On forecasts

The Cons may want to introduce even more massive tax cuts now and deal with the consequences later. But fortunately, the TD Bank is looking to the longer term, and pointing out that tradeoffs will have to be made:

Ottawa could continue to have annual budget surpluses through to 2012-13, assuming a solid economy and modest interest rates, but days of ‘easy’ budget planning are gone, a TD Bank (TSX:TD) report says...

“Under the key assumption of continuing sound economic performance and implementation of the policy agenda set out in the 2006 budget, budget surpluses would continue to accrue. But they would be quite modest,” TD chief economist Don Drummond writes...

However, the TD report also notes there are several factors that haven’t been included in its estimates, including the additional one percentage point drop in the goods and services tax that the Conservatives have said they’ll introduce...

"(W)e should not lose sight of the fact that Canada is in great fiscal shape relative to its own history and the record of almost every other country...But difficult trade-offs will need to be managed in order to introduce changes with large budget costs.”

It may take a lot more sources pointing out the obvious limitations on federal finances to ensure that the Cons can't launch more major tax cuts without public outcry. But Drummond's report at least ensures some increased awareness of the need to balance priorities...and if the Cons are willing to stake their public reputation on more costly tax cuts, it shouldn't take long for Canadians to make all the more clear that they wouldn't agree with the tradeoff.