Monday, March 14, 2011

Debt Free Saskatchewan

Debt Free Saskatchewan | Canadian Taxpayers Federation

I agree, why NOT have a debt free Saskatchewan? Why not fund those "unfunded" pension and benefit liabilities as well, just to make sure that there aren't any surprises in the future.

I mentioned something similar to a client the other day - that I would prefer to see a party run on fiscal austerity. I would prefer to see a federal party run on a promise that they will mandate a set debt and interest repayment (just like a mortgage) of 35-50 Billion per year, and that the budget isn't legally balanced if that repayment amount isn't met. This will take the pressure off any governmental party to ensure that they can generate the proper "technical" surpluses to pay off the debt within 25-30 years without having the electorate screaming about being overtaxed and demanding tax cuts or more programs.

When Trudeau and Pearson started us on the path of deficit spending, the reasoning seemed sound. "It's okay to spend a little extra here and only pay the interest on the debt because the value in future dollars will be much less than in current dollars". And they're right. Ten Billion dollars today is a drop in the bucket compared to his deficits during the 60s and 70s. What they weren't right about is that they weren't spending that money on one-off items, they were spending it on ongoing programs. Programs that were underfunded. Programs that in some cases are STILL underfunded. It also didn't help that Mulroney adhered to the idea that a deficit is okay as long as you aren't borrowing to pay for programs (and give the man some credit for at least funding the program portion of his budgets, if not the interest on his predecessor's debt).

Now that we're sitting on a $550 Billion timebomb, it's time to do something about it.

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