Summary:
In Ottawa, the Canadian Centre for Policy Alternatives has made public the annual Alternative Federal Budget. It suggests that the government should increase their spending by $32.9 billion dollars or 2.9% GDP. The centre believes that it will help stimulate the economy by producing 407, 000 jobs and give a three percent increase to the financial system. If the centre had admittance to Ottawa’s funds, the first thing they would do is spend $14.7 billion on municipal infrastructure, child care, inexpensive housing and post-secondary education. They also believe that Canada’s employment insurance program is flawed. Therefore, the government should spend an additional $3.4 billion to increase benefits and cover 60 percent of insured income. A further $9 billion would be used to decrease poverty and raise income for seniors, children and the working poor. The centre also suggest that $5.8 billion for training and education. However, in the Alternative Federal Budget, there were no suggestions on tax cuts. They believe that government expenses provide more stimulus than tax cuts.
Connections:
Economic fluctuations are what characterizes the market system. There could be a time of high rate of employment and rising prices. Also there will be times of high unemployment and slow economic activities, a state that the world economy is in right now. Both the textbook and article goes on to explain how the government can intervene to help stabilize the free-market system. It suggests that the government should spend more money on programs for the public. By spending money the government could create more jobs which will decrease the unemployment rate. If people have a job they will eventually start spending money which will slowly increase economic growth. The textbook also suggests that the government should cut taxes. If they do it will increase the amount of disposable incomes and people will spend more. However, in the article they believe that tax cuts will not be as effective as government expenses.
Reflection:
The plan that the Canadian Centre for Policy Alternatives made does not seem very effective. It only suggests to increase government spending on social programs and infrastructure. They believe that tax cuts will not be as effective and there is no point of including it in the plan to stimulate the economy. While the textbook suggests that government spending and tax cuts will be the more effective. That is because more disposable income will go into taxpayer's pockets. I wonder what will the government will do in the following years to stimulate Canada's economy. The United States is going into a deeper recession and that will definitely have an impact on Canada since most of our trades are with them. Will the government decide to stimulate the economy by government spending or with tax cuts and spending?
