At least, that's if you believe what you read. The same pimply trolls on the bond desk who would once have been reviled for their presumption - dictating policy, if you please, to a democratically elected government - are now quoted reverentially, their every twitch of unease over the Tories' promised 30-per-cent tax cut recorded as if it were an epistle from St. Paul: he of the abrupt conversions.

Of course, what people say and what they do are often two different things. Which may explain why, notwithstanding this much-reported queasiness on Bay Street, the yield spread on Ontario over Government of Canada bonds has been narrowing ever since the Tories were elected. From around 50 basis points in early June of last year, the spread on 10-year Ontarios has closed to about 30 points today. Bay Street's lips may be saying no-no, but its eyes say yes-yes.

Who's right, lips or eyes? Is it possible to cut taxes and balance the budget at the same time? Let's do the math. The government of Ontario will collect $46.8- billion from all sources in this fiscal year, according to last November's Fiscal and Economic Statement - about $400-million less than envisaged in the Common Sense Revolution. It will spend very nearly the same amount, about $47.1-billion, on programs. Add in $9-billion to cover the cost of interest on the public debt, and you have the current $9.3-billion deficit.

The current estimate of $47.1-billion for program spending is not far off the $47.4-billion the Tories planned on spending this year, the base from which they hoped to cut $6-billion over three years. Yet that's after cuts of $1.9-billion imposed last July.

How can this be? Because spending was rocketing along at much higher altitudes than projected in the Tory campaign document - or, for that matter, in the former NDP government's own April Budget Statement.

If it takes cuts of $1.9-billion just to keep spending at $47.1- billion, this suggests that as of last July spending was headed near $49- billion, at least $1.5- billion above the forecasts of two months before. Whether the approaching election prompted the NDP to go on a pre-election spending spree, or to understate spending on the books to make the deficit look smaller, the Tories can fairly argue that the extra $1.9-billion only ensures they will cut program spending by fiscal 1999 to the level originally promised: $41.4-billion.

Let us take them at their word that spending will be frozen at that level for another two years, that is, until fiscal 2001, the year in which the Tories promise to bring the deficit to zero. If the annual cost of interest on the public debt, now estimated at $9-billion, grows to, say, $10.5-billion in the interim, that means the government will need total revenues of $52-billion in that year to balance the budget and meet their promise.

Now, of the current $46.8-billion in revenue, about three-quarters, or $35.4- billion, is in taxes, which grow more or less in line with the economy. Another $7.3-billion arrives in various transfers from the federal government, but that's slated to fall to $5.2-billion.

The government also collects about $4.1-billion in various fees, licences and royalties, plus income from government enterprises; assume these remain constant. To get to its overall target of $52-billion in revenues, then, the government will have to collect almost $43-billion in taxes in fiscal 2001: a 20- per-cent increase over five years.

But that's before taking into account the Tories' 30-per-cent personal income tax cut, which means the tax base - the economy, in other words - will have to grow a fair bit faster than 20 per cent.

How much faster? Personal income tax now raises $15.5-billion. A 30- per-cent cut on that base would cost about $4.7-billion, leaving total tax revenues at $30.7-billion. To get that up to the $43-billion required in five years, the economy would have to grow by nearly 40 per cent, measured in current dollars - almost 7 per cent a year.

Unlikely. If instead the economy grew at a more plausible nominal rate of 5 per cent, then on these assumptions the government would come up more than $3- billion short.

So the Tories have some work to do. But let's not overstate this. If they cut spending a little more, if they raise a little more in user fees, if interest costs come in lower than forecast, they can easily make up the difference, or close enough to keep Ontario's creditors happy. That's not something Bay Streeters like to admit. But actions speak louder than words.