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Debt, Deficits and the Cost of Free Lunches

DEBT, DEFICITS AND THE COST OF FREE LUNCHES

It seems that every generation or two, fundamental economic ideas are questioned and challenged. The reasonable and important idea that governments should balance their budgets on an annual basis was challenged in the 1930s by the rise of Keynesian Economics and the counter-argument that deficit spending was desirable, if it was used to maintain full employment. Now it seems that any defense or desire for fiscal restraint and less government spending and borrowing are entirely out the window. Fiscal folly is the watchword of the day.

It is not surprising that politicians care little about annual budget deficits and growing debt, since spending money is their way of buying votes from interest groups wanting to eat at the government trough. In America today, it is all a political game by which Democrats and Republicans pander to their respective voting blocs, especially in an upcoming presidential and congressional election year like 2020.

On the one hand, the danger of a looming political crisis is warned about in the media when they point to the coming budgetary circus that will most likely start playing out toward the end of the summer of 2019, when Congress comes back into full session and the new federal budget year that begins on October 1, 2019, will have to be handled in some way.

Budgetary Brinkmanship and Political Plunder

Will the country be facing another federal government shutdown threat like the one in late 2018 and early 2019? Will the national debt limit be raised to permit the spending of the huge sums of money needed to fulfill all the demands for other people’s money above actual taxes collected through the syphoning off of private sector resources by continued government borrowing in the financial markets?

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Jobless Folks, Working Moms, and More Left Out of Canada’s Budget

Jobless Folks, Working Moms, and More Left Out of Canada’s Budget

Facing economic trouble ahead, Conservatives offer bouquet of tax breaks for the wealthy

Wasn’t it always the student who kept asking for extensions on homework who always wound up turning in the poorest quality work? Finance Minister Joe Oliver tabled the 2015 federal budget on Tuesday, using some “creative” accounting to scratch out a small surplus. But despite taking a two-month extension, everyone from mainstream economists to First Nations to the YWCA to unions and ordinary Canadians are giving Mr. Oliver a failing grade on his first federal budget.

Packed with tax breaks for wealthy Canadians, and back-loaded with promises that won’t pay out until four or five years from now, Tuesday’s budget is entirely an election document and little more. Nothing new or unexpected, and perhaps this is why Mr. Oliver’s first budget, in returning to balance, is so disappointing.

It’s a missed opportunity.

Mr. Oliver’s balance comes after six consecutive slash-and-burn deficit budgets, $14 billion every year in cuts from the services Canadians rely on from their government. These are cuts to the CBC, to policing, to veterans, to oil spill response, to healthcare, to food and rail safety, and the list goes on.

Meanwhile, Canada’s economic outlook is anything but rosy. The price of oil is forecast to remain low, while the Conservatives continue to bet the farm on raw oil exports. Unemployment is on the rise, job quality is the lowest in a generation, and pay inequality is increasing. The governor of the Bank of Canada recently referred to the effect of the oil price slump on our economy as “atrocious.” Almost three-quarters of children under five have no access to affordable, quality childcare. Eleven million Canadian workers have no access to a workplace pension, and we’ve lost 400,000 manufacturing jobs since Mr. Harper was elected.

 

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