The Budget

[Argus]

55 minutes ago, msj said:

Not relevant.  Private sector debt is $2 trillion if we want to throw out big irrelevant numbers. 

Context is everything. Federal net debt level is 31%.  Not 80% like Germany. Not 100% like the US. Not 140% like Italy. Not 230% like Japan. 

It is manageable and it is exceedingly stupid to allow our infrastructure deficit to grow while interest rates are so low and the economy has slack.  

Then maybe we should spend a lot of money on infrastructure. We aren't doing that at the moment and the Liberals much ballhhooed infrastructure project is pretty small beer.

[Smallc]

$186B over 12 years is a lot of money.

[Army Guy]

16 hours ago, msj said:

Not relevant.  Private sector debt is $2 trillion if we want to throw out big irrelevant numbers. 

Context is everything. Federal net debt level is 31%.  Not 80% like Germany. Not 100% like the US. Not 140% like Italy. Not 230% like Japan. 

It is manageable and it is exceedingly stupid to allow our infrastructure deficit to grow while interest rates are so low and the economy has slack.  

Just a question.....How much does it cost Canadian tax payers  yearly to service this debt? just to stay neutral.....

[Smallc]

About $30 Billion, and steadily falling.  

[Bonam]

31 minutes ago, Smallc said:

About $30 Billion, and steadily falling.  

And if we weren't paying that, we'd have $360 billion to invest over the next 12 years (instead of borrowing to invest $186 billion). Debt is a ball and chain on government finances, and yet people want to pretend that just borrowing more will solve the problem. 

Edited November 7, 2016 by Bonam

[Army Guy]

On ‎11‎/‎7‎/‎2016 at 2:24 PM, Smallc said:

About $30 Billion, and steadily falling.  

How can it be falling if our government continues to run negative bals....

[taxme]

On 11/6/2016 at 5:50 PM, msj said:

People die; governments live forever.  

The government is always spending taxpayer's tax dollars that it does not have. And they like to spend our tax dollars on projects and agendas that we don't need or never asked for. And there does not seem to be anyway to stop this mainly because they know that the people don't care. Hey, if I can take money out or your wallet every day, and you say nothing about it, well I will continue to do so until you finally wake up and speak out and say no more, enough already. And that is what the taxpayer's have to say to their elected officials. ENOUGH ALREADY.   

[Smallc]

19 minutes ago, Army Guy said:

How can it be falling if our government continues to run negative bals....

Interest rates are low.  Debt that's coming due can be refinanced at far lower rates than it was originally financed at.

[?Impact]

On 11/4/2016 at 1:55 PM, Wilber said:

If you are comfortable with spending 32% of your life income to service debt 

I don't understand what does cost of servicing the debt have to do with the debt:GDP ratio? I assume that is where you got the 32% from, but the cost to service the debt is based on the interest rates we are paying. Many of us have mortgages that are higher than our annual salary (personal GDP if you will), so we have personal debt:income ratios way about 100%, but the cost to service that debt is obviously much lower.

20 minutes ago, Army Guy said:

How can it be falling if our government continues to run negative bals....

I has been falling for the past several years as old bonds expire and are renewed at current lower rates. There are still several outstanding that are significantly higher than todays cost of borrowing, but what the situation will be a year or five years from now is unknown.

 

5 minutes ago, taxme said:

And they like to spend our tax dollars on projects and agendas that we don't need or never asked for.

Everyone has a different view of what the spending priorities should be. What you consider unnecessary, others may consider vital. The government is tasked with considering everyones opinions, and building compromise. Society cannot function without compromise.

Edited November 10, 2016 by ?Impact

[Michael Hardner]

Context:

Quote

Canadian governments (including local governments) collectively spent an estimated $60.8 billion on interest payments in 2014/15. That works out to 8.1% of their total revenue that year.

 

Not 32%.

 

 https://www.fraserinstitute.org/sites/default/files/cost-of-government-debt-in-canada-2016.pdf

[Smallc]

That's a bit misleading as it's not all under the control of Ottawa. 

[Michael Hardner]

Then it is MUCH less than 32% of our income to service debt... even less than 8%....

[Smallc]

More like 4% for federal debt.

[Michael Hardner]

So... we're saying that it's less than 32% then ... if I am following this correctly.

[Smallc]

Yes, but I think he misspoke.  It's equivalent to 32% of your yearly income being held in debt - about 7% from where the government wants to be (right now it's actually 31%).

Edited November 10, 2016 by Smallc

[taxme]

6 hours ago, ?Impact said:

I don't understand what does cost of servicing the debt have to do with the debt:GDP ratio? I assume that is where you got the 32% from, but the cost to service the debt is based on the interest rates we are paying. Many of us have mortgages that are higher than our annual salary (personal GDP if you will), so we have personal debt:income ratios way about 100%, but the cost to service that debt is obviously much lower.

