Bridges to nowhere?
by Deirdre McMurdy, Sympatico / MSN Finance
The "economic update" tomorrow is going to be a test of many things: not the least of which is the conviction of a political party that believes less is more when it comes to government. Now that central governments have essentially socialized key international social markets, it will be a severe test of the Tories - to say the least.
Despite the campaign promise that a deficit would never be tolerated, that's essentially what we're going to be looking at tomorrow. Still, there are deficits and deficits. Canada is most likely looking like something along the lines of one per cent of GDP - nothing like the eight per cent shortfalls we ran consecutively in the past. And nothing like the deficits the U.S. is facing.
There's the also the issue of government stimulus hanging in the balance. Finance Minister Jim Flaherty has indicated that the Tory's commitment to spend around $33 billion on infrastructre upgrades will be fast tracked in light of the economic outlook.
In the past, much of that was expected to be accomplished through public/private partnerships (AKA 3P). but is that model still viable at a time when debt markets are dead? And isn't kind of old school - as in Keynesian - for the government to spend like that at a time like this?