Trudeau’s Dangerous & False Offer: Spending Without Consequences
By Spencer Fernando, Exclusive to the National Citizens Coalition
In politics, it is almost always far easier to be the big-spender.
And in a world where central banks and profligate governments have incentivized debt accumulation and punished saving, that is even more the case than ever before.
Usually, there is a limit on how much spending a government will promise because they realize there must be a point at which fulfilling their political ambitions is outweighed by the long-term damage of saddling a nation with immense debt obligations.
But when unmoored from any sense of duty towards the future, and mired in magical thinking on the economy, all bets are off.
This is what we are now seeing with the Trudeau government, who are taking advantage of the present moment to make what will feel to many people like a very enticing offer:
Spending without consequences.
Trudeau started putting down the groundwork for this when he talked about how the government ‘took on debt so Canadians wouldn’t have to.’
Politically, it was a great line, but it is of course a fallacy.
The debt of the Canadian government must be paid – whether in principle or in interest payments – and the money to pay it comes from Canadians.
As they say, today’s deficits are tomorrow’s taxes.
Chrystia Freeland added to the ‘spending without consequences’ narrative by constantly referencing low-interest rates as the excuse for continuing rampant spending increases.
And while she would have had a bit of a point if the government were making immense investments in physical, tangible infrastructure projects, that is not where most of the money is going.
Also, interest rates don’t stay low forever, and we are already seeing bond yields rising.
The Liberal government is promising to continue government intervention in the economy in the form of expanded payments to individuals and businesses, running up huge deficits, even as economic stats show the economy starting to slowly recover from government-imposed restrictions.
The fact is, it simply does not fit Trudeau’s ideology to acknowledge that economic damage caused by government restrictions is best solved by the government stepping back.
And for all the talk about supposed ‘Keynesian’ economic policy, the government is ignoring that Keynes believed governments should run surpluses during good times and use that accumulated money to balance things out in rough times. Instead, we get deficits in good times, and even bigger deficits in rough times.
The big problem here is that the Trudeau government is likely correct in their short-term appraisal of the political situation.
There is a time-delay between massive overspending and the consequences being felt, and they clearly feel the delay is long-enough to win a majority government.
They are aided in this by a Conservative Party that seems unsure of who they are, with the party torn between a principled embrace of the limited government, free enterprise system, and others pushing for even more government control and intervention with the only difference being that a party with the ‘Conservative’ label would be doing the intervention rather than the Liberals.
A further issue is that the time-delay between overspending and direct consequences makes it easier for politicians to wash their hands of responsibility.
Those who take power when the consequences are felt are thus forced to make tough decisions to manage the fallout of policies they did not implement, but all the anger gets directed towards them.
Politicians know this, so we are seeing a never-ending game of kicking the can down the road, with everyone hoping they can hold power for long enough to keep the farce going and have someone else pay the price.
Of course, the price will never truly be paid by politicians, who are generally financially insulated from economic crises.
Instead, millions of Canadians will pay for it, quite literally in many cases.
Taking advantage of hope
Every day we see more and more evidence that the Trudeau government is doubling down on a political strategy of spending as much as possible to win at any cost.
They are taking advantage of the fact that people legitimately want to believe in those in power and want to believe things will be okay.
When Trudeau says he can spend a ton of money without anyone paying for it, it sounds great.
It sounds far better than those saying the government must have a reduced role.
Yet, Trudeau’s promise not only sounds great, but it also sounds too good to be true, because it is.
Economic reality can be evaded for a while, but it cannot be avoided forever.
Ramping up debt in an economy that has slowing productivity, imposing a carbon tax that restricts growth (making the debt burden even worse), strangling the energy sector, expanding the money supply dramatically, and incentivizing the formation of housing bubbles and debt accumulation among individuals and corporations will inevitably lead to a crisis.
In short, tough economic decisions must be made, either sooner or later. And sooner is always better, because every day without a change of course towards fiscal responsibility means those decisions will be tougher when the time comes.
That is why Trudeau’s ‘spending without consequences’ offer is the ultimate ‘wolf-in-sheep’s-clothing’ offer from a politician, and all of us who value the economic future of our nation need to speak out against it.
Spencer Fernando is one of the most popular and prolific political voices in Canada. He is a Campaign Fellow for the National Citizens Coalition. For more from Spencer, visit his website, and follow him on Facebook and Twitter.
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