One of the incessant ‘Trudeau must go’ posts includes this feature chart. It pegs Canada’s total debt as $1,163 billion, and each individual debt as $31K. These numbers are supposed to frighten us. But what struck me is how low they are. Compare this, say, with total Canadian consumer debt of $2,200 billion. Average consumer debt is $20K excluding mortgages.
So let’s look at Canada’s federal debt. If I pay $4 tax per day, that stops the growth of the debt in its tracks. If I add, say, a car payment, we could eliminate the debt in four or five years. Redirecting this money would also slow inflation. So why don’t the Conservatives support this?
It’s because they know this level of debt is very manageable. And they know these payments would be even lower if we include things like corporate taxes. That’s the fallacy of “your share of the debt is $x.” It assumes corporations owe nothing, and that billionaires owe (and benefit) the same amount as you. The Conservatives are trying to scare you with a threat that is not real.
The fact is, Conservatives don’t actually want to eliminate the debt. They want to reduce spending on social services and give tax breaks and free money to the rich. But you can’t pay down the debt simply by reducing spending. You have actually pay down the debt. But that’s the part conservative governments never actually get around to.
Here’s another thing: who do we all owe this debt to? Roughly 40% of the total debt, and almost all of the recent debt, is held by the Bank of Canada. About half the remainder is held by Canadians and Canadian institutions. So we owe the majority of our debt to ourselves. It’s not like owning money to the finance company or to a bank, where we never see any value in debt repayment.
As Yannick Beaudoin and Mark Anielski write, “Canada’s debt is not like household debt. The persistent use of the household debt analogy by politicians and media is not only grossly inappropriate; it also harms Canadians’ ability to make informed decisions around ensuring the government spends appropriately, wisely and with accountability.”