The problem with debts

The main item on the G-20 agenda was whether to cut debts or invest in more financial stimulus, with Stephen Harper strongly advocating the need to cut debts.

We need to cut debts.  Large public debts leave governments at the mercy of interest rates.  Double the interest rates and suddenly the debt load becomes completely unmanageable and we’re worried about our credit rating, forcing us into all kinds of nasty measures like privatizing health care, education and even basic services like water.  So in the interest of securing high quality public services, we need to make sure we keep the debt down.   The problem is that Stephen Harper proposes to cut debts not by raising taxes or trimming perverse subsidies to favoured industries, but by attacking the very services I desperately want to protect.  I have no interest in cutting the debt to have more money to fork over to the oil industry while basic services get gutted.

I’m less interested in stimulus for growth than I am in investment in post-carbon infrastructure, which we desperately need if we are to offer our children anything like the lifestyle we enjoy today.  That needs to be done too.  But it needs to be done on a budget that is responsible, that still contains the debt and that is palatable to Canadians.  So first off we need to free up some money by cutting the perverse subsidies to polluting industries which Mr. Harper was also desperately defending at the G-20 as he did in Copenhagen.  We also need to ensure that industries pay the full cost of their activities rather than loading those costs onto our health care, disability and other services.  Then we need to tilt the playing field to encourage the transportation, energy and buildings that we will need in the future even when they are not the cheapest option now.  All of this can be done with no additional cost.

But embedded in the argument of debt vs stimulus is the unspoken implication that we have to choose between these options because we are dismissing the option of increasing taxes.  I hope that tax increases will not be necessary if we do the things I outlined above.  But when I consider our aging population at a time when the energy systems that are the lifeblood of our economy are in serious decline, I cannot promise that tax increases can be avoided without sacrificing health care, education or support for seniors or people with disabilities.  Cuts to such basic services would be intolerable to me, and I would have to choose modest, progressive tax increases to protect these fundamentals because they are what make me proud and happy to live in Canada.

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