The Debt- An Economic Catastrophe

The Debt: An Economic Catastrophe

Few national economic issues have generated the same kind of concern as has the federal debt problem of Canada. There is a pressing need for long-term policies to lift Canada out of the national debt hole it is in. Eliminating the debt will not only free up money being spent on interest and reduce taxes, but make Canada a more feasible place for future generations to live and work.

Interest on the debt has eroded the government’s ability to fund its own operations and essential social services. Presently, thirty-five cents of every tax dollar the federal government raises is used for interest payments alone on the debt. Though there have been operating surpluses within the federal government, they have been eaten up by the debt interest payments. Few people understand the devastating effects of compound interest. The debt, at a compound rate of 10%, doubles in seven years, quadruples in fourteen years, and is eight times as much in twenty-one years. This creates great difficulty for governments to slow the debt, much less eliminate it. Our federal debt grows all by itself to the tune of approximately ninety million dollars every day. This may seem hard to digest, but it is reality. The need for debt elimination is vital if Canada wants to free up billions of dollars being spend on interest payments. Two approaches may be taken to this. First, an increase in government revenues through higher taxation may be considered. However, taxes are already at a point where some people feel they are working merely to pay the government, rather than support themselves. Second, a restraint on government spending by means of cutbacks may be a path, possibly a difficult one, to the road of eliminating our federal debt. Either way, it will be the young citizens of Canada that will have to pay for previous government overspending. “Our national debt, after all, is an internal debt, owed not only by the nation but to the nation. If our children have to pay the interest, they will pay that interest to themselves.” (Franklin Delano Roosevelt)

As our debt continues to increase, so do the taxes that Canadians are paying. Thirty-five percent of our taxes are being paid to reduce the debt, leaving the rest to fund government programs such as health care, education, and job creation. “For every benefit you receive a tax is levied.” (Ralph Waldo Emerson) However, a long look must be taken at how the tax dollar is distributed to various programs to determine which ones need more funding, and which should be receiving less. There is, by no means, excess money to spend foolishly; that is what got Canada into the financial crisis it remains in today. But by restricting the growth of program payments, eliminating some programs and cutting back on others, and by having higher income individuals pay back a greater share, dollars are now being reassigned to the most essential programs and to needy Canadians. The battle to reduce tax waste and increase efficiency continues across all government departments. Nevertheless, Canadians now claim they are being taxed to death. And the only way to stop this excessive taxation is for the government and citizens to work together to fight the debt, and subsequently, less tax dollars will be needed to pull Canada out of the financial crisis it is in.

There is no doubt that a debt-free country would be the greatest place in the world to live and work. There would be adequate funding for job creation by means of public and private investment, tax dollars would be spent responsibly and wisely, resulting in tax relief but still receiving essential services, and social spending would be prioritized to ensure the long-term survival of social programs that Canadians value and need. However, the position Canada is in now greatly differs from this. Canadians are out of work. Our government spends too much, owes too much, and taxes too much. This vicious cycle drains the lifeblood out of the economy, scares away private investors who create jobs, and makes Canadian products less competitive. Taxes are too high. Government over-spending has led to enormous interest payments on the debt, driving up the tax burden