Sunday, February 21, 2010

Dream dream dream

Whenever you want to, all you have to do is dream dream dream... (Sorry Everly Brothers)

So, Thomas Mulcair and the NDP want a few things from the government in order to support a spring budget. Let's go through the list point by point, ignoring the partisan sniping by reading the Globe's summary of the letter:

First point - the corporate tax cuts. There are two schools of thought on how to stimulate an economy. The first school of thought is to take more money from taxpayers and spend it on projects and services. The second school of thought is to leave more money in the hands of people who will use it to reinvest in things that they need, thus causing an increased expenditure level and stimulating the economy. Finance 101 says that a company has a target for after tax earnings which can then be allocated to shareholders and capital projects or debt reduction. If that company beats those targets, then likely 1 of 2 things happen - wages go up or capital expenditures go up - neither of which are bad for the Economy.

Second point - enriching the CPP - sure, but only if the increased benefits accrued to THOSE THAT ACTUALLY PAY FOR THEM. I've said it once, and I'll say it again - if current retirees enjoy increased benefits while my CPP contribution rates increase, then I will do everything in my power to ensure that myself and everyone I work with do not pay into the system. At present, I would estimate that this amounts to more than $200,000 per year that does not go into the CPP system. Even Mr. Mulcair and the NDP should understand that nobody likes paying into a system they don't benefit from.

Third point - deficit reduction. The NDP wants a deficit to GDP ratio of 1%, with a debt to GDP ratio of 30% within 5 years. Currently the debt to GDP will peak at around 35%. Now, I may be misreading this, but one of the same parties that has been beating up the Conservatives over the past year for having deficits at all is NOW PROPOSING A PERMANENT DEFICIT. They couch it in obscure language, but what it comes down to, is a deficit to GDP ratio of greater than 0 with no timeline to balance the books = permanent deficit of somewhere in the $15 to 20 Billion range. I think that this speaks for itself.

Fourth point - enrich the GIS. If you REALLY want the GIS system to work as intended, change the rules to a needs based system based on overall net worth and not income based. Then, take all of the money saved from the people that drop off the rolls, and add to the benefits of the remaining people who truly may need the money. In my position, the manipulation that I have seen, and the expectation that I've seen in people planning to maximize their OAS benefits would sicken most people. When it comes down to it, people make very stupid decisions in order to maximize their GIS, leaving hundreds of thousands in a no-interest chequing account so that they don't show interest income on their returns.

As for the last point about women and children (and I notice that the Globe didn't mention anything about enhancing benefits to First Nations that Mulcair did), I think I already wrote about a solution here.

Long story short, I think the NDP should decide whether it will advocate for new spending or complain about deficits. I don't think it should be able to get away with doing both.


  1. I think that the thrust of Mulcair's letter was that if you're giving up revenue by giving tax breaks to the industries which don't create employment means you're sucking the system dry. Banks and the Tar sands guys are the only ones making money and thus the only ones benefiting from tax breaks. Meanwhile banks aren't on a hiring spree and the "oil patch" companies are sending raw crude across the border in pipeline as fast as they can.For all the crap that's being left behind for future generations to clean up, we're not even getting the benefit of the refinery jobs. Those go to our neighbours to the south.
    I don't see any inconsistency with saying that money should be spent differently and that a reasonable debt per capita ration is X and that we have the means to shot for it.

  2. So, your position is that since the only industries that are making money are the socially dirty industries, that it's okay to take more money from them to fund programs?

    Interesting take. What I see is that the "tar" sands as you called them spends ridiculous amounts of money in development, which creates jobs. Banks help create jobs not directly, but by lending money to entrepreneurs, which also grows and develops industries. In both cases, it makes sense to leave more money in the hands of those industries so that they might help stir the recovery rather than giving the money to a government that can only "prime the pump" of a recovery through stimulus.