The role of government is set policies that support economic growth along with provide sustainable funding to social programs.

1. Failure of
Obamanomics and
Trudeanomics
BY: PAUL YOUNG, CPA, CGA
OCTOBER 30, 2019

2. Agenda
• What is Keynesian Economics?
• Trudeau failure on Keynesian economics
• Trudeau poor fiscal management
• Taxation Policies
• Money flow from taxation to program spending
• What is trickle down economics
• Money flow from a Corporation – Public Traded
• Money flow from a Corporation – GBE (Government Business Enterprise)
• Money flow from a School Board
• Money flow from a Hospital
• Fiscal Management
• USA and Obamanomics
• USA Healthcare
• Issues facing economies around the world

3. What is Keynesian Economics
• Keynes advocated increased government expenditures and lower taxes to
stimulate demand and pull the global economy out of the Depression.
Subsequently, the term “Keynesian economics” was used to refer to the
concept that optimal economic performance could be achieved – and
economic slumps prevented – by influencing aggregate demand through
activist stabilization and economic intervention policies by the
government. Keynesian economics is considered to be a “demand-side”
theory that focuses on changes in the economy over the short run.
Source - Keynesian Economics Definition |
Investopedia http://www.investopedia.com/terms/k/keynesianeconomics.
asp#ixzz4YTczh6Kk

4. Trudeau / Fiscal Management
• Martin is right about investment, but this is what happen
• Trudeau introduced tax hikes to small business which led to issues -
https://www.slideshare.net/paulyoungcga/what-party-would-be-better-for-small-business-in-canada
• Trudeau tax on the rich never led to issues with taxation -
https://www.slideshare.net/paulyoungcga/taxing-the-top-1-and-wealth-distribution
• Trudeau’s play the votes instead making policies that would make Canada more competitive (C69)
https://www.slideshare.net/paulyoungcga/2019-election-canada-competitivenes-september-2019
• Trudeau forced a regressive tax (Carbon tax) on to Cdns - https://www.slideshare.net/paulyoungcga/have-
the-liberals-made-lives-for-canadians-more-affordable
• Trudeau failed to get major infrastructure work done - https://www.slideshare.net/paulyoungcga/2019-
election-capital-and-infrastructure-canada-july-2019

5. Fiscal Management
@joycemurray
Your comments on the auditor-general are not completely accurate and/or your
government being more open and transparent are also incorrect!
Here my comments on liberals when it comes to open and transparent govt.
1. In 2014-2015 there was $39M spent on Performance Audits. You are now spending $32M
https://www.slideshare.net/paulyoungcga/2019-election-open-and-transparent-government-canada-
148976592 (see slide 12)
2. Your government changed the reporting on the fiscal monitor. You eliminated reporting of depts, why?
https://www.slideshare.net/paulyoungcga/2019-election-open-and-transparent-government-canada-
148976592 (see slide#8)
Trudeau fail to look at effectiveness of his programs. All Trudeau
did was throw money at the symptoms

6. Trudeau / Tax Reform
• Trudeau’s tax policies were abysmal failure
• Rich pay less in taxes - https://www.ctvnews.ca/canada/canada-s-top-1-per-cent-saw-fastest-
income-acceleration-overall-decrease-in-taxes-1.4609196 (Trudeau wanted a quick win on taxatoin
and it backfire)
• Trudeau poverty number are also miss leading as he changed the calculation as well introduced
policies like carbon tax that hurt the low- income earners -
https://www.slideshare.net/paulyoungcga/2019-election-poverty-and-income-inequality-
september-2019
• Trudeau made a tax cut to middle class but removed the tax credits as such the middle class pays
higher taxes - https://www.slideshare.net/paulyoungcga/middle-class-are-you-better-off-in-2019-
canada
• Trudeau never introduce proper tax reform, i.e. ITA reforms, closing down tax havens, etc. -
https://www.slideshare.net/paulyoungcga/2019-election-who-do-your-trust-more-when-it-comes-
to-tax-fairness

7. Efficient and Effective Government
The old saying “It is easy to fix a problem with money, but it takes something special to fix a problem without money”
Canada and its provinces are struggling with delivery program spending in terms of value for money.
https://www.slideshare.net/paulyoungcga/2019-election-public-sector-efficiency-canada-july-2019
Too many politicians are pushing climate / environment policies without proper analysis of various use cases.
https://www.slideshare.net/paulyoungcga/why-do-politicians-play-games-with-the-environment

