The independent Parliamentary Budget Office says the federal government is now running a permanent deficit that can only be eliminated by raising taxes or cutting spending. That contradicts the view of the federal government, which believes the deficit will naturally disappear once the economy improves…Page believes that the deficit can be eliminated only with “significant discretionary actions”, the least painful of which, in his view and the view of other private sector economists, would be to increase the country’s consumption tax – the GST…The other option to get out of deficit – cutting Ottawa’s annual spending – would be nearly impossible without affecting entitlement programs, such as Old Age Security, or transfers to the provinces.

As I’ve said earlier on here, I’m more apt to believe the PBO and Kevin Page’s reports then I am Jim Flaherty and Stephen Harper – mainly because Page and his office have been far more accurate then the Conservative government has been. As a friend of mine said to me on reading this report, “It is simple math, but the concept is lost with our current PM and finance minister”, who’ve stubbornly refused to accept that any of their economic forecasts are wrong. or that they are going to have to do one of the 2 options that Page and the PBO have outlined.

So what’s it going to be, Flaherty? Are you going to raise taxes, which you and the Prime Minister have been yammering at Ignatieff over his statement that he could not rule those out, as if what he said amounted to treason, or are you going to cut programs, and if so, what?