I didn't read the federal budget for 2016.
Of course the only people who actually read it were interns whose overlords had a vested interest in knowing what was in it, but not enough interest to read it themselves.
Unfortunately I don't have an intern, so I had to settle for reading the highlights online. But I did read the entirety of the preamble to the budget. And that short treatise is a wonder to behold.
The preamble catalogues the various economic and fiscal difficulties of two prototypical Canadians, David and Neera, and uses their struggles to highlight what's wrong with the current social contract, as well as how Prime Minister Trudeau and gang intend to fix it. It concludes:
"Canadians understand that a country can't cut its way to prosperity. The Government understands that hard work alone is not enough. A new approach - one that includes smart investments and fair choices - is needed. Budget 2016 reflects this new approach."
That summation, read in light of the rest of the preamble, is positively alarming. For buried in the middle of the preamble are the following assertions: "in an environment of sustained economic weakness and low interest rates, fiscal policy is the right policy lever to use to support long-term growth," and again, "[all Canadians] benefit from these investments, especially if they are made now, when interest rates are at historic lows." In short, we are to spend to prosperity.
Of course we saw what spending to prosperity by capitalizing on low interest rates does - it was called the financial crisis of 2008.
It was caused by low interest rates that resulted in cheap mortgages, which resulted in people unable to finance a mortgage getting loans, and eventually defaulting on them en mass. Cheap credit brought the most powerful nation on Earth to its knees in a matter of months in fall 2008, and eight years later it has still not fully recovered.
The obvious objection to the parallel I've drawn is that the government's budget is a single large mortgage, not thousands of little ones. And therefore, it ought to be easier to control and, even, result in better returns thanks to "bulk purchasing power" and flexible monetary policy.
But the untold story of 2008 is what happened in Europe. They used America's exponential growth caused by the housing bubble to take out loans and finance very expensive, growing operational costs, particularly entitlements. That's how Greece became the mess it is today; it tried to hand every citizen a free lunch on borrowed money from Germany that had made its revenues off of the American spending spree on mortgages. And then the bottom fell out.
What does all this have to do with the federal 2016 budget? Well the story of Europe is the exact direction this budget intends to head, quite ironic given the title Growing the Middle Class. Whether it's low interest rates or unsustainable growth, the problems on the balance sheet will be exactly the same: in the future, the cost of a project, service, or new entitlement will outpace projections, and we will plunge into further deficit, perhaps even recession and default.
I guarantee you that this fiscal policy will not grow the middle class. What's more, we will be paying for these missteps for generations to come.
And being one of those generations - at 26 I'm at the beginning of my economic life cycle - I must say I'm rather displeased at the prospect of having to clean up yet another mess from my forebears that could have been easily prevented.
So I beg you, please write, email, petition, and twitter troll the overlords of Ottawa, and ask them whether it's really fair to kick the economic can down the road.
I'm well aware they probably won't listen, and even if they did there's a lot to discuss, from NAFTA to globalization to automation, etc. But one thing is certain - this budget is not a new approach, and it won't work.