8. Government Taxation / Spending Flow
Consumers
Corporations
Government Entities
Taxation Flow
• Income Tax
(Personal)
• Income Tax
(Corporate)
• Consumption
Tax
• Income from
GBE
• Dividends
(LCBO)
Spending Flow
• Government
Transfers
(Healthcare,
infrastructure,
post-secondary
education,
childcare
• Direct Program
• Healthcare
• Education
• Social
Services
• Public
Safety

9. What is Trickle Down Economics
• Trickle-down economics, or “trickle-down theory,” argues for
income and capital gains tax breaks or other financial benefits to
large businesses, investors and entrepreneurs in order to
stimulate economic growth. The argument hinges on two
assumptions: all members of society benefit from growth; and
growth is most likely to come from those with the resources and
skills to increase productive output.
Source Trickle-Down Theory Definition |
Investopedia http://www.investopedia.com/terms/t/trickledownt
heory.asp#ixzz4YTi1ElxV

10. School Board - Flow
Source -
http://www3.dpcdsb.org/Documents/Financial%20Stateme
nts%2031%20August%202016.pdf
Commentary:
• 90% of the school board
is supported by taxation
(Provincial grants:
Expenses
• 76% of the school cost is
payroll
• Payroll taxes (CPP, EI
• Pensions
• Income tax
• Benefits

11. Hospital - Flow
Source -
https://www.rvh.on.ca/account/SiteAssets/SitePages/account/2016
Commentary
• Approximately 70% of
funding comes the
government
• Doctors and Nurses
compensation is tied to
contracts
• Many hospitals have
donor programs to
support either hospital
expansion or new
equipment
• Money Flow
• Spending
• Taxation (Personal)

12. Starting a business
• Takes capital
• Many high growth companies rely on stock options as well as other
deferred compensation a part of growing their business
• Small business are hurt by taxation, hydro, red tape/regulations
• The bulk of all new jobs created are by small business

13. How do pension funding work?
• Pension funds by assets (investments) with pension funds generated
contributions made by both private and public sector employees
• Pension funds are looking for ways to maximized the Pension Fund
returns
• If you increase taxation then you actually are hurting pensions funds,
i.e. less income (dividends) for pension funds
• Defined Benefit Plans
• Guaranteed pensioners a set amount to paid out to them.

14. Harper / Trickle Down Economics
• Source – http://globalnews.ca/news/1356467/tax-cuts-since-2005-
net-canadians-30b-pbo/
Fiscal Management –
Harper
Keynesian Examples
• Harper increase
program spending
• Harper established
dedicated funding for
infrastructure
• Harper honored the
transfers to the
provinces
• Harper moved OAS to
67
• Harper is not
responsible for
mismanagement at the
provincial level
Commentary
• After the 2008-2009 recession is when Canada had
one of the strongest economy in the G-7

15. Risk/Issues with Keynesian Economics
• Source -
http://www.forbes.com/sites/peterferrara/2012/07/12/obamanomi
cs-the-final-nail-in-the-discredited-keynesian-
coffin/#4e241e7a2167
Forbes Video:
https://www.youtube
.com/watch?v=yOl37
VcG89c&t=28s
Commentary:
• USA tax system is
complicated
• USA does poor job of
redistribution of wealth
• USA income inequality
worsening
• Government waste money
or about 1/3 of all
spending is wasted

16. USA Healthcare

17. USA GDP

18. Issues facing an economy
• Government Deficit and Debt
• Mismanagement of government moneys
• Structural deficits
• Government trying to be everything to everyone
• Size of the economy
• Consumer spending drives 2/3 of the economy
• Exports are key area for many countries (Canada drives 25% of their GDP via exports or about
$520B)
• People want cheat goods and services
• Taxation
• You cannot tax people to prosperity
• Demographics
• Aging population tends have different buying patterns
• Part-time vs- Full-time jobs (Precarious work)
• People are living longer

19. Summary
• Many people misunderstand either Keynesian Economics or Trickle-down
economics
• Private investment drives job creation (market-supply side of economics)
• Personal spending drives 2/3 of the economy.
• Pension funds invest pension assets into companies as part of managing the
returns
• It is not one policy that drive business expansion, but multiple policies