• A “stay the course” transition budget as expected – follows through on fiscal stimulus spending without adding to it
• Planned deficit for fiscal 2010-11 of $49.2 billion (3.1% of GDP)
• No consumption tax or personal or corporate income tax hikes
• E.I. premiums to rise post-2010 and contribute a large chunk (roughly one fourth) to deficit reduction
• Near budget balance by fiscal 2014-15 with a deficit of $1.8
billion (0.1% of GDP)
• Multi-faceted plan to constrain expenditure growth
Today’s budget contained few, if any, surprises. The 5-year deficit elimination plan is based on reasonable economic assumptions. The challenge will be to wrestle down the rate of spending growth to about 2% per year, particularly when about half of the overall spending mix is dedicated to transfer payments, which the government has indicated are off bounds and which are slated to grow by about 5-6% per year over the next 5 years. While the government provided some guidance as to how it will restrain non-transfer spending, much of the specifics remain to be fleshed out.Nevertheless, the projected return to a virtually balanced budget\ position is a prudent commitment.
In a nutshell there is nothing to yeah about but the government is going to try to get us ahead of the financial turmoil. Any questions call me any time. Jim Amitofski.