So Much For Tory Fiscal Stewardship

[ToadBrother]

And Trudeau will generate debt because he needed to be able to promise expensive goodies in order to get elected.

And the Tories generated debt by slashing revenues and continuing spending.

I'm sorry, there's no way the Tories come out of this looking good. If you're going to complain about Liberal deficits, then you have to at least admit the party you supported was every bit as willing to go down that road, and in the final push, created a fake surplus by selling assets.

[ToadBrother]

It's nothing if you tore it down 50 years ago but are still paying interest on it and what you replaced it with. If you just spent it on programs and services it became nothing even sooner. Kind of like borrowing to go on vacation but never paying it off.

Most sovereign debt is perpetual.

[Wilber]

Most sovereign debt is perpetual.

Weasel words. Doesn't make it cost you any less. Or your kids, or their kids. Etc, etc.

[angrypenguin]

Why didn't he stop adding to it in 2011?

I've posted my graph enough times.

Since 2008 the Conservative cut the amount they added to the debt by a tremendous amount year over year, until returning to surplus. It was around 30% every year or so since 2008.

I'm not posting it again.

Edited November 12, 2015 by angrypenguin

[ToadBrother]

Weasel words. Doesn't make it cost you any less. Or your kids, or their kids. Etc, etc.

It's just a statement of fact. Canada has run a debt pretty much from the day it was founded. In fact, one of the reasons it was founded was so a Canadian government could inherit the significant debts of the Maritimes.

[Wilber]

It's just a statement of fact. Canada has run a debt pretty much from the day it was founded. In fact, one of the reasons it was founded was so a Canadian government could inherit the significant debts of the Maritimes.

Canada's federal debt was flatlined from Confederation until the WW2, went up slightly and flat lined until 1974 when all hell broke loose.

Auditor General 1993

The cost of borrowing is the third area that affects the annual deficit. In 1991-92, the interest on the debt was $41 billion. This cost of borrowing and its compounding effect have a significant impact on Canada’s annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfall

The only thing saving our butts right now is record low interest rates.

You can say a 10 billion deficit is for infrastructure if you want but you can just as easily say it is to service existing debt so you can build infrastructure. It all comes out of the same big trough, how you dress the pig is just cosmetic.

[jacee]

Nonsense. You can't claim a recession in 2008 is somehow responsible for a structural deficit in 2016.

Oh. the devil made me do it.

He did create the structural deficit and for entirely ideological reasons. As an ideologically blind believer in small government, he wanted to hamstring future governments to hamstring them from have a government that does things. So, he cuts revenue, knowing that some future government will be forced into a choice of cutting program spending or raising taxes.

Patent nonsense. If Harper wants to constrain his own spending that's one thing. He's created a poison pill to constrain a future government. This type of dishonest governance needs to be called out for what it is.

After Chretien/Martin ran their surpluses, I would have been happier if they had put the surplus towards the debt and split the interest savings between new program spending and lower taxes. We would probably be $100 billion less in debt if that had happened. But instead, the Liberals spent the surplus and Harper created a structural deficit. And nobody complained because they were too greedy for tax savings.

So blaming this mess on Trudeau is ridiculous.

Like your post, RM.

One small correction: Harper spent the Liberal surplus he inherited.

.

[Wilber]

Structural deficits can be dictated by economic conditions. You don't have to do anything. You guys can pretend the biggest economic crisis since the Great Depression never happened but that won't change the fact that it did. You can also ignore that our deficits steadily declined since the initial shock in 2009. You can ignore that JT's solution is to keep borrowing and hope the economy bails us out. Keep drinking the kool aid boys.

[jacee]

JT's solution is to invest in much needed infrastructure, creating business and jobs and tax revenue, and hopefully free up for investment some of the massive wealth that corporations are currently hoarding.

[Wilber]

JT's solution is to invest in much needed infrastructure, creating business and jobs and tax revenue, and hopefully free up for investment some of the massive wealth that corporations are currently hoarding.

