The governmental DEBT that Canadians owe is staggering. Currently, the combined debt is over $2.1 trillion.
The Federal government’s debt alone is over $1.2 trillion. Our friends over at the Canadian Taxpayers Federation estimate that the debt grows by nearly $110 million/day.
Some people think that the debt a government has is not important, but that can’t be further from the truth. Studies show that there is a negative relationship between government debt and economic growth and in particular, government debt has a significant effect on private investment. Canada has gone through credit rating reductions in the past and what this means is that the interest rates that governments pay for borrowing money, go up. And that is on top of the cost of interest rates associated with high inflation, such as the situation we are in right now.
When a government uses Deficit spending to fund its programs, what that really means is that it is borrowing money from a bank. It’s using a credit card. And as we all know, the bill comes due. As a consequence of this debt accumulation, governments are required to make interest payments, also known as debt servicing, which mean our tax dollars are first used to pay interest, before being used to pay for programs such as health care, education, or social services.
In BC, the combined federal and provincial interest payment per year is roughly $9.9 billion*. Yet the whole of the social services budget is $9.1 billion*. We spend more on interest payments than services that people require.
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