Tuesday. Congressional testimony by Air Force and Navy leaders, plus a new report by the GAO, heaped bad news on a program that was already almost a decade late, hundreds of billions of dollars over its original budget and vexed by mismanagement, safety woes and rigged test results.

At an estimated $1 trillion to develop, purchase and support through 2050, the Lockheed Martin-built F-35 was already the most expensive conventional weapons program ever even before Tuesday’s bulletins. The Air Force, Navy and Marine Corps are counting on buying as many as 2,500 F-35s to replace almost every tactical jet in their current inventories. More than a dozen foreign countries are lined up to acquire the stealthy, single-engine fighter, as well.

[. . .]

If cuts do occur, the U.S. will be in good company. Australia, Canada and Japan have already begun backing away from the troubled JSF as the new plane has gradually exceeded their budgets. For these countries, alternatives include the Super Hornet and an upgraded F-15 from Boeing, Lockheed’s new F-16V and the European Typhoon, Rafale and Gripen fighters. But so far the U.S. military prefers the F-35, even if the stealthy jet is more than a decade late, twice as expensive as originally projected and available in fewer numbers. “We will remain committed to the long-term success of the F-35 program,” Air Combat Command asserted.

Update, 23 March: The summary of the GAO report with a link to the PDF version for download.

US Marine Corps facing 9% cut in troop strength and aviation

Filed under: Military, USA — Tags: , — Nicholas @ 08:18

Strategy Page has the details:

Because of budget cuts, the U.S. Marine Corps is losing four (of 27) infantry battalions and twelve (of 70) aircraft squadrons over the next five years. About half the marine aviation squadrons operate transport helicopters. Most of the fixed wing squadrons are bombers and fighters.

These cuts will result in jobs for 20,000 marines being eliminated, shrinking the marines to 182,000 personnel. Most of the units lost are from marine bases on the east coast. The Pacific, and China, is seen as the focus of Marine Corps attention in the future.

In effect the marines will lose nine percent of their personnel strength by the end of the decade. The marines want to do that without losing their most experienced and effective people. The idea is to keep officers and NCOs best able to expand the corps in the event of a national emergency, while at the same time maintaining, for as long as possible, a force that has lots of combat experience.

March 21, 2012

This is why Paul Ryan’s budget proposals will go nowhere

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 09:40

It’s because he’s not only requiring the middle classes to take a hit for the team, but he’s also trying to get rid of all the custom-crafted deductions, loopholes, shelters, and special favours in the tax code. Middle class voters have been sending their elected representatives to Washington to add to the special tax “tweaks” that disproportionally benefit the middle class. That’s how politicians ensure their re-election chances.

Unveiling his new budget proposal, Paul Ryan once again reminds us that he is one of the few men in Washington with guts and brains operating in harmony. His budget asks the big question in American politics: What is the middle class willing to give up in order to save the country?

I am afraid that the answer will be: Not very much.

[. . .]

The reaction to Ryan’s tax plan will be the truly telling thing. He proposes to create two relatively low tax brackets but to do so in a way that achieves revenue neutrality by eliminating most deductions and exclusions. Almost certainly this will mean reducing or eliminating the mortgage-interest deduction, deductions for state and local taxes, and deductions for charitable giving. (Ramesh’s beloved child tax credit probably will survive, unfortunately.) The Committee to Reinflate the Bubble will fight tooth and talon to defend the mortgage-interest deduction, and they’ll have a great many middle-class homeowners behind them.

H/T to Kathy Shaidle for the link.

Update: Nick Gillespie thinks that the Ryan budget proposal is merely an echo of Obama’s plan, not a serious attempt to get the government’s finances in order:

In brief, the Ryan plan is not as bad as [President Obama’s] budget, which wants to spend $3.8 trillion in FY2013 and envisions spending $5.8 trillion in FY2022. Over the next 10 years, Obama assumes that federal spending would amount to 22.5 percent of GDP while revenues would average just 19.2 percent of GDP. That ain’t no way to run a country.

In this sense, Ryan’s plan is slightly better but still doesn’t pass the laugh test. He would spend $3.5 trillion in 2013 and $4.9 trillion in 2022 (all figures in the post are in current dollars unless otherwise noted). Spending as an average of GDP would average 20 percent of GDP and revenue would amount to just 18.3 percent.

[. . .]

Yet Ryan’s plan is weak tea. Here we are, years into a governmental deficit situation that shows no sign of ending. How is it that Ryan and the Republican leadership cannot even dream of balancing a budget over 10 years’ time? All of the discussion of reforming entitlements and the tax code and everything else is really great and necessary — I mean that sincerely — but when you cannot envision a way of reducing government spending after a decade-plus of an unrestrained spending binge, then you are not serious about cutting government. If Milton Friedman was right that spending is the proper measure of the government’s size and scope in everybody’s life, then the establishment GOP is signaling what we knew all along: They are simply an echo of the Democratic Party.

March 7, 2012

Veterans Affairs to face disproportionally big cuts in federal budget

Filed under: Bureaucracy, Cancon, Economics, Military — Tags: , , , , , — Nicholas @ 10:32

That’s what Sean Bruyea thinks. Here’s his piece in the Globe & Mail:

Prime Minister Stephen Harper calls enlisting in the military the “highest form of public service.” Why then is Veterans Affairs, the department which cares for the Canadian Forces when its members are injured, facing the largest proportional cuts of any other public-service department?

The budget axe has been looming over all federal departments. The current “strategic and operational review” is a euphemism for reigning in a federal public service that is out of control. In the last 10 years, the core public service has grown by 34 per cent (versus 12 per cent at Veterans Affairs) and total government program expenses have swelled by 84 per cent (versus 67 per cent at Veterans Affairs).

Perhaps most galling for Canadians who have passed through two recessions in two decades and have seen no real growth in their earnings, public service salaries have increased by 22 per cent over and above inflation.

Few could credibly argue against the need for Ottawa to be managed better.

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