Sunday, December 28, 2008

Deficit Spending

Everyone is clamouring for deficit spending. I wonder if this is really because they believe it will jolt the economy back to health, or because they have a list of things they really want to buy.

As for Harper, he's not in a good situation; no matter how irresponsible he gets with running a deficit the Opposition will be saying it isn't enough. Likewise, no matter how much extra debt he takes on, someone won't get the money he was expecting and the press will be there to capture him saying that Harper doesn't care. Number one in the line of people to explain that they didn't get their fair share will be the BQ and the PQ.

Remember folks, deficit spending is not a panacea, and this debt is an extra tax that we are taking on for ourselves and our children (it will need to be paid back with interest, out of the taxes we pay). The way we were going, it looked like our national debt might have gotten paid off in time for me to retire. Now it looks like we will stretch it out further; maybe in time for my kids to retire. But not even then if we get addicted to deficit spending again!

4 Comments:

Anonymous jgriffin316 said...

I am against deficit spending as it is a tax raised against our children. They are the ones who end up paying it back. At the same time having people losing their homes is not a good thing either. Most people do not, or cannot, plan for long periods of unemployment. Plans that involve borrowing money on behalf of the tax payer should include a means of ensuring that the money is not spent on depreciating assets or "entertainment" purchases.

In other words, deficit spending should go into maintaining homes, not buying giant flat screen TVs. The question is, how to ensure that happens.

8:12 AM  
Blogger Shawn Abigail said...

The challenge of personal responsibility is a difficult one. If you give someone $10K to help them keep their house, a certain percentage of people will blow that money on something else. On the other hand, if you put the money directly against their mortgage, you insult many people who will claim that you don't trust them (and lots of people will think you are just bailing out the banks).

In this particular crisis, personal responsibility faces other challenges. What about the person who buys a $200K house with no money down, and now the house is valued at $150K. Should he just walk away from the mortgage because it is financially advantageous to do so? I would say no. You contracted that debt and it is yours to pay. But lots of people will just walk away and say it is someone elses problem.

Finally, we could bring up the whole notion of personal responsibility with regards to welfare. I believe very deeply in the importance of helping people out. But some people will waste their welfare cheque on drugs. Others will think that long-term multi-generational welfare support is both a right and a normal way to live. And for some people, welfare is a disincentive to work (despite the fact that welfare provides a pitiful minimum on which to live).

In short, we have a system that has lots of problems, and I am not sure what the answers are.

11:06 AM  
Blogger Rileysowner said...

Their are two ways to have a deficit. One is to increase spending and not increase taxes. The other is to decrease taxes and allow people to spend their own money. The problem is that many of the people who are in need right now, are people who don't have jobs, so letting them keep more of the money they earn is not particularly helpful. That would mean increasing spending, but on what?

Propping up the tottering auto sector seems like a fools wager. The same goes for the forest industry as they have no one to sell to. If they did, they would not need assistance.

I would like to see the money spent on things that will last. Good quality roads or something that has been floated for decades like a high speed rail from Windsor to Montreal. The problems with those or most other infrastructure spending, is the environment assessments will take years if not decades to do and they often require specialized workers and would not employ the people who have been fired from manufacturing jobs. The positives are that they provide infrastructure that will provide long term benefits for all Canadians rather than throwing money away giving it to the auto or forestry or banking or whatever sector.

10:43 AM  
Anonymous jgriffin316 said...

Riley,

If the provincial and the federal governments could agree on project funding (and credit) you would be amazed how many studies would not need to be done. As for unemployed factory workers, most of them could switch over to construction fairly easily as long as the work was not to specialized. From my own factory days I know most of the workers know how to work with and around heavy equipment. Many of these guys know how to work hard so hard work will not be an issue. The only problem will be transportation to and from the site as most of the work is not likely to take place near their homes.

On a separate note, CTV was predicting an unemployment rate of 50% in St. Thomas, ON due to the troubles in the auto sector.

10:26 AM  

Post a Comment

<< Home