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Friday, September 28, 2007 

Harper Gives $14 Billion Surplus To Bankers

Stephen Harper and Jim Flaherty demonstrated how the conservative mind works by the way in which they dealt with Canada’s $14Billion budget surplus. They took the entire amount and gave it to the banks. Period. No other option was considered.

During the years that Roy Romanow was Premier of Saskatchewan, he operated with a very popular model for utilizing surplus budget dollars. With a policy called ‘1/3 - 1/3 -1/3', all surplus dollars went one third to debt reduction, one third to tax cuts, and one third to program creation or enhancement. The model worked well and is one of the reasons that Saskatchewan New Democrats have been able to remain in power for 16 years.

Harper proved again yesterday how limited Conservative vision is. With the luxury of a surplus that could have been used for infrastructure spending, student loan relief or tax cuts, Harper knee jerked towards typical right wing ideology and handed the entire $14Billion to banks. No vision. No creativity. No concern for the citizens of the nation.

How are you liking ‘government by right wing ideology?’

Canadian Press

Photo courtesy Conservative Party of Canada

Did anyone notice that Steve made the announcement and Jim stood by on stage with the rest of the stage props?

If it's good news, he gets the honours of the announcement. Bad news just gets out in a press release.

Just saw the announcement again on the noon news on CTV Toronto.
Jim Flaherty has a booster platform to stand on in order to be seen and heard.

Runty little man in more than one sense of the word.

I certainly understand the point about low-balling the surplus, which is an entirely valid criticism. However, it should be pointed out that by law once the $14 billion surplus became a reality the government MUST use it to pay down the debt. That's the law. At that point, they had no choice (but again, it's a totally valid point that they had a choice not to so horribly underestimate the surplus in the first place, so they did tie their own hands, nonetheless the hands are now tied). So, first of all, Harper may have manipulated things so that he'd have a surplus to give away, but once he has a surplus he HAS to give it away. That's the law.

I'd also say it's a bit disingenuous to say that he gave the $14.2 billion to "bankers". It's much more accurate to say that he gave it to "the banks". It should also be pointed out that the reason he needs to give money to the banks ($14.2 billion, in this case) is because we collectively owe the banks $481 billion. So, we're not exactly "giving the banks our money", we're giving the banks THEIR money, back. We borrowed money from the banks, we now owe them a lot, and Harper just made a large payment.

It's also worth noting that this one time $14 billion payment is going to save us $715 million in interest payments every year, forever (presuming we keep paying down our $481 billion dollar debt). THAT could have been used to fund services, and that's the argument I'd focus on if I were the NDP. I'm all for paying down our debt as fast as we can. Once we're debt free, the options open to our children will be much greater than the options we have today. I wouldn't object at all though to seeing the interest savings spent, not on new services, but on fixing our current services. How many nurses do you suppose could be hired, at good salaries, in permanent full-time positions for $715 millon a year in perpetuity? I don't know exactly, but it has to be THOUSANDS (to give one simplified example).

Personally, if someone gives me 10,000, there's nothing I need more than to pay down my credit card debt. It'll give me more money to spend every month ('cause I'm not spending that money on my credit card bills) which is worth much more to me than anything I could buy with the $10,000. I'm not that concerned when the government does the same thing on a larger scale. I don't think the NDP will convince a lot of Canadians that paying down the debt is a bad use of the government's money. However, tell the people what you could get accomplished with the $715 million in "found money" from the interest savings and, if you have a good plan, you'll get A LOT of attention!

So as Canada's municipal infrastructure crumbles, as students deal with crippling debt, as the promise of 125,000 new day care spaces is tossed on the scrap heap, Canada's 'Banks' have $14 Billion to lend and charge high interest rates.

All I am asking for is some balance. by using the Romanow 1/3 - 1/3 - 1/3 model, you can pay down debt and do some other very NEEDED things in the nation.

Balance is something right wing thinkers are not good at. They tend to work towards extremes.

I should say, I like the 1/3,1/3,1/3 formula, and wouldn't argue against it, but Harper can't just implement it unilaterally. The law would need to be changed. It's a good formula, it's just that to me, I'm not too upset about giving the banks back 14 of the 481 billion dollars we owe them. Plus, I rather like the idea of reducing our annual payments to the banks for interest charges by $715 million dollars.

I just think we shouldn't get too self-righteous about paying the banks back the money they lent us. If we don't like having to pay back our debts, we shouldn't have incurred them.

This surplus will be short term.

1) Canada is not collecting significant Tar Sand Oil royalties. As result even more oil money is flooding in and over inflating the Canadian Dollar. In a few years at full capacity the North Sea Oil was effectively pumped out. How long can we remain the US's primary Oil supplier until we run out.

2) The approximate 20% increase from .82 US in August 2005 to par now, is killing our competitiveness. Parts of Canada will go into a recession because of the high dollar, reducing the surplus next year.

3) Delaying improvements to energy efficiency will further hurt our competitiveness with a much more energy efficient Asia. Our poor energy efficiency also reduces our competitiveness in many indirect ways such as limiting schools within travelling distance and reducing labour mobility. A more competitive education system and greater labour mobility depend on greater transportation efficiency.

4) Cutting education programs, particularly early education have very large long term cost.

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