If you care to know what governments desperately want to hide, it’s best to skip speeches and introductory fluff in the beginning of budget documents. Instead, dig deep until you find hard numbers that in past years would be trumpeted. Here’s a good example: Canada’s federal debt after another five deficit years.
Back in the 2007 budget, one could find the total debt figure on page 32. This year, one must scroll through 175 pages to find a table where the figure, “$622 billion,” first appears. That $622 billion is the projection for 2015. It’s 36 per cent above and $165 billion higher than the recent low of $457 billion in 2008, this after a decade-plus of debt repayment.
The excuses for this newest debt binge are plentiful, mostly weak, and the federal books reveal Ottawa has no credible plan to attack the deficit.
On excuses, it’s true part of the current year’s $54-billion deficit can be explained away due to the suddenness and severity of the recession. But not all of it, not by a long shot. Much of the red ink is by choice. That includes the $15.3 billion spent on bailouts for General Motors and Chrysler, ongoing corporate welfare for other sectors, regional development slush funds, and upped transfers to the provinces that are similarly blind (or don’t care) about stealing from tomorrow’s generation to deliver unpaid-for benefits to today’s.
Another popular excuse for deficit spending/stimulus is to rescue the economy from the recession. Hello. Much of the 2009 stimulus money was only approved in late January, about five months before the recession ended on June 30.
So to credit government spending for ending the recession even though the recession was already done before most government stimulus cheques were cashed and before most shovels were in the ground, or to worry that ten, twenty, or forty billion less in annual spending by Ottawa would throw a $1.2 trillion economy back in recession, is to live in a time warp where public sector intentions can affect the economy to a greater degree than actual private sector investment and spending. It’s the latter that rescued Canada from the recession, not late-to-the-party “stimulus” cheques.
Some might offer up compassion as a reason for continued stimulus. Except that it was never as if unemployment insurance money wasn’t going to be paid or that EI had anything to do with stimulus money. Much of the past and present stimulus/deficits are at the expense of future growth. Financing a home renovation this past year can be subtracted from future hammers, nails and labour.
And added debt constricts future choices as tax dollars won’t be available to be used privately or publicly. Thus, even the social programs of tomorrow will suffer because of today’s excess spending. Those who don’t get that should look at public debt charges—$30 billion this year, $40 billion in 2015, and ask what $30 or $40 billion can buy in the way of social programs, or as economic incentives if overall personal or business tax levels were reduced by such amounts.
Not that it matters, given Ottawa’s minority government has decided to borrow from the future to spend now.
But however one would divvy up money now unavailable, government stimulus measures had little to do with ending the recession; credit near zero interest rates instead. More stimulus also won’t prevent another recession if a weak world economy and defaults in Greece, Japan or California push us all back into the economic soup.
As for plans to bring the budget back into balance, there isn’t one, not one worthy of the name. Finance Minister Jim Flaherty says he’ll find $17.5 billion in savings over five years. That’s microscopic. It’s 1.4 percent of $1.2 trillion in total program expenditures over five years. Most families could cut five, ten or twenty percent from their budgets if they had to, but not federal Conservatives from the collective public budget.
A scan of 425 pages reveals no substantial cuts to spending, including no reforms to public sector entitlements, salaries, and pensions to bring them into line with private sector realities. Quite the opposite: “Employee pension and other benefits are not subject to the general operating budget freeze,” reports the budget on page 183.
It’s hard to know what to make of this budget. Despite 424 pages, it comes across as the single most un-serious and flimsy budget document in recent memory. It’s the Peter Pan budget, created on a wish and a prayer. It hopes the world economy recovers instead of soberly facing up to the possibility that Canada’s federal government should get our fiscal house in order regardless.
I hear Paul Martin is now consulting for some European governments. The Conservative government would do well to put him on retainer here.