Balanced budget – debt reduction
For the first time in decades, the economic situation has pushed many governments to accept deficits. The return of Keynesian economics, and the welcome sidelining of Milton Freidman’s approach, have been mandated due to the serious economic crisis created by the U.S. credit collapse. Greed and an addiction to higher-than-achievable rates of return on investments created a casino economy. Greens favour a steady economy, maximizing meaningful work and economic health. The highs and lows of booms and busts may be bearable for those with lots of chips to gamble away, but are brutal for the average Canadian.
Now that Canada is in the business of increasing deficits to end the recession, we have to be very mindful of how we get out of a deficit. The Harper 2009 budget is on track to create a whopping $50 billion deficit last year alone, with no plan to get out of it.
Economists warn of creating a “structural deficit.” Greens are very concerned about this risk. A future structural deficit could threaten our health care system and other indispensable government-funded programs. Prime Minister Harper’s government had already eliminated Canada’s surpluses before the recession hit, by cutting taxes and increasing government spending. Some economists have argued that Canada was in a recession even before the September ’08 economic crisis. Now Greens are concerned that the Harper government is creating a structural deficit by cutting income taxes, increasing government spending, and not finding any new forms of government revenues, as Greens would do through a carbon tax or as President Obama is doing through the auctioning of carbon credits.
As long as a country is in deficit, it cannot find the resources to pay down the debt.
Canada’s debt currently stands at $490 billion. In the 2009 budget, the cost of servicing that debt was $34 billion. Our government pays $93 million in interest every day. That debt burden drains support from essential government programs. Imagine what $34 billion could do to alleviate poverty and provide affordable housing and affordable post-secondary education in Canada.
Being indebted to external creditors also makes our political decision-makers vulnerable to pressures from outside our country. The 1994 International Monetary Fund’s (IMF) Report to Canada recommended that our government reduce the number of hospital beds, convert student bursaries to interest-bearing student loans and cut funding to the National Film Board, the CBC and VIA Rail. The government of the day implemented all of these cuts. Canadians lost 10 per cent of our hospital beds the following year and today we have a wait time crisis in our health care system. If we had no debt, we would no longer be beholden to the IMF and global credit rating agencies.
The Green Party believes in living within our limits, ecologically and fiscally. We are committed to a balanced budget and to reducing the national debt. It won’t be easy. To pay down the debt while supporting programs that meet immediate social, economic and environmental needs, we must maintain a healthy and fair level of taxation and we must ensure that Canadians get good value for their tax dollars.
Green Party MPs will:
- Ensure we can climb out of the deficit once the recession is over by placing taxes on pollution to replace those cut in income by avoiding the creation of a structural deficit.
- Set a disciplined schedule to gradually pay down the debt while meeting immediate social and environmental needs, increasing debt reduction over time but starting with modest targets to permit investment in critical programs such as the Green Plan to Avert Climate Catastrophe.
- Take Action