Yes, to keep borrowing and hope the economy looks after it. Same old, same old.

You did read the quote from The AG in 1993 that said of our $423B debt only $37B was due to a structural deficit. The other $386B had been borrowed to service existing debt. Did you not? Same pig, different dress.

Edited November 12, 2015 by Wilber

[ToadBrother]

Yes, to keep borrowing and hope the economy looks after it. Same old, same old.

You did read the quote from The AG in 1993 that said of our $423B debt only $37B was due to a structural deficit. The other $386B had been borrowed to service existing debt. Did you not? Same pig, different dress.

You do understand that interest rates paid on government bonds is not directly tied to BoC overnight rates, right?

[Wilber]

You do understand that interest rates paid on government bonds is not directly tied to BoC overnight rates, right?

I'll refer you again to the AG's 1993 report. Or don't you understand what he was saying?

[ToadBrother]

I'll refer you again to the AG's 1993 report. Or don't you understand what he was saying?

And I'll ask you, do you think a moderate increase in spending threatens Canada's credit rating?

[Wilber]

And I'll ask you, do you think a moderate increase in spending threatens Canada's credit rating?

Jeez Louise, I don't know about you but being able to borrow until my creditors get nervous has never struck me as being very intelligent. You can rationalize anything.

In 1993 the AG said that only 37B of the national debt was due to a structural deficit, the other 386B had been borrowed to service that 37B deficit. That is just what had been borrowed to service the debt. Even if we don't borrow a nickel this year, we are still paying about 26B to service that debt. If we knew how much had actually been spent to service that debt since Confederation, we would probably want to shoot just about every federal politician since Macdonald. At best they have been guilty of willful ignorance and at worst, downright dishonesty when it comes to rationalizing debt.

No matter how obvious it is, there never seems to be any shortage of kool aid drinkers to continue the cycle.

Edited November 12, 2015 by Wilber

[ToadBrother]

Jeez Louise, I don't know about you but being able to borrow until my creditors get nervous has never struck me as being very intelligent. You can rationalize anything.

In 1993 the AG said that only 37B of the national debt was due to a structural deficit, the other 386B had been borrowed to service that 37B deficit. That is just what has been borrowed to service the debt. Even if we don't borrow a nickel this year, we are still paying about 26B to service that debt. If we knew how much had actually been spent to service that debt since Confederation, we would probably want to shoot just about every federal politician since Macdonald. At best they have been guilty of willful ignorance and at worst, downright dishonesty when it comes to rationalizing debt.

No matter how obvious it is, there never seems to be any shortage of kool aid drinkers to continue the cycle.

You don't seem to be answering my question, and you haven't really demonstrated that you understand that government borrowing uses a different mechanic than commercial or personal debt.

[Argus]

JT's solution is to invest in much needed infrastructure, creating business and jobs and tax revenue, and hopefully free up for investment some of the massive wealth that corporations are currently hoarding.

First, he is not investing much in infrastructure. Second, there's no evidence his investments, such as they are, will create more than temporary construction jobs.

[Wilber]

You don't seem to be answering my question, and you haven't really demonstrated that you understand that government borrowing uses a different mechanic than commercial or personal debt.

Borrowing is borrowing and paying it back uses the same mechanic. You keep paying until you pay it off. If you don't pay it off, you never stop paying.

[Argus]

Borrowing is borrowing and paying it back uses the same mechanic. You keep paying until you pay it off. If you don't pay it off, you never stop paying.

Forty billion a year this year. As interest rates rise to more normal levels, that will jump to eighty billion a year.

[Wilber]

Forty billion a year this year. As interest rates rise to more normal levels, that will jump to eighty billion a year.

Well Wikipedia says about 26B for 2015 but you are right, if interest rates double, eventually, so will the cost of servicing the debt if none of it is paid down.

