NP View: Chrystia Freeland’s selfish and short-sighted budget

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By continuing to spend well beyond our means after the pandemic, the Liberals are ensuring that today’s youth will have to pay once again when the bills come due.

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Monday’s budget was a fantasy exercise. Finance Minister Chrystia Freeland has distributed billions of dollars for long-standing Liberal priorities under the ridiculous pretext of reviving an economy that is already booming. The minister should have made sure that the impact of the pandemic on our finances was short-lived, but instead used it as an “opportunity” to spend large sums of money for the foreseeable future. It is extremely short-sighted and selfish. The debt we incur today will be a liability for future generations.

It was inevitable that the government would run a large deficit in 2020 and again in 2021, as we fight COVID-19 and seek to fix systems that have been shown to have deep structural deficiencies, such as long-term care. But the high deficits are expected to continue for at least the next five years. As a result, the federal debt is expected to increase by $ 715.7 billion between 2019 and 2026.

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This equates to the total national debt when Canada celebrated its 150th anniversary in 2017. For the perspective that was the total debt accumulated after we built a transcontinental railroad, won World War I, survived the influenza pandemic Spanish, overcame the Great Depression and beat the Nazis.

The national child care program proposed in this budget and the infrastructure spending on things like rural broadband and green power pales in comparison to these achievements.

For Freeland, whether or not there is a good reason to go into debt is irrelevant. “In the current environment of low interest rates,” she wrote in the budget, “not only can we afford these investments in Canada’s future, it would be shortsighted of us not to Do them. This is the talk of a cheap salesman, not the finance minister of a serious country.

Low interest rates alone are not a reason to take on more debt and take more risk. In the mid-1990s, Canada narrowly escaped a debt crisis after a quarter of a century of large deficit spending, for which Prime Minister Justin Trudeau’s father was largely responsible. Federal spending was cut by 14 percent between 1995 and 1998, which could have been avoided if restrictions had been applied from the start.

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In 2010, we saw how things could have turned out so much differently, when Greece experienced a sovereign debt crisis. The country’s budget deficit had increased over the previous decade, accounting for nearly 7% of gross domestic product in 2007, while its public debt exceeded 100% of GDP. The state of its finances left it unable to withstand the shock of the Great Recession, causing it to collapse dramatically.

As a result, the Greek economy was in recession until 2017, the longest of any advanced capitalist economy in history, the political system was plunged into chaos, the economy contracted by a quarter and unemployment has reached 25%.

The Greek experience highlights one of the great risks of sustained deficit financing and high debt: it reduces a country’s capacity to face future crises. As we are all well aware, unforeseen events can and do happen, and may require large increases in government spending to mitigate their effects.

In 2019, Canada’s debt-to-GDP ratio stood at around 30%, giving the government the flexibility to borrow when it needed it, but debt as a percentage of GDP now stands at around 50%, there will be less room for maneuver. maneuver next time, especially if that number continues to increase.

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Even if we somehow manage to avoid pandemics, wars, financial shocks, or other disasters over the next several decades, the debt we incur today will remain a burden because it will limit the capacity of future governments to solve contemporary problems.

According to the budget projections, by 2025 we will pay almost $ 40 billion a year just for debt service – double what we paid last year. To put that into perspective, this is roughly the same amount the federal government paid in 2019 through the Canada Health Transfer, which is about a third of provincial health spending in this country.

By selfishly spending beyond our means today, future governments will be forced to pay interest on the excesses of the past, instead of cutting taxes and allowing people to judge for themselves how best to spending their hard-earned paychecks.

And the cost of servicing that debt will rise as interest rates inevitably rise from today’s record lows. This may not be a problem if the economy continues to grow, but could be a problem if rates rise sharply or if debt increases start to outpace GDP growth.

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Either way, we make sure that taxes go up in the future. The taxes proposed in this budget on digital giants and luxury goods may not affect most Canadians, but ultimately the tax authorities will be forced to turn to the wallets of the middle class.

Sufficient. The average Canadian pays too much tax as it is, and to expect him to pay more, as he certainly will, to fund Liberal debauchery is offensive.

There is also an economic compromise. Money invested in government bonds could potentially be used more productively by the private sector. And a lot of research shows that increasing debt can stunt economic growth.

In its budget, Freeland acknowledges that young people have paid a “high price” throughout the pandemic. By continuing to spend well beyond her government’s means after the pandemic, she is ensuring that today’s youth will have to pay again when those bills come due.

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  1. Canada's Finance Minister Chrystia Freeland chats with families virtually in Ottawa, Ontario, Canada, April 21, 2021. REUTERS / Blair Gable ORG XMIT: GGG-OTW103

    Jesse Kline: Chrystia Freeland’s budget tries to hide the failure of the COVID response

  2. Finance Minister Chrystia Freeland, left, hits Prime Minister Justin Trudeau in the House of Commons after presenting the 2021 federal budget on April 19.

    Kelly McParland: Justin Trudeau’s big budget bet

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