Friday, September 18, 2009

Time For A Canadian Tea Party

Stephen Harper was right on one thing: once you get into deficit, it spirals out of control. And that's exactly what has happened lately. Let's look at it again: Back in late November of 2008, we were promised a balanced budget for 2009/10. Later it was announced that lower revenues might result in some $11-15 billion deficit. The Liberals wanted more stimulus spending in the 2009 budget - they got it; the deficit went up to $34B. Then came the time to bail out the auto industry, literally buying out their shares at face value - so the deficit went over $50B and now, according to the recent projections, it's expected to hit ~$56B. Similarly, the deficit for 2010/11, initially estimated at $29.5B is expected to climb over $45B.

But that's because we're in recession, isn't it? The stimulus spending - isn't this just a temporary measure to keep the wheels of the economy turning during the crisis? And, since it's not part of the "base" program expenses, these should be just temporary deficits, shouldn't they? If that was the case - then we would see the winter's budget projecting surpluses as early as 2011/12. But somehow, the budget projected $13B deficit for 2011/12 and $7B deficit for 2012/13. In other words - even back in January, the budget already included at least $13B in excess "base" spending, which was nothing but a structural deficit.

Since then, that structural deficit has more than doubled (from $13B to $27.4B in 2011/12) and it will take not 2 more years but 4, until 2015/16, for the revenues to finally outgrow the inflated program expenses. So, for the next 6 years we should expect no tax relief; at least - not on the Federal level. For the next 6 years, the debt will keep piling up, threatening to reach $1 Trillion (Federal and provincial debt combined) and undoing more than a decade of surpluses. For the next six years we'll be working overtime so that our big government could keep throwing away cash, overspending roughly $75B every year.

And if you think that things will be better under Ignatieff - sorry to disappoint you - they won't. The moment his new government is sworn in, Ignatieff will tell us "oh, I wish I could keep my campaign promise and balance the books without raising taxes" - and he'll bring in a tax hike or a new tax - such as carbon tax or federal healthcare premiums or anything else his finance minister could think of... And we'll end up with a weaker economy, heavier tax burden and - even bigger deficits. Because, apart from "not raising taxes", Liberals will have some other costly campaign promises. And they won't want to alienate their many supporters among special interest groups that will demand cash, cash and more cash.

So, how can we get out of that deficit hole? There's only one solution: cut wasteful spending.
This is a "no more taxes" rally from 1995. It was thanks to these rallies that Jean Chretien's government realized that people are not going to tolerate any more taxes and that it's the time to cut spending to eliminate the deficit. In just a year's time, the deficit went down from $30B (1995/96) to $8.7B. Considering that the GDP back then (as well as government revenues and expenses) stood at about half of what they are now, slashing 21.3B from the deficit back then could be compared to reducing it by $43B these days. All what's needed is enough political will.
Here's a US Taxpayers' Tea Party March. It's time to have a similar protest here in Canada. In the US, 2 million people came to Washington DC to protest runaway spending and the imminent tax hikes. Here, we may not even have enough space in Ottawa for that many people, but at the very least, we can have 2 million people (which is roughly 1 in 10 registered voters) sign the petition to cap program spending and balance the books in 2011/12.

3 comments:

Susannah said...

"And if you think that things will be better under Ignatieff - sorry to disappoint you - they won't."

Speaking of Ignatieff, have you seen this ad that popped up on Youtube last week?

Thucydides said...

London, Ontario will host a "Stop Over-Spending" (SOS) rally in downtown London 03 Oct 2009, based on the TEA party meme.

Find out more at the Forest City Institute website:
http://forestcityinstitute.ca/

See you there!

Leonard said...

I live in Moncton NB, so I won't be able to get there on such a short notice, but I'll blog on that to help getting the word out.