As I pointed out in my last post, the fact that the Conservatives have admitted they will miss their budget projections next year isn’t news. There hasn’t been a single annual budget yet that actually reached the projected balance it was supposed to, and, as a result, the date at which the Conservatives promise we’ll be back into surplus territory has crept farther and farther back in time. Now it’s past the 2015 election. This is kind of surprising, since it was widely expected that the spin-happy Conservatives would make a great flourish out of balancing the budget before the next election. Maybe that’s still the plan, despite the published figures.
Anyhow, I thought it would be useful to look at this from a broader perspective, which is what I’ll do in the next couple of posts. Today we’ll talk about debt, as opposed to deficit. Debt is the overall amount the Canadian government owes from previous years; the deficit is just the difference between revenue and expenses in the current year. As you’ll see in a moment, Canada’s responsible majority government has been hard at work serving our best interest.
In 2006-2007, the Conservatives’ first fiscal year in power, there was still a surplus, and the overall public debt stood at $467.3 billion. In 2011-2012, according to the most recent budget documents, federal debt had grown to$582.2 billion. That year, the Conservatives spent $31 billion making payments and covering the interest on old debts, but they also took out $26.2 billion in new debt. Flaherty says we’ll be taking out another $26 billion over the course of this year. (So much for all those savings we were supposed to get from service cuts!) That will decline substantially next year and, he claims, we’ll be in surplus again by 2016-2017.
Given those projections, the federal debt is going to max out at $634.5 billion in 2015-2016, and then will shrink fractionally, by just a couple of billion dollars, over the few years after that. What this means is that in 10 years of government, the Conservatives expect that they will have spent more than $165 billion more than they took in from Canadians. That’s an absolutely staggering figure.
I want to emphasize the significance of this. The federal Liberals went to a great deal of trouble to balance the budget and begin chipping away at the debt. Doing so required major service cuts to healthcare and social programs, leading directly to many of the problems we are now experiencing today. Still, if your measure of successful government is the bottom line of the budget, and for this country’s right-wing media supposedly it is, the Liberals made a good accounting of themselves. They paid off quite a bit of the debt between 1997 and 2005. Pity the Conservatives abandoned that quest.
Now, the numbers aren’t quite as bad as they seem. I haven’t accounted for inflation. That effectively knocks a few percent off the total. The reason is that, as the currency inflates, the relative value of our old debt shrinks. This is an ironic effect of inflation, and it’s one that retired Harper Cabinet minister Stockwell Day utterly missed in an extraordinarily incompetent attack on “quantitative easing” published by CBC a week ago.