Thank you for clarifying because, when the government spends money, we must ask where the money comes from. The money comes from companies and individuals. So we have to look at what we don't see. We talk about a credit crisis. If the government takes its citizens' and entrepreneurs' money to stimulate the economy, it may destroy some jobs. Some entrepreneurs could use this money for productive projects.
I am more in favour of cutting taxes, since this is what means individuals will have money in their pockets, which they can spend or save. If they save, that will create wealth because the money will be available for borrowing by entrepreneurs to invest in projects that create jobs. When we cut taxes, the money doesn't just fly away in the sky. The money stays in the economy and is available. If we cut my taxes and I use this money to pay off a debt that I owed to one of my fellow citizens, the money will remain available and my fellow citizens can decide to spend it or save it. I think that the creation of wealth comes from productive investments, not from spending.
If spending created wealth, many countries in the third world would be rich today. Canada is a rich country because of the investments it has made and because its tax rates are very low.
History may show that I'm right. During the Great Depression, the American government spent and the U.S. federal government cut its spending by two thirds between 1945 and 1948. Spending by the U.S. federal government was $92 billion in 1945 and it fell to $29 billion in 1948. The federal government got out of the way and this accounted for a cut in public spending of 70% within a few years. This is what enabled them to get out of the Great Depression.
So I do not support your logic, which claims that the best way of getting out of the present crisis is to spend and, the more we spend, the further we'll get out of the crisis. I think we need balanced spending and that is what our government is doing. We have spent on infrastructures, which will be there for many years and will benefit future generations. I'm talking about roads, bridges and tunnels. These infrastructures will be around for future generations. We were also responsible when we decreed a permanent income tax cut so that Canadians would have some money in their pockets.
I don't think that irresponsible deficits are the solution to the current crisis. I think that we have to have an accurate vision of the situation. This is why we'll run a deficit for a very short time before getting back to a budget surplus as soon as possible. The solution won't come from the economists but rather from the people. The economy is all Canadians who spend and save day after day. It's very hard to predict Canadians' behaviour.
