Whoever you support, it is time to move on

[RightWinger]

I think we should let these Liberals argue amongst themselves!

Sparhawk, most everything you write, save for the last couple of posts, smells to me so much like BC NDP bullshit! That is why Campbell is having such a battle, These idiot NDP's in BC screwed the hell out of BC's economy, then they were defeated! Their whole platform for this past election, was the state of the economy and they were the ones who fuked it up in the beginning!

Your people must have smoked way too much BC skunk back in the day! So, back off the pot and open your eyes tunnel vision boy! The world cannot afford to sit back and indulge the massive social programs your people want. Let's get this economy going! Also, if the majority of Canadians want gay marriage, so be it! I am willing to bet that you and your fudge-packing buddies are greatly outnumbered!

[Riverwind]

Sparhawk, most everything you write, save for the last couple of posts, smells to me so much like BC NDP bullshit!

I am right wing economically but left wing socially. There isn't a party in the country that can completely represent my views. That probably one of the reasons I can live with the Liberal party's failings: I have to hold my nose whatever party I vote for. Conservatives could get my vote but they will likely have to get rid of Harper first.

Actually, correct that: the BC Liberals are pretty close. You won't hear a peep out of them about gays, abortion or the war on drugs: the economy is all they care about and that is way it should be.

[Argus]

Mulroney could have paid off the debt he inherited in a few years at the supposed service cost. That "high" interest rate did not last and had little bearing on the debt problem. Refinancing would have been no problem.

Let's examine the veracity of this statement.

Debt when Mulroney took over: $200 billion

Yearly budget $113 billion, yearly deficit $38 billion. Debt servicing charges taking 22% of the budget.

But he could have paid off that 200 billion in a few years? How? In a period of high unemployment interest rates (examine them before saying they didn't last) how is he going to not only wipe out a 38 billion deficit, but pay off 200 billion (in a few years)? Let me guess; increase taxes by about 50% in the midst of a recession?

And if Mulroney could have paid it off in a few years why haven't Chretien and Martin finished it by now, after many years of huge budget surpluses?

[Guest eureka]

It is often said that there was virtually no debt when Trudeau took office but it is not true. I do not have the figures at hand for the time, but the debt was $20 billion in 1971 and rose every year after that. I believe the amount added during the Trudeau years was about $114 billion. The greatest increase in the debt came during the final years of the Mulroney administration when the service cost did hit $40 billion in 1992.

That cost and the debt shrank dramatically under the Liberals to, again I think the figure was about $13 billion in 1997. The recession responsible for the initial surge in debt was in 1981 during Trudeau's time.

Mulroney had about 7 years of recovery and growth before the next recession fo;;owing his election hit. In that time, he sent the debt to about $545 billion instead of using his good luck to set it right.

[August1991]

When Mulroney took over from him in 1985 the debt was up to about 200 billion (8% of GDP) and the yearly deficit had passed 38 billion. Unemployment and interest rates were both into double digits. Debt service costs represtented 22% of the budget. With the bank rate as high as it was the debt jumped to 360 billion within five years because in order to pay the previous year's debt servicing charges the government had to run a deficit - which meant borrowing more money - which meant the following year's debt charge would be still higher During Mulroney's reign his government spent $230 billion servicing the debt, all of it borrowed money. Nevertheless, the overall debt dropped from 8% of GDP to 5.8% of GDP

Mulroney really gets a bad rap. He ran up the deficit largely because Canadians were in denial in the 80s about the dangers of deficit spending much like they are in denial about the sustainability of our heathcare system as it is currently structured. The Liberals were able to balance the budget because the population had 'hit bottom' and was willing to accept the treatment that would have been politically impossible for Mulroney in the 80s.

Mulroney also deserves a lot of credit for sticking to his guns on the GST. It allowed the Liberals shift gov't taxes away from income and on to consumption which has gives a much more competitive tax system.

<{POST_SNAPBACK}>

I haven't read through this whole thread but this intelligent post caught my eye.

The Canadian and US economies went into a serious recession in the early 1980s and government deficits ballooned in the two countries. If you blame Trudeau for increasing government debt, then you'd have to blame Reagan too.

In the 1980s, nominal interest rates remained high even though inflation fell. Hence, real interest rates were high. It was very difficult for Mulroney to avoid deficit spending when such a large chunk of the budget was taken by interest payments.

By the 1990s, nominal interest rates came down and real interest rates returned to historical average - about 2% or so. Balancing the budget became much easier. Economic growth meant more tax revenues while lower interest rates meant lower government expenditures. (I think the impact of Martin's cuts in transfer payments to the provinces and civil service reductions is exaggerated.)

Incidentally, the recession of the early 1980s was provoked by the US Fed applying a very restrictive monetary policy. At the time, it was the only way to end the nonsensical interventionist policies of the 1950s, 1960s and 1970s. This marked the start of what the Left calls the neo-liberal ascendancy. [Political factoid: The US Fed chairman at the time was Paul Volcker, the same guy who sits on Desmarais's Power Corp. Board and who is also conducting the UN Oil-for-Food scandal.]

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As to the GST, it is a consumption tax. The income tax contains an implicit distortion since it encourages current consumption as opposed to future consumption (or saving). The GST also has fewer collection points.

It took great political courage to introduce the GST and Canadians should be proud that Mulroney did it.

[Guest eureka]

Really intelligent, Argus! Now refute my position. The only error in it is that I somewhat exaggerated the Mulroney final debt figure. But what's a 100 billion to a neoLib! It was stil an example of gross incompetence.

I won't bother with the side liningin that "intelligent" post that brings in a spurious take on healthcare.

[Guest eureka]

Mulroney tore down Canada's southern wall. Almost simultaneously, he switched the balance of the federal tax system from income to spending. By leaving Canada's deficits to soar, he forced his successors to destroy public programs and institutions Tories had helped create and neo-conservatives now deplored. Love him or hate him, the only two-term Conservative prime minister of this century left an indelible mark.

This is from something by Prof. Desmond Morton that is kind to Mulroney and also thinks he "had a bad rap."

It about sums the argument without the fairy tale of interest rates.