The most arresting thing about F’s budget?
F, of course. Check out that makeover. And just to think that under his new rules, Botox treatments are no longer tax-deductible. Where the hell did he get that idea?
On a more serious note, if that’s possible, is what this little federal exercise means. The budget is political, not economic. It sets the scene for an election this year (I told you 2010 would be a tipping point), in which F&H plan to get a majority. That will pave the way for the real budget, which is 12 months away – the one that could declare a debt emergency, ‘temporarily’ hike the GST, impose an income surtax and slash spending.
At that time, we’ll be well on the way to $600 billion in debt, be adding tens of billions more a year, have higher loan and mortgage rates, an army (still) of unemployed and a cascading real estate market. Ontario and BC will have had the HST for eight months, provincial taxes will be higher in most parts of the country, and we’ll all be chuckling about the summer day in 2010 that a SFH in Van hit a mil.
Just imagine how you’d feel if you were the greater fool who bought that.
All this is way more likely now that F spent less time on his fiscal plan than his hair. The country has gone from a healthy little surplus to a mastadonian deficit in the course of three years. According to the Parliamentary Budget Officer, a dude with a real set, given the aging population and the economic prospects, we could have a structural deficit now of $20 to $40 billion for as far as the eye can see.
So, budget 2010 was an early chance to do something about it. Turn off the spending tap, start working on a plan to deal with a world in which there are just two workies for every retired (a few years ago, there were seven people working for every person drawing a pension), and scale down government. Instead, federal spending increases by a billion, another $19 billion will be spent on stimulus stuff and there is absolutely no long term plan. Just rhetoric. Grecian Formula. That kinda stuff.
The implications should be obvious. The housing bulls who come here to take a dump are living on borrowed time. Those of our relatives and work colleagues who have mortgaged and borrowed their way to granite countertops and boy toys will regret it. Young 5/35ers will understand that leverage = risk. People with their money in the wrong place (like bond funds, for example), or with their net worth stuffed into one asset (like their house) will wish they’d heeded the Lessons from The Bunker. Those who think tax avoidance is unpatriotic will learn fast.
By delaying the inevitable, F makes it worse.
Kind of like fleeing your age.
