OTTAWA, June 4, 2013 /CNW/ - Hillwatch today released a policy brief
discussing why the Federal Government has been on the debt track for
most of the last 50 years attributing it to the willful blindness built
into the budget-making process.
This paper identifies 'blind-spots' in the Federal budget process.
A persistent trend of over-estimating economic growth and consequently
Never planning and preparing for recessions despite their inevitability;
Tolerating large deficits while finding only small surpluses politically
Having no actual plan or commitment to reducing the National Debt; and
Unrealistic expectations about Government's ability to protect us from
downside economic risks.
These 'blind spots' place our public finance on a fiscally unsustainable
path. This path can veer from risky to dangerous and damaging by future
developments over which we have little control: too-short recovery
periods between recessions; higher interest or inflation rates; or a
prolonged period of low growth.
The prescription proposed includes:
A practical plan to pay-down the principal of our National Debt over
A conservative and transparent forecasting methodology for economic
Budget rules to recognize, accommodate, and channel political pressures
to spend surpluses.
"Governments are always chasing the tail of economic growth. They never
catch up and match their spending patterns to the actual patterns of
growth in the economy. The by-products of this inability to sequence
spending and economic growth are deficits and accumulating debt.
Governments then try to compensate by making questionable bets about
the future that exacerbate the underlying problems." states Mr. Proudfoot.
This paper argues that the Federal Government needs to stop chasing the
growth tail and organize its finances to deal with probable risk. It
has been playing a game it is bound to lose most of the time. To
reverse the odds, it needs to change the rules of the game!
PDF available at: http://stream1.newswire.ca/media/2013/06/04/20130604_C4252_DOC_EN_27366.pdf
SOURCE: Hillwatch Inc.
For further information:
Full Policy brief available at: www.hillwatch.com; for more information, please contact
Scott Proudfoot, (613)238-8700 Proudfoot@hillwatch.com