Federal Deficit & Debt

[August1991]

Watch this debate in the future. "Martin reduced the deficit. He's competent."

On the contrary, he's only showing that he's an old time politician. Layton has a better handle on the issue. And Harper too, I suspect.

"Government" is unlike any institution ever created. It has both your cheque book and your credit card. It can use either at any time to buy what it needs.

And surprisingly, for you and me, as Canadians, it makes no difference whether the government uses your credit card (borrowing) or your cheque book (taxes) to buy what it needs.

Why surprising? If the government uses your credit card, you can simply pay off the bill. If you don't, that's your choice. (Would you leave a Visa bill to your kids? Well, don't! It's your choice... but don't blame the government for a situation you can undo, by paying your bills.)

If a politician (Martin) uses your cheque book to pay your credit card bill (taxed you to reduce the deficit), or another politician (Layton) uses your credit card to buy you services (borrowed to pay for road construction), they are both being paternalistic - and their claims of fiscal responsibility are irrelevant. (But maybe the road was a good idea!)

Much, much more pertinent: it matters greatly whether the government uses the card or cheques at all (not which one it uses).

There is a film about called "The Corporation". No corporation has your credit card number, nor bank account number unless you give it to them. (My sister has advised me against this kind of pre-payment.) But the Canadian Government has both your chequing account number and your Visa card, and you have no choice.

Canadians should better understand this entity called "government". It can do enormous good. But claims of "paying debts", or "reducing deficits", or "buying now instead of paying the mortgage" should be ignored.

Government is a strange beast - we need to understand it.

[BigGunner]

Watch this debate in the future. Martin reduced the deficit. "He's competent."

On the contrary, he's only showing that he's an old time politician. Layton has a better handle on the issue. And Harper too, I suspect.

"Government" is unlike any institution ever created. It has both your cheque book and your credit card. It can use either at any time to buy what it needs.

And surprisingly, for you and me, as Canadians, it makes no difference whether the government uses your credit card (borrowing) or your cheque book (taxes) to buy what it needs.

Why surprising? If the government uses your credit card, you can simply pay off the bill. If you don't, that's your choice. (Would you leave a Visa bill to your kids? Well, don't! It's your choice... but don't blame the government for a situation you can undo, by paying your bills.)

If a politician (Martin) uses your cheque book to pay your credit card bill (taxed you to reduce the deficit), or another politician (Layton) uses your credit card to buy you services (borrowed to pay for road construction), they are both being paternalistic - and their claims are irrelevant.

Much, much more pertinent: it matters not at all whether the government uses your cheque book or your credit card, but it matters greatly whether it uses the card or cheques at all.

There is a film about called "The Corporation". No corporation has your credit card number, nor bank account number unless you give it to them. (My sister has advised me against this kind of pre-payment.) The Canadian Government has both my chequing account and my Visa card.

Canadians should better undertsand this entity called "government". It can do enormous good. But claims of paying debts, or reducing deficits, should be ignored.

Blaming Layton and the NDP for the federal debt and previous decifits? Nice try, but its a can of worms that you might not want to go near.

Conservative PM Brian Mulroney expanded Canada's debt by $300 billion in 9 years of office....speaking of debt..

Conservative PM Brian Mulroney installed the GST, bracket creep on income taxes...speaking of theft of one's hard earned money..

Liberal PM Martin/Chretien unloaded $billions of service cuts to the provinces with no way to pay for it...speaking of not taking responsiblilty...

Liberal and Conservative 'politics' as usual has got us into this situation, not Jack Layton...

Jack Layton understands fiscal responsibility. As councillor for the city of Toronto, he and his council had stewardship over a $100 million civic budget....with laws that forbade deficits...no matter of the idiotic offloading by whomever the provincial government of the day was.

[willy]

Jack Layton understands fiscal responsibility. As councillor for the city of Toronto, he and his council had stewardship over a $100 million civic budget....with laws that forbade deficits...no matter of the idiotic offloading by whomever the provincial government of the day was.

August1991 was quite clear that balancing the budget in this regard is irrelevant. With legislation demanding balancing the budget, all one would do if they spend to much is tax more. (this was the cheque book part of the analogy)

$100 million is a far cry from $180 billion annually, and he was only one councilor. This is a far cry from PM and that is the job he is applying for.

[BigGunner]

Fair enough..

But one needs to identify what causes are right for increasing (or decreasing) taxes or taking on new debt for certain projects..

Its like the good debt/bad debt issue in households...

Good = mortgage, student loan

Bad = big screen TV, (some expensive trinket)

Federally,

Good = highway upgrades, airport fixes, misc. transportation projects.

Bad = Theme parks in the PM's home riding

We all gotta pay taxes. Learn to like them, as they will never go away. The line items in the budget are debatable, but more or less are agreed upon by most...frivolous projects like a sponsorship program are no excuse to raise taxes, and could have been better used as part of the healthcare transfers that were stolen from the provinces.

[willy]

Its like the good debt/bad debt issue in households...

Good = mortgage, student loan

Bad = big screen TV, (some expensive trinket)

Good debt is the kind that is tax deductible. If you borrow to invest it is a good debt. What makes it good is that it is tax deductible interest. In Canada, we can not write off mortgage interest and thus they are bad debts. Really wanting a house does not make it good debt. In fact if you sell it and it isn’t your primary residence you will have to pay capital gains and then it is a really bad debt.

[BigGunner]

Its like the good debt/bad debt issue in households...

Good = mortgage, student loan

Bad = big screen TV, (some expensive trinket)

Good debt is the kind that is tax deductible. If you borrow to invest it is a good debt. What makes it good is that it is tax deductible interest. In Canada, we can not write off mortgage interest and thus they are bad debts. Really wanting a house does not make it good debt. In fact if you sell it and it isn’t your primary residence you will have to pay capital gains and then it is a really bad debt.

There are taxes on just about everything, get used to it. In fact, if ever the Greens formed a government, there would be a "special" tax on chips and other snacks...on top of the already assessed GST.

[August1991]

Good fun, and I don't want to be a "sophisticated" easterner, so excuse my terms.

But if your partner/spouse/husband/wife/significant other uses your debit card, or your credit card, to buy something, is there any difference? You just pay the bill.

The government is the same.

A partner/spouse who claims to be good because she/he uses a specific card? Think twice. It's not which card he/she uses but how much they use the cards! Sorry for sounding like a sophisticated Easterner.

[willy]

A dumb western sometimes buys things that become more valuable over time and when you always have to earn more value than you will be taxed on sometimes you have to do stupid things like borrow to invest to avoid some taxes. It is the difference in tax rebate that ends up making you a greater return.

It would be much simpler if the money you made off an investment was yours but when you have to pay up to 45% back to the government it makes people do strange things to try and make a little money.

I guess we out west could learn something from you easterners, please continue to enlighten me as mostly easterners made up these tax laws.

[August1991]

A dumb western sometimes buys things that become more valuable over time

You "dumb" westerners, in my experience, buy good things almost always. Having lived amongst you, I have a tremendous respect for your common sense. (Do I sound patronizing? Sorry, I don't mean to. I really don't. I had the chance to see big skies, and mountains. I miss them - and I won't speak of Cape Freels.)

But how does it matter how something "good" is paid for? Credit card, debit card? What's the dif?

Imagine you are shopping, using your sister's cards to buy something for her neighbour? What's the dif what card you use? You just tell your sister: I did it debit, or credit. She'll figure it out after. (You are like the government! Can't people get this?)

How you did the damage to the cards is irrelevant. What damage you did matters.

Last point: Does it matter whether your sister's credit card is Bank of Montreal or Citibank or Banque de Paris?