Big debt brag? Canada's debt 22nd worst in OECD!
By Kevin Gaudet
Dr. Seuss probably didn’t have Prime Minister Stephen Harper or Liberal leader Michael Ignatieff in mind when he wrote his short story The Big Brag. But he might as well have. In the story a bear and a rabbit argue and brag about who can hear and smell farther. Like Dr. Seuss characters, Harper and Ignatieff are ignoring the danger of the growing national debt burden, instead, bragging about which of them could spend more and faster. What Canada needs is not such boasting but its own discussion on how to deal with this large and growing debt problem created by such spending.
In a spirited and continued defence of his government’s massive stimulus spending program – all with borrowed money – Mr. Harper boasts that Canadians need not worry about the massive debt being racked up. Canada is better positioned than other nations to weather this new spending storm, he boasts. Meanwhile, Mr. Ignatieff deplores that the money isn’t being spent fast enough. He brags, without explanation, both that he could spend it faster and avoid the deficit and debt troubles this spending will bring.
In the fall economic update, Finance Minister Flaherty bragged that Canada is much better off than most of its G7 colleagues. He argued that our deficit and debt levels are manageable and small relative to other countries. This brag is not true.
In fact when debt levels are compared to the size of the economy (as measured by debt as a per cent of GDP), Canada is worse off than is the United States and the United Kingdom, only bettering France, Germany, Italy, and Japan. Facts don’t seem to keep Canada’s political leaders from their boasting. This year’s federal deficit will reach at least $56 billion. In November the federal debt will again blow past the $500 billion mark. One may see the dizzying growth of debt at www.debtclock.ca, hosted by the Canadian Taxpayers Federation.
Mr. Harper’s brag about Canada’s debt fails to factor in the size and growing impact of other public debt, especially at the provincial level. Ontario’s provincial debt, for example, will soon hit $200 billion. BC’s debt will hit some $60 billion by 2013. Even the economic powerhouse of Alberta plans to run a deficit of almost $7 billion this year. Without restraint, it too will start incurring debt.
The PM may brag about comparisons to G7 nations where Canada is third out of seven. However, when compared to the 30 nations of the Organization of Economic Cooperation and Development (OECD) Canada ranks 22nd. According to the Intelligence Unit at The Economist magazine Canada’s total public debt for 2009 approaches $1.1 trillion and is climbing. Total debt levels stand at 72 per cent of GDP. This amounts to approximately $33,000 of public debt for each man woman and child in Canada.
Even though the United States is in a better debt position than Canada The Economist is sponsoring ‘The Buttonwood Gathering,’ a conference in New York to discuss, amongst other issues, how to deal with the public debt burden.
Today’s debt splurge will not be temporary. Even after the recession ends, few wealthy countries will keep their debt from rising further. Worse, today’s borrowing binge is taking place just before an inevitable budget-crunch caused by the pension and healthcare costs of an ageing population. Canada is no exception.
Mr. Harper and Mr. Ignatieff might pay attention to what Dr. Seuss’s savvy worm says about the story’s two braggarts “I’d looked ‘round the world and right back to this hill! And I saw on this hill… you, who seem to have nothing else better to do than sit here and argue who’s better than who!” A better brag would be who has the best detailed plan to get Canada back out of debt.
Get weekly updates about new issues of ESR!