I has been falling for the past several years as old bonds expire and are renewed at current lower rates. There are still several outstanding that are significantly higher than todays cost of borrowing, but what the situation will be a year or five years from now is unknown.

 

Everyone has a different view of what the spending priorities should be. What you consider unnecessary, others may consider vital. The government is tasked with considering everyones opinions, and building compromise. Society cannot function without compromise.

I don't think that compromise works at all in Canada because it would appear that only a small minority get to force their programs and agendas on the majority who may not want to have anything to do with their programs and agendas. It would appear as though the government will only listen to a minority rather than the majority, and no amount of compromising will change what the minority want. The government may make it appear as though they are listening to the majority but there will be no compromising anything with that majority. A minority do not want to compromise on anything. They want it all.     

[taxme]

Obviously nobody here has heard of the Comer Report. If Canadians created their own money rather than allowing private banksters to create it for them they would never be in any kind of debt. We pay interest on money borrowed from those banksters which makes no sense at all. Once Canadians learn that all our tax dollars pretty much go back to those banksters to try and pay off that debt they would probably demand that this must change. The Canadian government is in cahoots with the banksters to give the shaft to the taxpayer's of this country. Nothing will change until one learns as to how the money system works. It's on the internet if one wants to know and learn the facts about how the money system works. 

[Army Guy]

16 hours ago, Michael Hardner said:

Context:

 

Not 32%.

Canadian governments (including local governments) collectively spent an estimated $60.8 billion on interest payments in 2014/15. That works out to 8.1% of their total revenue that year

 

 https://www.fraserinstitute.org/sites/default/files/cost-of-government-debt-in-canada-2016.pdf

A lot of numbers being thrown around which is adding to the confusion..... What we are saying is that Canadians are on the hook for 60.8 Bil dollars each year to service debt......and we brush that off as not being a whole lot of money because it represents only 8.1 % of out total income.....What has me concerned is this attitude in the last 8 years we have added 175 bil to our national debt, and according to Michaels source represents a 54.6 % increase in national debt.....The liberals have already said they are will to add another 186 bil just for infra structure over the next 12 years. that does not take into account anything else.....ARE you asking us to relax everything is going to be OK the debt is really nothing to worry about..... When would be a good time to get concerned ....when they jack up interest rates, or when they jack up me taxes....

[Army Guy]

One other question why is Micheals source quoted as saying net debt as percentage of GDP at 64 % what does that mean exactly.

 

[Smallc]

21 minutes ago, Army Guy said:

One other question why is Micheals source quoted as saying net debt as percentage of GDP at 64 % what does that mean exactly.

 

That means that the provinces and Ottawa together have 64% debt when you use free cash assets against the total.

[Argus]

The easiest way to think of it is what share of the government budget goes to paying the interest on the accumulated debt. Because were it not for the debt we could be spending that on something useful, or cutting taxes. And it's short sighted to think that our servicing costs are getting lower given interest rates are going to be going up, perhaps even up significantly in the coming years if Trump has his way. Not only are we adding more to the debt every year but all the infrastructure spending through borrowed money in the US is liable to provoke inflation, which will spill over to Canada. That in turn will cause interest rates to go still higher. It would not take a lot of increase to have that $30 billion jump to $60 billion. What does that do to our budget?

 

[Smallc]

You understand that debt rates are locked in for years, and in many cases decades?

[Bonam]

43 minutes ago, Smallc said:

You understand that debt rates are locked in for years, and in many cases decades?

Each year, we borrow more since we run deficits each year. Any new borrowing is at the interest rates prevalent in that year. If/when interest rates rise, the debt mix that we service will start to increase in terms of its average servicing cost as the preponderance of old low interest rate debt slowly becomes replaced with newer higher interest rate debt. 

I agree that relative to other times, now is a good time to borrow due to interest rates being near historical lows. But just because now is a better time than other times to borrow, doesn't mean we should borrow if we don't need to. Canada is in an enviable position compared to most other western countries in terms of debt-to-gdp ratio, due to fiscal prudence by a long succession of Canadian governments, and I would like to see that fiscal prudence continue. That means not borrowing just because we can, even if it's tempting to do so, unless there are very very good reasons. 

[Argus]

1 hour ago, Smallc said:

You understand that debt rates are locked in for years, and in many cases decades?

You understand the debt will be there for many years, and in almost all cases, decades?

[Smallc]

31 minutes ago, Argus said:

You understand the debt will be there for many years, and in almost all cases, decades?

Yeah, and the economy will grow to make the debt insignificant.  We have to return to balance at some point, but now it's easy to argue balance isn't that important.