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Liberal Tory same old story

By Kevin Gaudet
web posted February 9, 2009
 
Big-time government spending is back in a big way.  The federal government has tabled its budget and revealed plans for a drunken spending spree.  Sadly, taxpayers will be left with a budget hangover for years to come from this binge.  Prime Minister Harper plans to rack-up no less than $85 billion in new debt over the next few years.  Nearly a decade of debt reduction will be wiped out with this one budget, leaving taxpayers to wonder how this could happen.  A look at Canada’s economy and the budget reveals how this was a betrayal of good fiscal management and how the keys of the federal treasury have been given to the opposition coalition.

With Mr. Harper in power, many Canadians thought they had a federal government interested in keeping its promises to control spending, balance the budget and reverse decades of overspending.  They were wrong.  When the Liberals left office, program spending stood at $175-billion. In the four years since, spending is projected to have grown by 31 percent, up to a whopping $229-billion!  This government has abandoned any pretense of being fiscally conservative with their plans to spend with reckless abandon.

Listening to the rhetoric coming out of Ottawa, one would believe Canada is in the midst of an economic meltdown, the worst since the Great Depression.  This is absolute rubbish.  Unemployment is at 6.6 percent, only up from an historic low of 5.8 percent last year.  It is expected to top-out at no more than 8 percent.  Those repeating the rhetoric would be wise to recall that unemployment during the recessions of the 80s and 90s hovered around 13 percent.  Interest rates in the 80s pushed towards 20 percent and were under 10 percent in the 90s. Today they are below 5 percent.  The economy (GDP) is flirting with zero growth, nothing like the 43 percent contraction in the 1930s. 

In a hysterical over-reaction to calls for ‘stimulus,’ after eleven straight years of surpluses and debt reduction, the latest federal budget takes a giant leap back into deficit. ‘Stimulus’ is merely a new code word for deficit. It is used by those organizations, businesses and special interest groups with vested interests in convincing government to ratchet up spending.  They succeeded. 

Only three months ago during the last election, all party leaders promised that they would balance the budget.  Sadly, now they are fighting with each other over just much over-budget they should go. 

The government says it plans to return to surplus in five years. But this will only be possible if its rosy revenue projections come true and it is able to restrain spending growth.  Now that the spending taps have been turned on, it will difficult to turn them off again. Temporary programs changes like EI benefit extensions and regional development spending have a way of becoming permanent, especially with the political pressures of a minority Parliament.

Debt growth is also a problem.  Canada’s federal debt stood at $457.6-billion at the end of 2007–08 down from its peak of $563-billion in 1996-97.  Yet, the Harper government is planning to build it back up to no less than $542 billion, the same level it was in 1999-2000.  This huge debt burden amounts to $16,224 for every man, woman and child in Canada.

The only glimmer of good news in the budget was the rise in thresholds for taxing income in the 22 percent and 26 percent tax brackets.  Raising these thresholds means more income is taxed at a lower rate. This measure is broad-based and provides modest relief for the average Canadian family.  Regrettably, its impact pales in comparison to the spending spree.

Mr. Harper used to be a very vocal opponent of deficit spending, corporate welfare and regional development programs.  Sadly, he has now embraced them with vigour.  Taxpayers are left to scratch their heads wondering where in Ottawa is there a political party who will stand up for and champion the taxpayer? ESR

(c) 2009 Kevin Gaudet

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