I'm always happy to see the debt repayment stuff; saving service charges, not handing if off to subsequent generations, etc.

And if you think about it, if the feds have paid off, say 30 billion of 8% interest over the last few years, that is a total reduction so far of interest charges of 2.4 billion annually forever. This is especially the case if the retired debt is to <i>auslander</i> creditors.

This is a great means of increasing available cash. Now if you want to then give is a tax break in that annual amount fine, if you want to spend it on child-care or the military...fine. Just do not mess with the captial aspect of the debt reduction. Boring, boring, boring but good sense.

It is rather strange: The conservatives (large and small C) present themselves as the keepers of fiscal responsibility, yet they can't run an economy. The PCs under Lyin' Brian expanded our deficits; the Liberals under Chretien and Martin eliminated them. To our south, the Republicans under Reagan, Bush I, and Bush II expanded the deficit to record levels; Democrat Clinton eliminated the deficit.

It appears that the only thing conservatives know about money is that they want more of it, and anything that gets them more of it is good -- pardon me, Good For The Country.

Ironic that conservatives, who pride themselves on their realistic view of the world, are in fact the biggest romantics. Their unrequited love for The Marketplace has always let them down, but they keep believing that *this* time it'll be different.

Isn't the point to be straight with the Canadian people? Do we need fiscal management by stealth?

Perhaps we are embarrassed to be prudent? Perhaps gentle handling is what we need as we do not like blowing our horns?

PS - I did not shadow write Nemo's comment but I could have.

At what cost though? Sure it sounds good to say we have "good government," but is it really? What about the cuts to defence? What about the cuts to Healthcare that Martin claims to hold so dear?
I want balanced budgets with a fixed amount to go to debt reduction, not all this hockus pockus, oh suddenly we have all this extra for debt, or childcare, or healthcare, whatever shall we do?
I don't want to see large deficits or surpluses either way.

We need large surpluses to pay of the former much larger deficits. We are squeezing every last nickle out of the economy to pay off the 500 billion dollar mess the Tories left (which includes the 165 billion Trudeau mess). It is inverse unbalance which has to continue until there is a reasonable return to at least pre-Mulroney debt levels. That ought to take until 2317 AD. If we dip into the capital surplus as well as the now liberated interest payments, it will take to 3317 AD.

Great post - if you consider the possible economic shocks ahead (boomer retirement, oil prices increasing ahead of inflation, sudden steep drop in the U.S. dollar, impact of global warming), it is all the more important that we focus on getting our house in order now, while we have the chance.

It's strange, though. I hate to kitchen-table analyze, but what's wrong with running a deficit? That's what I did to go to school, that's what my parents did to buy a house. Then, when times are good , we pay off those expenditures. Well, folks, times are good, and here we are, paying off those expenditures. And look, we even have extra from that overtime Dad did at the plant, so let's do those renovations of the kitchen we all want. It's the same situation. Sorta. You know what I mean.

(And yes, I realize I'm playing loose with the difference between "deficit and "debt," by the way)

'nee: I take your point, but you have to consider the cost of school or a house as compared to your annual income. If you're like me or most people, these were cases where you were faced with costs which were known to be temporary and were huge in magnitude when compared to your income.

For the government, the only real equivalents would be war or depression - cases in which I would support running a deficit. Maybe an oil crisis could count as well but we certainly should have taken action sooner to get things back under control after things stabilized a little (poor Joe Clark).

Anyway, I think the point Alan was making is that we should keep paying off what we owe since times are still good right now.

There has to be a balance. Personal tax rates in this country are way too high - for instance between 1994 and 1999 the proportion of all tax revenues that the Federal government collected from personal income taxes increased by 43% while economic growth only increased 22% and ave.incomes only increased by 18%. High taxes are a proven disincentive to economic growth. What the neo-cons may be saying is "enough" - bring in some balance - give us a break.

Given the Liberals history of fiscal "management" of "loose money" it is no great leap to see them use the majority of this surplus as a "slush fund" for their "pet" projects to ensure re-election - there is already musings about it being used for this insane National Daycare Plan (which will make the Gun Registry fiasco look like a badly run lemonade stand) etc.

It is a great leap as it is impossible. <p>By law about one-third goes to a buffer fund and the rest to the debt pay-off. The buffer fund is never used due to all the surpluses and rolls into the next year's surplus. Shake well and repeat. <p>The law would have to change to cause what you are suggesting or it would have to be diminished by program spending <i>before</i> it is identified as a surplus. That will take getting it through a minority Parliament and that is called democracy not a "slush fund".

"...it would have to be diminished by program spending before it is identified as a surplus..."
BINGO!

Well, yes, but then it is not a surplus. You cannot BINGO and go off topic.

Projections, me lad, projections. They already know to expect perhaps a bigger "surplus" this year - the fear is it'll soon disappear unfortunately, not through balanced tax cuts (I hope I'm wrong on this) but through new unsustainable spending on wacky Liberal projects that will see Federal spending balloon for years ahead.

Why would that not happen in the dizzy days of majorities but we fear it in the threadbare days of minority? That "fear" has been there for 8 years but its mongering has gathered no facts about it. All is fear, empty fear.

In the fullness of time...(as I say, I hope, nay, pray that you are right and I am wrong)

Eight years is pretty full.

SayNay? - I recommend visiting:

http://www.fin.gc.ca/afr/2004/afr04_1e.html

And at least taking a look at a few of the charts.

There's a good one on Government revenue as a percentage of GDP about halfway down. It shows how federal goverment spending (compared to the economy) has dropped under the Liberals and is now below anything it ever was during the Mulroney era.

Consider the RRSP program, reductions to the capital gains tax, lower tax brackets, brackets indexed to inflation, lower corporate taxes, expanded tax credits for children, students and small business, elimination of the surtax. What exactly would it take for neo-cons to feel like they've been 'given a break' or that the agenda hasn't been unbalanced in its neglect of tax-cuts?

Hmm - spends less, taxes less, pays off debt. No wonder conservatives can stand it!

All the above points are good ones, but let me just say that tax cuts are a proven economic stimulator: eg. Federal tax revenues were up 4.7 per cent in 03/04 despite, coincidentally, $4.5 billion in tax cuts which came into effect that year, with corporate tax revenues being up $5.2 billion and personal income tax revenues up $3.2 billion from the previous year. Public debt charges declined by $1.5 billion due to the decline in interest rates.

What the neo-cons might be saying is: "continue with the promised tax cuts and the economy will continue to grow".

I think the tax cut thing is just dogma. For young people what this amounts to is that you get a tax cut of fifty bucks, but you spend several thousand on service fees and student loans or on other things that you didn't have to pay for before. I think downloading the costs of everything onto individuals (especially young poor individuals) is dumb and bad for the economy. I think it's short term gain for long term pain.

By the way, the deficit and debt came into being as a political entity in the early eighties. That's twenty years ago. So we've had twenty years of this "we can't afford" business and mostly it's benefited baby boomers who don't want to pay their fair share of the costs of government. So now they want more tax cuts. I say forget it. Because, this is an ideologically based argument. What it says is, I don't want to have social programs at all. I don't care what they cost or what they're for. Whatever it is that the government does can be done better by the private sector.

Well in a lot of areas, that's just not true. The public sector does a better job with health care. The public sector is better at water safety. The public sector is better at schools. If you refuse to fund these things, of course, then all of that goes down the drain, but that's not because the public sector is worse. It's because there's a lot of lobbying by your friends who run HMOs and stuff in the States. Those guys really want to run something along those lines here. Actually, with health care in the state it's in, we can't afford tax cuts. Point final. Blah blah blah. I know, I'm a dullard.