Tuesday, May 05, 2015

Tax Cuts Only Work When There Are Jobs


Everybody's talking about tax cuts. Stephen Harper has be doing it for six months. Yesterday, Justin Trudeau talked about tax cuts. It's true that Trudeau's proposals would spread the money more evenly and put it into the hands of the people who need it most. But it's also true that tax cuts only work if you're making money. Put another way, tax cuts benefit those who have jobs. And, at the moment, nobody is talking about creating jobs.

Scott Clark and Peter Devries write that no one is talking about using public money to create jobs:

The question centres on the word “deficit”. Stephen Harper has convinced Canadians that all public borrowing is ‘bad’. Oliver continues to pull this Pavlovian trigger in his speeches and, no doubt, it will be play a big role in the Conservative election campaign. The opposition parties leaders are thoroughly spooked and seem to have convinced themselves that even mentioning the concept of deficit spending would be political suicide.

But public borrowing is a tool; it has no moral status. Deficits are ‘good’ or ‘bad’ based on the context — the size of the debt, the cost of borrowing and the use to which the borrowed funds are put. No credible economist would recommend a return to the bad old days of the 1980s. But the Conservatives’ claim that running a deficit in 2015 would turn Canada into Greece is complete rubbish.

At today's interest rates, public debt is easily serviceable:

Consider the following: A deficit of 1 per cent of GDP would be about $20 billion; a deficit of 0.5 per cent of GDP would be about $10 billion; a deficit of 0.25 per cent of GDP would be about $5 billion.
A deficit under 0.5 per cent of GDP is relatively small, if not trivial, by any statistical fiscal standard. A deficit under $20 billion would still allow the ratio of debt to GDP to decline from its current level. In fact, even if the deficit ratio was held constant — which implies increasing deficits — the overall debt burden would continue to fall.

The federal government is in an excellent position to be the ‘bulk borrower’ for the provinces — to secure low-interest loans to use on infrastructure projects that would boost the economy in the short term while increasing economic productivity long-term. Right now, Ottawa can borrow using thirty-year bonds at about 2.5 per cent — dirt-cheap debt, much cheaper than the provinces could secure on their own.

All the parties continue to put the cart before the horse. Tax cuts only work if the people who receive them have incomes. And, for most Canadians, that means having a job.


Lorne said...

Perhaps, Owen, it is true, as Susan Delacourt suggests, that all of our politics today are what she calls "retail politics." Gone are the grand visions of the past as each party panders to the selfish side of our natures, convincing us to vote for them on the basis of what they can offer us as individuals, not as a society. Trudeau's plan is little more than this.

Owen Gray said...

Trudeau Sr.'s dream of a "Just Society" seems to have been obliterated, Lorne.

Anonymous said...

In other words, they're empty promises.
And I agree with Lorne: our leaders are not leaders anymore. They do not offer Vision or Ideas. They offer 'wedge' issues that will gives a few crumbs from the table.

Owen Gray said...

If Susan Delacourt is right, Anon, that politics is all about retail, then our democracy is in deep trouble.

Mogs Moglio said...

What democracy Owen Steve Joe Harper has shattered what was left of it. Harper intends to get back in office by hook or by crook.

We need a very good constitutional lawyer like Rocco Galati to put these Harper con criminals behind bars no Steve not the ones you and your pal Rob Ford like to drink beers at the ones that will imprison you.

We ask Galati if he will represent The People of Canada vs The conservative Party of Canada for their blatant violations of The Charter of Rights and Freedoms The Canadian Constitution The Bill of Rights and their total disregard for Veterans First Nations Seniors unemployed the have nots the environment Oceans Lakes and waterways. I could go on forever about the Harper-con violations against life but hey they believe the rapture is coming tomorrow but hey so-called christians have been spouting that nonsense for two thousand years [the rapture is tomorrow]. But tomorrow never comes because when you wake up it is always today.

Lyrics courtesy of The Kingston Trio "When will they learn when will they ever learn?"


The song is just as poignant and relative today as it was back in the sixties. So Rocco opens an escrow account specifically for the purpose of suing "The Harper Clown Con Gong Show" we advertise this on every blog we visit. Even if people donate only a loonie or a toonie to the escrow we can raise enough funds to jail them. Some will donate: $10 $20 $50 $100 $1000 $10,000 $100,000 maybe some a $1,000,000.00 maybe even more. After all the "Heave Steve" movement is gaining momentum and traction after his ominous Bill C-51. And just to put 'fire under their pants' remind them that Steve oily Joe is going to try to use our money to defend the cons in court.

I am working on writing up a draft summary for Rocco for him to edit at will. One of the provisions is that the Harper-cons have to use their own personal finances to defend themselves no more tax-payer free roll. Some of the writing points are Steve's cons have clearly broken the "Law of The Land" now they need to pay for it like any common thief that gets caught. No mercy the law of the land will be fair and honest but Steve as an analogy can not escape this noose. When I am ready and Rocco or another constitutional lawyer agrees we will collectively take these Harper-cons to the prison of their own making. Maybe the "Rapture" will come for them before something bad happens in prison eh?

Cheers to you and your family Owen!

Owen Gray said...

Galati has done all of us excellent service, Mogs.