May 2nd, 2006
Mike Harris' cabinet's takeover of the federal government has brought us another illogical common sense revolution.
Somehow, someway, cutting taxes (except personal income tax, which is going up - but corporate taxes are dropping by several percentage points) and raising spending is going to result in a balanced budget.
My bet: We're back in deficit from a strong surplus faster than Bush managed to put the US there.
That might be good, though -- the dollar's incredible rise (it's over 90 cents!) would finally be curtailed. Not such a bad result for putting the next several generations of Canadians into extremely deep debt!
The real problem here is this:
We're supposed to go into deficit only during down times in the economy (if at all), and during booms we tax it all back and pay it off.
We've got the first part down ok, but then we get to boom times and everyone gets greedy. People with money want to keep it; people without want handouts. During down times everyone is happy to take borrowed money, but we're, as a society, loathe to give it back when the going is good.
Without it, our debt is doomed to get worse. The conservatives are in power again during a boom and will squander it as they always do, leaving the centre and left to clean it up during the next bust. When we finally recover and get into another boom, the conservatives will be right there again to squander it.
Posted at 08:19 on May 02, 2006
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