Justin released the Liberal Party’s platform with full costing a little while back. With 8 days to go as I write this, it’s time, I think, to have a good hard look at it and measure just how disastrous it would be to implement.
First, let’s be blunt – it’s long. So long, in fact, most people who vote Liberal will “tl;dr” it and just blindly vote for Justin anyway. That’s unsurprising, since Justin’s followers are blinded by the shine his handlers have managed to place on him. I swear, if the lights from the cameras hit his teeth just right, I’m sure we would see some major lens flare like something from a JJ Abrams film!
The first thing I noticed when I scrolled to Page 71 (The costing section – the part I’m most interested in) was the fact that the whole page caters to a negative emotions of the reader: jealousy. It scapegoats “millionaires” and “the top 1%” as being those to blame for not paying enough taxes.
Trudeau’s main promise: To jack up taxes on “The Rich” (it’s easiest to blame someone else, of course) so he can cut taxes on the “middle class”. What Justin continually fails to understand is (a) “The Rich” will just re-work their finances to minimize or prevent any additional tax expenditure, or (b) leave, taking their wealth with them.
The end result of either approach would mean that revenues would not rise significantly in the long run, which, of course, means that Trudeau’s promised deficit financing, over three years, would be higher than he’s forecasting.
Not only will Trudeau (attempt to) hit the nations highest income earners hard, but he also does, despite his denials, target the middle class: He’s promising to cancel income splitting for families.
If a family has both parents working and each earning roughly the same amount of money, then income splitting doesn’t do much for them. However, many Canadian families do not live under this reality. Many families have made a decision for one parent to stay at home while the other goes to work. Many families have a significant difference in income from one parent to the other in cases where both are working. Income splitting for families is extremely helpful to families like them, because the income differential can be smoothed out between the family members, meaning a lower tax bill overall. This is a wonderful idea, because the extra savings of income tax can go towards retirement savings, or the child’s education, child care, or whatever the family judges to be important.
If you are in this situation, Justin wants to take that away from you. He wants to punish you for not going to work. He wants to hurt you for your choice to stay at home with your children.
Cancelling income splitting for families will knock you down, and keep kicking you while you’re down, because you will see a significant change in your after-tax income for years to come.
That is the cost of Justin’s family taxation plan, and with less cash flow, that means less investment, less savings, potentially more family debt, more bankruptcies, and those who will suffer most?
And that is Justin’s plan.
Deficit Spending. Again
Just like his father did, Justin wants to spend more money than the government collects in revenue. This is a disastrous plan. Not only because the Harper Conservatives just got us out of the deficit they were forced into by Parliament in late 2008, but, also, because we now are back in a balanced budget scenario. In our current fiscal position, if the government planned surplus of roughly 1% of GDP, with no new debt accumulated, we could have the entire federal debt paid off by 2067, according to the Montreal Gazette. That’s quite an accomplishment, and I think it’s ambitious and unlikely, given the fact that we cannot predict what our future holds.
Justin plans to add $25 billion to the current federal debt, over three years, and taxing us like crazy to balance the books in 2019, which is, by a rather ironic coincidence, the next election year.
We have to consider, not only the amount of money Trudeau plans to borrow, but also the interest we will have to pay on the money we borrow. Every year that we run a deficit, we will have to also borrow money to pay the interest we already owe, which means we are in a situation where our country’s debt is already ballooning, and now, not only are we borrowing money to pay interest, but we’re adding to it, which means we just have to borrow MORE money to pay the interest.
Here’s some math:
In 2013-2014 fiscal year, our interest on our national debt was $28,220,000, and the national debt was $659,000,000. This works to about 4.3% annual interest on the debt.
Now, let’s carry this forward, freezing the interest, to make the numbers easy, at 4.3%.
To work this out, I went here and used the debt repayment calculator for a quick-and-dirty way to figure out the real cost of using the Montreal Gazette’s approach. It isn’t perfect, but it gives a rough idea of how we could do it if we wanted to. Of course, if we pay off the debt quicker, then we don’t pay nearly as much in interest, but it’s unlikely that we will. Chances are, we’ll take much longer.
To pay off the national debt as it is right now, we would need to pay $31.8 billion a year in principal and interest and ensure the budget remains balanced for the whole time. If we extended it from 52 years to 100 years, paying the debt off by 2115, and ensuring the budget is balanced every year, that payment drops to $28.8 billion per year. Not really that much difference!
So let’s, for now, stick to the 52-year idea.
Now, assuming we do pay off the debt by 2067, we’ll pay nearly $1 trillion in interest. That’s a huge amount of money, caused almost exclusively by Justin’s father, I might add, Pierre Elliott Trudeau. (see here)
Now, Justin wants to add another $25 billion over three years: Approximately $10 billion in Year 1, $10 billion in Year 2, and $5 Billion in year three.
What would that do to us?
Assuming that we stay consistent with what I’ve said above – and aim to pay the debt off by 2067, it ends up adding $1.3 billion to the amount of interest we will pay for just the first year!
Year two adds another 1.3 billion to the interest we will have to pay, and year three adds another half billion as well.
So the real cost of Trudeau’s spending, assuming we pay the debt off by 2067, is, at least, $63 billion, not $25 billion as he is telling you.
Say no to this disaster.