Canada's debt

[daniel]

Like everything else there are pros and cons. People tend to forget that we vote for our MPs and not the government. It is the elected MPs who select the government.

Question Period is a joke. Ed Broadment stated that it is not "Answer Period" so the government side can respond any way it wants to - even lying. The irony is that when pointing out the lie, the member who makes the accusation (although stating the truth) gets thrown out.

The interogation Mulroney sat through during the Mulroney-Schreiber Inquiry indicates how tough the questions really should be and how the respondant should not get away without giving a satisfactory answer without spin, hyperbole or attacks thrown back to the questioner.

[sharkman]

And I see it as the exact opposite. Our system get things done and it has the ability hold our head of government to account much easier. Our government must do the people's will (even though yoyu will argue that the concentration of party power doesn't make that so, I would disagree. If Canadians didn't like what the party was saying, they wouldn't vote for the MPs). It really is responsible government.

People always talk about the appointments that tahe PM can make. Wellm in reality, the President makes even more. Many have to go through the Senate, but there is still a great deal of power in a political office. Here, all power really rests with a non partisan non political figure who has only the best interests of the country and the constitution in mind.

You seem to be comparing Canada and the U.S. Please explain how is it that our system has the ability to hold our head of government to account. Remember, in Canada we rarely get minority governments.

[sharkman]

You can't keep BLINDLY cutting taxes and expect to stay out of debt, or maintain adequate social services. Taxes = revenue.

Now if you want Canada to adopt the Republican insanity of Palin, Rove, Cheney, Bush, Coulter and Limbaugh, then you keep on advocating reducing gov't revenue.

This is true, but an objective look at the evidence clearly shows that the Canadian government was reaping huge surpluses the last few years so we were no where near such hysteria that you mentioned. Also, your group of Americans have widely differing views on government taxes/revenue, so that comment is meaningless.

[Topaz]

I like to know the views of how higher the Tories will take the deficit. It wouldn't surprise me if it went over 100Bil or higher. There are few ways to pay this off and one being selling the crown properties, reduce spending or yes, raise taxes, even the GST, which helped create this mess. Its hard enough to have novice people governing this country but when a crisis comes up as this mess, they are out of their league! As a voter I would voted out anyone nearing their 6 years and save money by not letting them recieve their, 100,000 yrly pensions later on. Or how about taxing the 100,000 up taxpayers, which included the MP's. Harper says he can pay this off in 5 years and I think he should tell Canadians HOW?

[MontyBurns]

You can't keep BLINDLY cutting taxes and expect to stay out of debt, or maintain adequate social services. Taxes = revenue.

Now if you want Canada to adopt the Republican insanity of Palin, Rove, Cheney, Bush, Coulter and Limbaugh, then you keep on advocating reducing gov't revenue.

If you like paying taxes call Revenue Canada and tell them that you would like to pay more this year.

Do your part for the social sector.

[MontyBurns]

Harper says he can pay this off in 5 years and I think he should tell Canadians HOW?

Increase taxes on socialists since they like paying taxes. That will help solve it.

[Jerry J. Fortin]

And I see it as the exact opposite.

Of course you do!

Our system get things done and it has the ability hold our head of government to account much easier.

Really, and how is it that we hold them to account without any way to remove them from office? In fact we don't even get a say in whether or not they get into office, because the people are not allowed under this system to choose their own leader.

Our government must do the people's will (even though you will argue that the concentration of party power doesn't make that so, I would disagree. If Canadians didn't like what the party was saying, they wouldn't vote for the MPs). It really is responsible government.

The government does the will of the Prime Minister, period. The proof in in the pudding , what happens when one of the government MP's votes against the government because the constituents demand it? The constituents are the will of the people, not the anointed partisan hacks bellying up to the public trough. Getting a once a mandate vote, and only on who to vote for not on any of the issues does not constitute a democratic system. Aside from that, waiting till all the damage is done over the duration of the mandate, we are then allowed to dump them, how very nice. Not my idea of a responsible government.

People always talk about the appointments that tahe PM can make. Wellm in reality, the President makes even more. Many have to go through the Senate, but there is still a great deal of power in a political office. Here, all power really rests with a non partisan non political figure who has only the best interests of the country and the constitution in mind.

