Economics: Canada: Analyzing features of the Federal Budget in relation to paying down the debt

Taking up the responsiblities that refWrite's general editor, Owlb, has shouldered hitherto, may I introduce myself as the new reporter-commentator for economics and business concerns here.

Owlb has instructed both Politicarp (on politics) and myself (EconoMix on economics) to keep analyzing the current fed Canadian govt's budget, each from our own particular specialities; and, additionally now, also the new budget brawt down by the majority Liberal got of Ontario. The two budgets have some similarities, tho in the first case a pre-election budget introduced by the fed Conserve minority govt and in the second case another pre-election budget that will figure in the October election called by the Lib govt of the province of Ontario.

Both budgets have provisions for Child Benefits, an issue regarding which the reformational-founded now ecumenical Christian lobby group in Canada, Citizens for Public Justice, has campaigned for nearly two decades. CPJ's valuable analysis provides these thawts:

The past two budgets [Conservative] have reintroduced unnecessary complexity to Canada’s child benefit system. Budget 2006 created the Universal Child Care Benefit, a flat-rate taxable benefit for families with children under the age of seven. Budget 2007 creates a non-refundable credit that helps middle and higher income families but excludes those still struggling to pay the rent and put food on the table.

On the positive side, this new tax credit builds within the tax system greater recognition of the cost of parenting for all families. However, the same goal could be reached by creating a universal flat-rate child benefit that is non-taxable. A straight $310 refundable credit for all children under 18 could achieve tax recognition of the cost of parenting in a way that includes all parents. It would also help low income families get closer to exiting poverty. It is an unfortunate that the credit proposed in Budget 2007 excludes poor families. In that respect, it is a step backwards in Canadian social policy.

I won't quote further what the Christian lobby group goes on to treat in its Fed budget analysis under "Child Care," because that section introduces presuppositions and policy that bear a longer discussion--as it now adopts the vast expensive institutionalization that many people see CPJ/s stance as a programmatic ideological takeover of child care by other than parents. It seems to me that one must make a distinction between Quebec's child-care system which is motivated by exposing even the youngest kids to the French language, and more pluralistic systems where majaority-language-perservation is not a provincial motive of the utmost priority. While there is language differentiation, as far as I know there is no room for faith and values differentiation as these mite be freely chosen by different segments of the population--if they had a choice. But that takes us away from the Fed Budget 2007.

What I missed in CPJ's analysis and appreciation of the Budget-as-is centers on a feature that affects the ability of any future govt to improve child-care for all in a non-uniformitarian way, a feature that affects families now and in future generations (including future immigrant families who are not even yet members of our Canadian society): the Conservs made the move in this budget to pay down a significant portion of the Federal Debt of Cdn$ 619,701 millions. This is the Gross Federal Debt figure; I haven't found the Net figure, but I did find this passage on the peak of the

The federal debt

	See also...
	Inflation
	The Consumer Price Index
	The Canadian dollar
	The federal debt

By 1995, the federal government had been spending more than it collected in revenues for 25 consecutive years. The deficit (the amount by which government spending exceeds revenues in any given year) was $37.5 billion on a public accounts basis. As a result of persistent deficit financing, Canada's total debt load (the accumulation of all past deficits and surpluses since Confederation) had grown from $20 billion in 1971 to over $545 billion in 1995. By 1994/95, covering the interest costs alone was costing Canadians $42 billion—more than the annual deficit and some 26% of the entire federal budget. By March 1997, the net federal debt reached an all time high of $588 billion.

While CPJ offers many valuable thawts and horizons in its Budget analysis, it doesn't even notice that a chunk of debt has been paid down that benefits everyone. Now, this money for debt-reduction in the Budget doesn't come from the poor, those on Disability and Welfare, who don't work and don't pay Income Taxes (altho if they do file, they usually do get small refunds). And the poor do pay GST and PST sales taxes. But, again, not Income Taxes.

Rather, this money toward debt-reduction comes precisley from the middle-class. That's why the middle-class is selected out for certain family rebates on their Income Taxes, this round. Why can't CPJ graciously acknowledge this instead of pitting income-classes against one another in its analysis?

Now, Fed Debt-reduction does benefit the poor longterm, it does benefit children and youth who will have less national debt on their shoulders when they become adult income-earners of the middle-class and responsible for the accounts of the body body politic, and it does benefit both immigrants and families immigrating to Canada in the future.
Fed Debt-reduction helps those currently in poverty now, only obliquely, because many of them may never join the middle-class, become wage-earners, and thus shoulder the debt thru Income Taxes. But many of them will climb the ladder some, and enter the middle-class. Upon doing so, those poor-become-middle-level income-earners will then shoulder whatever Fed-Debt remains. But as long as they remain poor, they don't pay down thru Income Taxes, only a bit thru GST (sales tax) part of which is reduced thru rebates from the very Income Tax system to which they don't pay.

An economy of care must care about the poor, the middle class, and the paying down of the debt.

Surpluses both achieved and anticipated have allowed the government to direct more money toward paying off the accumulated debt. As a result, the cost of paying interest on the debt has dropped from a high of 33 cents of every dollar of revenue collected by the federal government in 1995/96 to 19 cents in 2001/02. Another promising sign is the decrease in the debt-to-GDP ratio, which gives a picture of the size of a nation's debt in relation to the size of its economy. Though still high by historical and international standards, Canada's debt-to-GDP ratio had fallen from 69% in 1995/1996 to 46% in 2001/02.

CPJ's analysis of the Conservative minority govt's budget 2008 has at least one major serious blindspot, a blindspot that leads to a skewered analysis and an unfortunate level of incoherence in the analysis that then is attributed to the budget itself. This projection of its own incoherence onto the budget is lamentable.