December 21, 2008
Vice-President elect Joseph Biden is calling for a large deficit financed stimulus package which might exceed 1.2 trillion over two years. The new American administration clearly understands what is needed. This makes Stephen Harper's planned 20 billion dollar plan for Canada hardly a drop in the bucket. Since the US GDP is 10 times greater than that of Canada the appropriate figure here should not be a 20-30 billion dollar deficit but a figure that is roughly a substantial fraction of the US package in relation to the GDP, given that our recession may escape being as severe because our economy will benefit from some of the US stimulus and our exposure to bad mortgage debt may be less drastic. So if the US is spending 700 billion or about 5 % of the GDP we should be spending 3.5 % to 4 % of our own GDP or between 49 and 56 billion. This would result in a deficit of about 60- 66 billion. This might be enough or just below the appropriate amount by several billion but at least it would be closer to the mark than what Harper is now proposing. If it were up to me I would err on the high side and ensure a sufficiently positive impact to do the job. 100 billion would be in the ballpark. But I can hear the gnashing of teeth and cries of alarm coming from Ottawa already so as a first step I would be pleased to see 50 billion spent to help people cope with the recession, fund a substantial infrastructure program, help those who are unemployed, assist the military carry out its mission by ensuring they have top notch equipment made and assembled in Canada, help the provinces with specific economic assistance and re-invest in our education, healthcare and social programs.
Over to you on Parliament Hill.
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