No doubt you are suggesting that the Governor General holds all the power, even on paper that is incorrect and you must surely know that. The Governor General does in fact have some reserve powers in theory. They are supposed to be able to dismiss Prime Ministers and dissolve government, or withhold royal consent in times of constitutional crisis but these powers are not used very damned often. In fact should the Governor General attempt such a thing in these days the poop would hit the fan big time.

[Smallc]

They are supposed to be able to dismiss Prime Ministers and dissolve government, or withhold royal consent in times of constitutional crisis but these powers are not used very damned often.

Yes....all of the power. And actually, I think I was speaking of the Queen. You don't like our government system. That's really too bad, because it probably won't be changing to any large degree.

[Smallc]

Really, and how is it that we hold them to account without any way to remove them from office?

Non confidence....and elections.

[Smallc]

You seem to be comparing Canada and the U.S. Please explain how is it that our system has the ability to hold our head of government to account. Remember, in Canada we rarely get minority governments.

That's right, but even during majority the Prime Minister can't do anything completely outrageous. He has to keep all of his own MPs happy and he has to satisfy the constitution to avoid being dismissed.

[Smallc]

In fact should the Governor General attempt such a thing in these days the poop would hit the fan big time.

I doubt it. If a circumstance arose where the GG actually had to use any of the power that she has without ministerial advice, then it would probably be a very sticky situation, one that would need solving. There's a reason that she holds the power that she does. It's there in order to protect the country and the constitution.

[Smallc]

I seem to remember someone who believes in Alberta forever saying something about the fact that there was not going to be a deficit for the year and that everyone that said there would be was wrong....Hmmmm

$2.25B

I guess the media didn't hear him.

Edited May 30, 2009 by Smallc

[Machjo]

To some degree, I'd say we're at fault for thi deficit. Imagine, if in an election you have two candidates to vote for, and here's what they promose:

Candidate 1: 'I'll reduce government spending.'. When asked about taxes, he states that he hopes to reduce them, but no promises; it'll depend on the revenue to sepnding ratio.

Candidate 2: 'I'll reduce taxes'. When asked about spending: 'Well, we've got all kinds of responsibilities like war and such'.

My guess is, between two such candidates, most would vote for 2 above. Personally, I'd vote for 1 above. And you?

[Smallc]

I would vote for option 2. Well, no, we can reduce from the recession spending levels, but it is true that we do have many commitments. Actually, I'd like a third option that holds the line somewhere around 2007 levels.

Edited May 31, 2009 by Smallc

[Machjo]

I would vote for option 2.

I think most would too. Personally, though my first preference would be for a candidate who will tryto reduce government spending, my second option would be for a candidate who doesn't fear supporting tax increases to maintain a balanced budget (for example, if he fails to convince the government to reduce spending). My last option would be for a candidate who promises tax reduction yet can't promise spending reductions.

In this respect, if I only had a choice between the following two candidates:

1. 'I'll increase taxes if necessary to balance the budget'.

and

2. 'I promise tax reductions no matter what the cost'

I'd vote 1 aobve. But I suspect most would vote 2 above.

[Smallc]

I don't know if you saw, but I edited my post above.

[Machjo]

I don't know if you saw, but I edited my post above.

Thanks.

Also, seeing that it's easy to say 'cut spending', has anyone gote some advice as to where to cut spending?

Personally, I could think of a few that would hurt nobody too much:

1. Cut (and I don't mean reduce, but CUT) spending on second-language education for civil servants, police, military, and all other government personnel, and instead use the limited bilingual resources available more strategically by placing them where their language skills are likely to be needed most.

2. Introduce high-level (not Mickey-Mouse) compulsory tests to assess the language competence of newcomers to Canada, which they must pass, and cut (again, I make a distinction between the meanings of cut and reduce) spending on the Federal LINC programme (http://www.servicecanada.gc.ca/eng/goc/linc.shtml).

3. Make an official recommendation to the UN to consult formally on the reduction of the UN's official languages from 6 to 1 (last I'd read, the UN was spending about 12 million US dollars a year on interpretation and translation costs for meetings of the General Assembly alone! And remember, this increases funding demands on member states, including Canada).

