The Debt: An Economic Catastrophe Essay, Research Paper

The Debt: An Economic Catastrophe

Few national economic issues have generated the same kind of concern as has the

federal debt problem of Canada. There is a pressing need for long-term policies

to lift Canada out of the national debt hole it is in. Eliminating the debt

will not only free up money being spent on interest and reduce taxes, but make

Canada a more feasible place for future generations to live and work.

Interest on the debt has eroded the government’s ability to fund its own

operations and essential social services. Presently, thirty-five cents of every

tax dollar the federal government raises is used for interest payments alone on

the debt. Though there have been operating surpluses within the federal

government, they have been eaten up by the debt interest payments. Few people

understand the devastating effects of compound interest. The debt, at a

compound rate of 10%, doubles in seven years, quadruples in fourteen years, and

is eight times as much in twenty-one years. This creates great difficulty for

governments to slow the debt, much less eliminate it. Our federal debt grows

all by itself to the tune of approximately ninety million dollars every day.

This may seem hard to digest, but it is reality. The need for debt elimination

is vital if Canada wants to free up billions of dollars being spend on interest

payments. Two approaches may be taken to this. First, an increase in

government revenues through higher taxation may be considered. However, taxes

are already at a point where some people feel they are working merely to pay the

government, rather than support themselves. Second, a restraint on government

spending by means of cutbacks may be a path, possibly a difficult one, to the

road of eliminating our federal debt. Either way, it will be the young citizens

of Canada that will have to pay for previous government overspending. ?Our

national debt, after all, is an internal debt, owed not only by the nation but

to the nation. If our children have to pay the interest, they will pay that

interest to themselves.? (Franklin Delano Roosevelt)

As our debt continues to increase, so do the taxes that Canadians are paying.

Thirty-five percent of our taxes are being paid to reduce the debt, leaving the

rest to fund government programs such as health care, education, and job

creation. ?For every benefit you receive a tax is levied.? (Ralph Waldo

Emerson) However, a long look must be taken at how the tax dollar is

distributed to various programs to determine which ones need more funding, and

which should be receiving less. There is, by no means, excess money to spend

foolishly; that is what got Canada into the financial crisis it remains in today.

But by restricting the growth of program payments, eliminating some programs

and cutting back on others, and by having higher income individuals pay back a

greater share, dollars are now being reassigned to the most essential programs

and to needy Canadians. The battle to reduce tax waste and increase efficiency

continues across all government departments. Nevertheless, Canadians now claim

they are being taxed to death. And the only way to stop this excessive taxation

is for the government and citizens to work together to fight the debt, and

subsequently, less tax dollars will be needed to pull Canada out of the

financial crisis it is in.

There is no doubt that a debt-free country would be the greatest place in the

world to live and work. There would be adequate funding for job creation by

means of public and private investment, tax dollars would be spent responsibly

and wisely, resulting in tax relief but still receiving essential services, and

social spending would be prioritized to ensure the long-term survival of social

programs that Canadians value and need. However, the position Canada is in now

greatly differs from this. Canadians are out of work. Our government spends

too much, owes too much, and taxes too much. This vicious cycle drains the

lifeblood out of the economy, scares away private investors who create jobs, and

makes Canadian products less competitive. Taxes are too high. Government over-

spending has led to enormous interest payments on the debt, driving up the tax

burden on individual Canadians. And finally, our health care system is in

critical condition. Out-of-control government spending is the greatest single

threat to health care and other social programs in Canada. As one can see, the

debt-free scenario is much more attractive. This would unquestionably draw more

people to Canada to live, raise families, and work, consequently stimulating the

federal economy.

The journey to a debt-free Canada will not be a short one. Nonetheless,

measures must be taken to eliminate this economic catastrophe before it gets

more out of hand than it already is. We must learn to live within our means,

and understand that we can no longer spend money we do not have. ?Some debts

are fun when you are acquiring them, but none are fun when you set about

retiring them.? (Ogden Nash)

Bibliography

Emerson, Ralph Waldo. Quotation Homepage: http:\\www.lexmark.com/data/quote-

21.html. Nash, Ogden. Quotation Homepage: http:\\www.lexmark.com/data/quote-

21.html. Roosevelt, Franklin Delano. Quotation Homepage:

http:\\www.lexmark.com/data/quote-21.html.