Conservative Mathematics

It would appear that our CPoC government thinks that they can not only pay down the debt, but do so at the same time as reducing government revenues.

With Canada's debt running in the neighborhood of $400 billion today, fifteen years means that we would have to retire it at a rate of nearly $26 billion a year. Now, that's an aggregate number including balloon payments and normal debt retirement. Given that much of the current government debt was run up during the Mulroney years (remember him - the last Conservative PM?), a sizable chunk is no doubt due to be retired in the coming fifteen years. Which may mean that sizable surplus payments against the debt may be able to retire a sizable chunk in fifteen years.

However, this plan makes huge suppositions about the state of the Canadian economy over a very long period of time, and further supposes that provincial governments will not run into the fiscal red as well. (A risky assumption at the best of times)

The part of the calculus here that doesn't quite add up is the notion of simultaneously reducing government revenues. It's sort of like agreeing to reduce the term of your mortgage, and then at the same time agreeing to a gradual reduction in your salary at work. Of course, I find it interesting that the government is putting the CCP - and any surplus revenues it generates - into the coffers of "general revenues" here. If the CCP is generating a surplus right now, and it is expected to provide funding to Canada's seniors as the baby boom generation retires (which, by the way will be near it's peak retirement right around 2021, I suspect), chances are that those very surplus dollars will in fact be required to fund the program without the government incurring further debt as the taxpayer provided revenues gradually drop off.

Looking at the experience in Alberta, I think that Jack Layton has it pretty much bang on:

"They're just simply saying, 'We are going to pay down the mortgage unbelievably fast. It doesn't matter if people are sick…. We are going to focus single-mindedly on reducing taxes and debt.' And that's not a balanced approach," he said.

(Believe me, it's not only unbalanced, it's ultimately very damaging to the infrastructure and engines of the economy)