Friday, September 20, 2019

Canadian Deficts - Out of Control???



Note: For 2016 & 17 the bold figures are the actual figures, the light numbers are the budgeted figures. For the years 2018 & 19 the only figures available are the budgeted amounts.

Deficits are not used to fund capital infrastructure expenses like airports, roads, bridges etc. but rather the day to day cost of running the government, which includes giving funds to other countries etc. Deficits are funded from borrowing funds on which interest must be paid, currently the annual interest cost to fund the accumulated Canadian deficits is in excess of $33,000,000,000.00 each year.
  
Over simplified this means that about 10% of every dollar the government takes in in taxes goes to pay the interest on our debt resulting from continually spending more money than what is coming in. Put another way, your income taxes could be reduced by 10% if it were not for the debts government has run up on your behalf.

Sadly in Canada that is also the way many of our households are being run as well. We use mortgages, reverse mortgages, consumer loans, lines of credit, student loans etc. etc. to fund things we simply can't afford based on our income levels. 

Put another way, the deficits we keep running up are as is we are giving our grand children the bill for the steak dinner we are eating today.

One of the big differences in political philosophies is the fact that conservatives used to think balanced budgets were a good thing, while all other parties don't mind spending your grand children's money to pay for the promises of today to get themselves elected.

And the Canadian electorate seem to think that is OK.

  
Canada's Federal Debt 1840 - 2011
  Source: Stats Canada Table 385-0010

The actual federal debt is now $700,000,000,000.00 which puts that red line at the very top of the above graph.

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