It’s only $10 billion
That’s the line coming from several economists, as well as from Liberal Leader Justin Trudeau, when they argue that a deficit of that size is really no big deal. It works out to a measly 3 per cent of our $300 billion federal budget. Seems like a small price to pay to “get the economy moving,” doesn’t it?
If only it were that simple. If such a deficit is an “insignificant” size relative to the federal budget, it’s an even more insignificant sum as part of our much larger overall economy. It’s simply not going to make much of a difference in how our economy performs.
Secondly, it’s not just $10 billion this year. It’s another $10 billion the year after. And if history is any indication “small, temporary” deficits have an unfortunately common habit of turning into “large, permanent” ones. Indeed, between 1971 and 1997, Canada ran deficits – in most cases, in the tens of billions – every single year.
And then there is the debt.
Contrary to what many assume, simply balancing the budget in a single year isn’t the end of the story. There’s still the leftover pile of deficits from previous years to pay off. With interest. Lots of it.
We can thank our lucky stars that interest rates are low these days. Although even with these low rates, the federal government spent $26 billion on interest payments last year. But what’s truly mind-boggling is when you start adding up the interest payments over time.
Since 1990, the interest payments on Canada’s federal debt has cost taxpayers more than one trillion dollars.
Not one million. Not one billion. A trillion; one thousand billion. That’s a “1” with twelve zeroes after it.
What, precisely, did we get in return for this trillion dollars? After all, it can’t be infrastructure: that’s precisely the thing Trudeau and others insist we now need more money to build. Jobs? But we’re also told we need to borrow more now to “create jobs.” And then of course there’s all the programs and services that the pro-deficits crowd insists are chronically underfunded. We need to borrow to fund those too!
The sad irony is that a trillion dollars would be more than enough to fund the dreams of even the most spendthrift politician – with plenty left over for tax relief. But we can’t put that money towards the needs and interests of Canadians today, because we’re still burdened by the consequences of decades of reckless government borrowing. In effect, we are still suffering from a 40-plus-year hangover that just won’t go away, and that today’s politicians have no plan to try and remedy.
All of this needs to be borne in mind when politicians try to convince you that their “small, temporary” deficits are the cure to all that ails us. Because it is precisely the kind of thinking that has ended up costing Canadian taxpayers a trillion dollars in interest payments in the last quarter century.
So no, sorry, it’s not only $10 billion.
Please contact Aaron Wudrick, Federal Director, Canadian Taxpayers Federation:
613-234-6554 (office) or 800-265-0442 (toll free) or 613-295-8409 (mobile)
This is a free commentary provided every two weeks to media outlets and opinion leaders by the Canadian Taxpayers Federation (CTF). The CTF is Canada’s leading non-partisan citizens’ advocacy group fighting for lower taxes, less waste and accountable government. Founded in 1990, the CTF more than 84,000 supporters and seven offices across Canada. The CTF is funded by free-will, non tax-receiptable contributions.
Permission is freely granted to reprint or broadcast this material with appropriate attribution to the CTF and authors.