[Argus]

Well Wikipedia says about 26B for 2015 but you are right, if interest rates double, eventually, so will the cost of servicing the debt if none of it is paid down.

I'm not entirely sure where I got the figure from. A quick search shows this

In 2011, alone, Canadian taxpayers paid the private banks an estimated $37.7 billion to service the federal debt—over $103 million each and every day of the year!5

Also an interesting aspect of the cite below is this. It basically points out that with succesive deficit spending governments, we wind up borrowing money in order to pay the debt service costs on the money already borrowed.

From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.

http://qualicuminstitute.ca/federal-debt/

[Argus]

I'm sorry, there's no way the Tories come out of this looking good. If you're going to complain about Liberal deficits, then you have to at least admit the party you supported was every bit as willing to go down that road, and in the final push, created a fake surplus by selling assets.

Not every bit as willing. But I have criticized them in the past, both for the cuts to the GST, and for giving in to the opposition to launch a hugely expensive, and to my mind largely pointless 'economic inventive' program. I don't think we needed it and I don't think it did much good. I accepted it simply because the only alternative was a leftist government spending the same or more. But at least the tories had finally brought things back into a semblance of balance. And no, I didn't like their added promises the last year.

And no, I'm not going to give the rainbows and unicorns party a free ride. This is not an emergency similar to 2008. You might make the case that Alberta is really suffering, but I'm willing to bet virtually no infrastructure money will be spent there, especially as compared to say, the Atlantic provinces or Quebec.

[overthere]

And no, I'm not going to give the rainbows and unicorns party a free ride. This is not an emergency similar to 2008. You might make the case that Alberta is really suffering, but I'm willing to bet virtually no infrastructure money will be spent there, especially as compared to say, the Atlantic provinces or Quebec.

Little federal infrastructure money is ever spent in Alberta , really. And the irony is that because the province still retains fiscal capacity, it will continue to finance equalization as it own economy tanks. Please don't leave out that other chronic teatsucker- Manitoba- out of your comments.

They like to brag about their success, but resent any mention of that backdoor cash they get every year.

But I have criticized them in the past, both for the cuts to the GST, and for giving in to the opposition to launch a hugely expensive, and to my mind largely pointless 'economic inventive' program. I don't think we needed it and I don't think it did much good.

I agree. In retrospect, it was a mistake by Harper to cave in to the demands of The Coalition of Bloc Quebecois, Liberals and NDP and create the economic stimulus plan that basically did nothing, as usual. The Trudeau plan will accomplish even less. They never work, and have been tried for decades including by Trudeau the Elder.

Perhaps we'll see a return to another bout of good old some wage and price controls in a few years, when all this flops. But YES WE CAN!!!

[angrypenguin]

People do know that the Harper government spent the most money on infrastructure in the history of Canada.

3x more than tge last time we spent that much.

[ToadBrother]

Borrowing is borrowing and paying it back uses the same mechanic. You keep paying until you pay it off. If you don't pay it off, you never stop paying.

But you keep invoking the BoC prime overnight rate when you talk about the Government accruing debt, but sovereign debt interest rates are not a direct factor of central bank rates. They are more affected by credit ratings, which are not directly connected to any central bank rate. Once again you seem to have bought into the analogy to commercial and personal interest rates, and it just doesn't work like that. In fact, sovereign debt can often generate much higher interest rates for a jurisdiction than what private borrowers may experience; for instance Greece, or the other PIIGS during the height of the credit crunch.

[ToadBrother]

And no, I'm not going to give the rainbows and unicorns party a free ride. This is not an emergency similar to 2008. You might make the case that Alberta is really suffering, but I'm willing to bet virtually no infrastructure money will be spent there, especially as compared to say, the Atlantic provinces or Quebec.

And I'm willing to bet you're wrong. The Liberals smell a sea change in Alberta, and they'll make sure their small Alberta caucus has some money to dole out.