Sunday, April 05, 2009

From day one

It's definitely a plus to see the CCPA pointing out how obviously inadequate the Cons' stimulus package looks - not only based on the expected losses yet to come, but even compared to the actual economic damage at the time the Libs chose to pass the budget. But it's worth noting that the study may actually be overly generous to the Cons and Libs in relying on Deficit Jim and Recession Stephen's questionable assumptions to begin with:
The CCPA report said the estimated effect the stimulus package is supposed to have on employment was eclipsed the day before the stimulus budget was made public.

The government says its $29-billion stimulus package would maintain or create 189,000 jobs this year, and rise to 250,000 by the end of 2010.

The study says 296,000 people have been thrown out of work since the economic decline began in October, and that job losses hit 189,000 one day before Finance Minister Jim Flaherty stood up in Parliament to deliver his stimulus budget.

"The Conservative stimulus plan wasn't enough the day it was introduced and since then Canada has lost 106,000 more jobs and the economy has shrunk another 0.7 per cent," Macdonald said.

His study, which uses Statistics Canada figures, said the government's stimulus efforts don't even make up for the economic shrinkage that had occurred by the end of 2008.

While the size of the economy declined by $20 billion between Oct. 1 and Dec. 31, 2008, the government estimates its package will add 1.6 per cent to Canada's real GDP, or a growth of $19.7 billion.

This means the economic impact of the stimulus package was "exhausted" by the end of December, almost one month before the government introduced the package, CCPA said.
Now, the problem with the numbers cited by the Cons is that they themselves figure to substantially overestimate the effects of the Con/Lib budget. As some of us have noted from the beginning, the largest dollar amounts within the stimulus are directed toward measures where they either won't generate new economy activity, or may not even be used at all. Which means that the actual effect of any stimulus from the budget may have run out far more quickly than even the CCPA estimates.

That said, it's certainly worth highlighting how inadequate the Cons' budget was from the moment it was presented. And that fact should offer all the more reason to doubt that either the Cons or their enablers within the Libs can be taken seriously by Canadians looking for a meaningful response to the recession.

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