In 1950, the year I was born, the Government of Canada had total revenues of approximately $1 billion and a total debt of also $1 billion. Flip ahead to 2017, and federal revenues leap to $300 billion, while total debt skyrockets to $760 billion, says a Fraser Institute study called a Federal Fiscal History, 1867-2017. In summary, in 1950, the federal government had roughly $2 billion in cash to spend, while in 2017 it had a staggering total of $1.060 trillion to spend. Yet despite all this money, it is still running deficits and borrowing even more money. For over 100 years, the pattern has been the same: Each year the government spends more than it has, it raises taxes and keeps borrowing more. A few years ago it realized Canadians were tired of hearing about “more taxes,” so it got creative and started changing the names to duties, fees, licences, penalties, interest, overrides, riders, special fees and a host of other words that all mean the same thing: more taxes. And while this article is focused on federal issues, the same scenario plays out if we are talking about provincial or municipal spending.
All of this can be summarized, and I believe summarized fairly, with the following statement: Governments are unable to discipline themselves when it comes to spending. They have chosen to eliminate these problems by borrowing money; however, the debt has risen (and will continue to rise) to the point where the interest charges on the debt will be larger than the total government revenue. At this point, the government in question will have no money to pay for old-age pensions, defense, EI, agriculture, education, welfare, health care, RCMP, security, employee wages and pensions, political pensions, environmental issues, diplomats, airports and highways. Whether the world-debt markets are willing to lend the government all this money remains unknown, but considering the risk they are likely to demand some very high interest rates, which will just compound the problem.
Politicians love to point out that the great economist, John Maynard Keynes, proposed that governments should run deficits and borrow money to balance their budgets. What they fail to mention is that Keynes said this should only be done during tough economic times or times of war. During strong economic periods he warned that governments had to run surpluses, in order to pay off the debts accumulated. This part of his advice has been totally ignored – the federal government now runs deficits all the time.
Winston Churchill once noted, “any five-minute conversation with the average voter will thoroughly convince you that democracy doesn’t work.” While I fear abandoning our democracy, I also fear what is ultimately going to happen to our nation because the politicians who are currently in power are spineless cowards who will not, and cannot, discipline themselves. If Canada is to be saved, I think we need a revolution.
Brian McLeod is a St. Albert resident.