Now, I said that none of thes policies would hurt anybody too much, and here's my explanation:

1. Generally speaking, in a bilingual community where someone might in fact need government services in either official language, chances are there are also plenty of bilinguals to choose from. logical conclusion, eh. And if there are not many bilingual candidates to choose from in that community then it's probably because the community is not very bilingual in the first place. Again, a pretty logical conclusion. So cutting spending on language teaching for civil servants is not likely to affect access to bilingual services much.

As for the teachers who lose their jobs as a result, well, they are bilingual, teachers are generally well educated and receive a middle class salary, and so they are likely to be more able to cope with the layoffs than others. Add to that that once these teachers go to work in the private sector, they expand access to bilingual services in the private sector. So no one will suffer too much from this. And worse comes to worse, they'll still have access to Ei in the transition period.

2. If we don't allow a person to enter Canada in the first place, then we're not going to be causing him any undue harm. He'll just continue on as he always had before. As for teachers in the LINC programme, same as above for those in the public service.

3. If UN interpretors and translators lose are laid off, I'm sure they'll be able to find other work for crying out loud. They're highly qualified.

So I think the above would be an example of tax cuts that would not hurt anyone too much, if we want to look at it from a humanistic perspective.

[Jerry J. Fortin]

Our national debt per capita is a little over $21,000.00 and was falling. If you really want to do something worthwhile toward that debt level, add another freaking tax to pay off the debt. Once that debt is paid off this nation would be in very good shape.

[Machjo]

Our national debt per capita is a little over $21,000.00 and was falling. If you really want to do something worthwhile toward that debt level, add another freaking tax to pay off the debt. Once that debt is paid off this nation would be in very good shape.

I woud rather reduce government spending. Having said that, though, I agree with you that if reducing government spending is not an option, then increasing taxes would be preferable to what the Conservatives have done.

[myata]

And among the things that they done, was as many pointed out, a massive spending spree (surplus extermination) almost immediately preceding the turn of this recession. Is somebody laughing up where? Or simply that deep rooted conservative conviction that they "know" things best - even the ever unpredictable economy? Does not appear like sound prudent policy for which they so like to praise themselves.

In that regard, I'd like to draw attention in particular to the GST reduction strategy. Because nobody I know would make a purchising decion based on 2% margin (I mean the decision to buy or not), at the time it looked as an election gimmick (as it probably was devised by conservative election strategists). Really it doesn't do much more than saving consumer a few hundred bucks, on average year, plus some more once in while on a big purchise. In good times, when government revenues are coming from a variety of sources, that's OK. But in recession, when income and profit tax base shrinks dramatically, GST would be one of a few sources of revenue relatively less impacted by the economic slowdown. This is, again, because nobody makes buying decisions because of a few percentage point difference. That was the idea of sales taxes in the first place (to add a stable source of revenue less affected by economic cycles), and it's hard to imagine that economist Harper did not know that, but this seems to be (yet) another case where prudence and common sense gave way to ideological preferences, in this government.

As a result, public revenues were cut by 25% of the more stable revenue source (8% GST to 6%) exactly at the time it was needed most. Call it whatever you want, but to me it looks as certain shoot themselves (and ourselves, with them) in the foot, as can be. Well done, Messrs Harper and Flaherty! May be that could go some way in explaining the wide fluctuations of your deficit prediction (34 to 50 bill., like 50% in the course of three months; I hope the trend won't hold, at least not in linear progression, for the sake of us all here).

[Jerry J. Fortin]

The debt we already have is a relative thing. It is not so large as to consume the GDP, nor is it so large to represent a dominating factor in budgets in terms of servicing fees. In other words we have the fiscal room to maneuver.

Yet the question is whether or not the government should try to "spend" its way out of economic recession.

[Machjo]

One way I could see of stimulating the economy without causing unnecessary debt would be the following (though it should be used only as a counter-deflationary measure):

1. Print just enough money to stop the deflation (any more than that woud be harmful) and put that money into ethical funds. This would have a few advantages:

a. It would put more money in the economy by increasing demand for funds, thus providing businesses with the funds they need.

b. It would ensure that the money goes towards promoting ethical industries.

c. Once the economy picks up (which is when we're most at risk of inflation) the government could then start to sell those shares and take that money back out of the economy. This would kill two birds with one stone by putting money into the economy in a recession while being able to pull it back out of the economy in tmes of inflation, thus helping to stabilize the conomy.

d. It would allow us to increase spending without having to borrow. In fact, if we have debt, we could even pay down the debt with this printed money.

