Fiscal conservatism from the left
I've never run a business, and I've never held office and made decisions on public spending. My entire experience with money is as chief bill-payer and breadwinner for my family. From that perspective, a lot of the arguments flying around regarding government spending and debt repayment seem alien to me.
Like when Jack Layton says stuff like this (not a recent quote, but still NDP policy from what I can see):
I don't believe that now is the time to accelerate the paying down of our national debt. Paul Martin does. But, if we follow his plan, even according to their own numbers, that'll take $30 or $40 billion over the next ten years out of what we could otherwise spend on healthcare, education, environment, cities and a childcare program and so on. We think that paying down debt, you know it's interesting people say, 'should we have less debt?' well, it would be nice…let's suppose you're having a family discussion. You have a sick grandmother who needs some care, you've got a kid who wants to go to university and you're wondering about tuition and you've got a leaky roof. And, dad walks in and says, 'you know what we're not going to do any of those things because we're going to pay back the mortgage even faster than the bank says we have to because we just have to get rid of that mortgage, I'm fixed on it so we're not going to take care of any of those needs.'
Am I the only one who thinks this is a silly argument? Government debt isn't really like a mortgage at all. Eventually - years, and years, and *sigh* years from now - my house will be completely paid off. Can anyone seriously say our federal debt will eventually be completely paid off like my little house?
Isn't Canada's debt more like a revolving line of credit? And how many of us think having a line of credit worth a quarter of our annual income in perpetuity is an "aggressive" long-term debt-strategy?
As I've said, I'm not an economist - and since economics seems to be the new alchemy, I wouldn't brag about it if I was - so maybe I'm just desperately in need of an education as to why government finances are completely dissimilar to family finances. That remark isn't entirely facetious, either: I wouldn't be surprised if there were substantial differences of which I'm completely unaware.
But when thoughtful Canadian lefties like Declan at Crawl Across The Ocean post in defence of fiscal conservatism and "aggressive" debt repayment, you have to wonder if all the common-sense types are out to lunch, or if it's the politicians and the economists instead. Because arguments like these seem pretty solid to a layman like me:
Holding ~$500 billion in debt as we do currently, every 1% rise in interest rates puts a $5 billion hole in our budget. i.e. we are very vulnerable to a large interest rate shift. If we were to get hit with an economic mess like we got hit with in the 70's, but starting from this debt position, well, it doesn't bear thinking about.
"Using budget surpluses to repay debt is a highly dubious gesture of inter-generational fairness if today's children are neglected in order to lighten the load of future taxpayers."
But today's children and future taxpayers are the same people - the fairness issue has nothing to do with them. The fairness issue is about all the people who benefited from piling up the debt who will soon be leaving the workforce and will no longer be in a position to repay their debt before it passes on to their children. And the fact that controlling spending to pay down the debt affects all members of society, including children, doesn't mean that the children of future generations should have to pay interest on $500 billion of debt that we piled up and never paid down.
Now, consider one of the primary spending objectives that Russell suggests: "rebuilding the wide range of social programs that play a role in combating poverty and promoting social equity". Now, does anyone think it is really possible to do a study which will accurately estimate what the impact of doing this on total tax revenue collected by the federal government would be? And if this policy is implemented can we track whether we are getting the return we expected? And if we aren't, will these programs be shut down? We have to remember that government is not a business.
Read the whole thing. If you disagree, please tell me why, because until someone can present a more compelling counterargument, I'm inclined to agree with him.