Did Andrew Scheer really say that?
At the Conservative Leader’s Wednesday scrum, while referencing policies to deal with the climate crisis, he claimed, “I’ve never known a problem to be solved by a new tax.”
Was he kidding? Didn’t sound like it. And as could be imagined, the Twittersphere lit up with scornful jabs. How about the Nazis, many reminded him? A bit of a problem, he might agree. And didn’t wartime taxes provide for a strong military? Or would Mr. Scheer have preferred musket-bearing citizen militias?
How about the country’s social programs? And in his own case, incensed respondents noted, what is it that solves Mr. Scheer’s problem of making a living as a career politician? His handsome salary and all his perks are courtesy of the taxpayer.
Oh well. What at least can be said is that the Canadian Conservative Leader’s obtuse take on taxes hardly matches the madness of his conservative brethren in the United States.
Having brought in one sweeping tax cut (favouring mainly the wealthy) that has thoroughly depleted his treasury, U.S. President Donald Trump is now talking of another one before election day in 2020. He’s already racked up a trillion-dollar annual deficit. Does he want to double it?
Canada’s deficit, which Mr. Scheer’s party rails on about, is pint-sized by per capita comparison.
The U.S. has tallied a trillion-dollar deficit before, just a decade ago in fact. But that was after the financial meltdown when the economy was in the tank and had to be ignited with government spending.
Today’s mammoth deficit and national debt comes while the country’s economic engine is purring along, nurturing almost full employment and maximizing tax revenues. Economists, who deride the President’s idea of another cut as straight out of bonkersville, can’t recall another time when there’s been such indebtedness with the economy flush.
The American debt-to-GDP ratio was estimated at 106 per cent in 2018 and is rising. In 2007, it was 62 per cent. Canada’s, as Mr. Scheer knows, is a hardly menacing 30 per cent.
The question is what happens when the inevitable downturn happens; when revenues rapidly shrink; when today’s flat interest rates ramp up, making debt payments so much more penal?
The situation is precarious but amazingly no one seems to care. Not the White House. Not the lawmakers on Capitol Hill. It wasn’t this way before. In 2011 during the Obama administration, Grand Old Party members, incensed by debt and deficit levels, pushed to pass a constitutional amendment that would require balanced budgets. In his 2016 campaign, Mr. Trump vowed to eliminate the national debt within eight years. What a joke all this is now. Deficit hawks have become almost an extinct breed.
With the U.S. capital consumed by impeachment hearings, the fiscal crisis gets rare mention. Other plans such as rebuilding the nation’s deteriorating infrastructure have fallen by the wayside. Issues such as gun control are largely forgotten. The United States officially withdrew from the Paris climate accord this week, the only country in the world to do so. It was a one-day story.
Despite the financial crunch, the Trump administration however is greatly increasing military spending. This comes at a time when the President is pushing to reduce the U.S.'s military presence in the world and drawing down war spending, policies which logically should result in less spending on defence.
Conservative dogma maintains that tax cuts will lead to economic growth that replenishes the coffers. The long held belief has been repudiated in the past and is being repudiated again. But Republicans still hold to it.
Democrats? What a bunch. They’re behaving like the fiscal blight doesn’t exist. On the contrary, candidates for the party’s nomination are coming forward with exorbitantly costly schemes such as medicare for all, free child care, student loan cancellations, free college tuition and green new deals. If they do succeed in defeating Mr. Trump next November, they will find a treasury so barren that only dramatic tax increases will make any such programs possible.
The big deficits thus far have not brought on high inflation. Government borrowing has not yet crowded out private-sector borrowing. These factors along with the low interest rates have contributed to deficit complacency.
It allows the Trump administration to keep pushing the envelope. Everything now pivots on political considerations. That likely means more spending, more tax cuts, and deficit and debt levels escalating to ruinous proportions.
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