Harper: Spending significant deficits on the way.

Not too long ago Harper was claiming there would be no deficit but now he has adopted the Keynesian stimulus economics that other free market ideologues such as Bush have also embraced. Of course he also endorses tax cuts as well a standard conservative (well every party by now) policy. The result will be a demand to cut govt. spending and social programs as soon as the economy shows any sign of recovery. As well instead of deflation we will have inflation because of all the extra dollars pumped into the system.






Spending, 'significant deficits' on the way: Harper
Premiers, prime minister sign labour mobility deal
Last Updated: Friday, January 16, 2009 9:48 PM ET CBC News
Prime Minister Stephen Harper speaks to the media on Friday following the first ministers meeting in Ottawa. (Adrian Wyld/Canadian Press)
Prime Minister Stephen Harper said Friday that infrastructure spending and help for the unemployed dominated talks with Canada's premiers and territorial leaders, but he didn't reveal any specific funding commitments.
Harper spoke at a closing news conference after two days of consultations with the first ministers in Ottawa ahead of the Jan. 27 federal budget.
"Most of the discussion was on a few measures to assist the economy … issues like the availability of credit, but also on potential labour market measures and potential infrastructure measures," he said.
"There are some pretty broad agreements on the things we can be doing now," said Harper, adding premiers and territorial leaders put a "smorgasbord of options on the table."
The first ministers are in agreement that collaborative efforts are required, because "we are in a very dangerous time for the world's economy," said Harper.
Canada is entering a short period of "significant deficits" as the government must borrow cash to inject into the economy, said Harper. Federal officials have signalled that the government is poised to run a deficit of as much as $40 billion, most of it as a direct result of economic stimulus measures.
A cash injection is necessary, because Canadians are afraid to spend in light of the global recession, Harper said. Spending measures will be time limited, he said.
"We know the money is out there, sitting on the sidelines. Businesses are afraid to invest, households are afraid to spend, bondholders are afraid invest," he said.
"This is a time for government to come forward, borrow that money at what are … very low interest rates and put it to work in the economy."
Tax cuts on the way?
The ministers met in a bid to reach agreement on a massive economic stimulus package the federal government plans as the centre of its budget. It could include infrastructure spending, changes to the employment insurance program, money for job retraining and aid for struggling industries.
Satisfying the premiers is a crucial step in ensuring a favourable reaction to the budget, on which the fate of Harper's minority government rests.
Opposition leaders have said they are prepared to vote down the government and seek permission to form a coalition government if the budget is not in the best interests of Canadians.
Liberal Leader Michael Ignatieff said he's getting the message "loud and clear" that Canadians don't want political instability on top of economic problems. He said it's still up to Harper to undo the damage his party caused.
"He's got one way out, which is to produce a budget that meets the needs of Canadians," he said in Calgary before a meeting with local business leaders.
"But if he fails, I've gotta be ready to form a government to replace him."
Harper also suggested Friday that tax cuts for middle-income earners were in the works.
"It's important the middle class of this country be part of an economic stimulus plan. The middle class pays most of the freight, forms the basis of our economy," said Harper.
"I would remind you it was Mr. Ignatieff who called for middle class tax cuts less than two weeks ago. We're listening. Not just to what he, but what many others say," he said.
Ignatieff called for tax cuts for low- and middle-income earners earlier this week during a cross-country tour.
Concerns about equalization
British Columbia Premier Gordon Campbell said he and his colleagues are all concerned about the potential size of the upcoming deficits, but he pledged his government would "work in complete partnership with the federal government" and municipalities to make life easier for people affected by the economic downturn.
Ontario Premier Dalton McGuinty said he believes Ottawa will announce new investments in infrastructure that will require some provincial funding.
"If stimulating the economy is to have the intended effect, which in part is to inspire confidence in consumers, then they’ve gotta see new activity, new jobs being created," said McGuinty.
No all the premiers were singing Harper's praises, however.
Quebec's Jean Charest took the prime minister to task for changes to the equalization formula that will restrict increases for have-not provinces to the rate of inflation.
"I see this as Mr. Harper breaking a promise he had made on the fiscal imbalance," said Charest.
Newfoundland and Labrador's Danny Williams and Prince Edward Island's Robert Ghiz echoed Charest's concern about the equalization change but did not appear eager to make the issue a priority.
Quebec officials also complained the prime minister wasted time during the talks by having federal ministers brief the premiers instead of giving them more time to talk.
Outside the conference venue, about 175 Quebec demonstrators braved minus –26 C temperatures as they chanted for $2 billion annually in affordable housing cash. Police, some wearing balaclavas against the cold, patrolled the barricaded entrance to Ottawa's old city hall just a couple of city blocks from the prime minister's residence at 24 Sussex Drive.