2. We sell those shares once the economy picks up again tohelp control inflation. Now if that money is used to pay off the debt instead, then this option is removed, in which case we would simply have to reduce government spending later to control inflation.

A big disadvantage os such a policy is that it could only be used once we fallinto deflation (which usually occurs some time after a recession has already started) and can only allow for the printing of just enough money to counter the inflation, no more. So its use is limited, but it does have the advantage of ensuring that any recession will be moderate.

[Jerry J. Fortin]

One way I could see of stimulating the economy without causing unnecessary debt would be the following (though it should be used only as a counter-deflationary measure):

1. Print just enough money to stop the deflation (any more than that woud be harmful) and put that money into ethical funds. This would have a few advantages:

a. It would put more money in the economy by increasing demand for funds, thus providing businesses with the funds they need.

b. It would ensure that the money goes towards promoting ethical industries.

c. Once the economy picks up (which is when we're most at risk of inflation) the government could then start to sell those shares and take that money back out of the economy. This would kill two birds with one stone by putting money into the economy in a recession while being able to pull it back out of the economy in tmes of inflation, thus helping to stabilize the conomy.

d. It would allow us to increase spending without having to borrow. In fact, if we have debt, we could even pay down the debt with this printed money.

2. We sell those shares once the economy picks up again tohelp control inflation. Now if that money is used to pay off the debt instead, then this option is removed, in which case we would simply have to reduce government spending later to control inflation.

A big disadvantage os such a policy is that it could only be used once we fallinto deflation (which usually occurs some time after a recession has already started) and can only allow for the printing of just enough money to counter the inflation, no more. So its use is limited, but it does have the advantage of ensuring that any recession will be moderate.

Printing money will only further devalue the dollar. As it stands now we are only in a recession, not a depression. If a government starts monkeying around with the dollar then we will be in real trouble as in deflation and depression. As it stands now, the correct move is in fact some sort of stimulus package. My view is that any such package should be infrastructure, and not just building roads and fixing sewers, these are only public assets that do absolutely nothing to return the investment. Granted this type of thing does wonders for private business, but I tend to think the government should avoid making profits for individuals in favour of creating some secondary industrial capacity that would at least have the potential to provide a return on investment. Call them crown corporations or call them coops, whatever you call them isn't important, the point is productive capacity. The creation of wealth is dependent upon profit made though productive effort. That is the name of the game after all.

Coops are the best available business model for this kind of thing, at least it leaves government out of the equation and has the effect of spreading the wealth around. Spreading the wealth is the way out of our problems. Providing or creating additional disposable income for citizens is the only sure means of increasing economic activity.

In my view the best way to go is to begin with energy and food production because we have a ready made internal market for these products and the available resources to pursue the effort. In addition, our small population makes the production surplus to internal consumption available for export and bringing in foreign capital in the form of profits is the easiest way out of debt. Make the other guy pay the bills and let us invest the savings.

I guess what I am getting at is that the governments need a full spectrum economic plan that begins with and ends with the concept of profitable employment for the citizens.

[Machjo]

Counter-deflaionary printing might devaluethe dollar, but in a recession that could be a good thing anyway.

The disadvantage, of course, is that the increase in exports and decline in imports could also risk inflationary pressures. If, however, we print just enough to halt deflation (the definition of counter-deflationary printing) and no more, then that is handleable. Sure the dollar might devalue a little but not too much. And with such little printing, we coud esily, once we start to get out of recession, to then just start reducing government spending to take that money out of circulation again, thus essentially moderating booms and busts in the economy.

[Machjo]

Your idea of workers co-ops I like too. That could be integrated with the idea of the government investing in ethical investment funds. Bying stocks in co-ops could be a way to help them indirectly while still being able to control inflation later by selling off those shares when the economy picks up again, thus taking that money back out of the economy as a counter-inflationary measure.

We need a ong-term plan. Right now the problem is diflation and demand-deficient unemployment. Later, it will be inflation. We need a plan that can kill those two birds with one and the same stone. Buying shares in companies with printed money now and then selling them off and taking the money back out of the economy later could be a way of solving a problem now while laying the groundwork to fight the opposite problem later.