Cuss Jar Economics
David Simmonds

There’s an interesting new poll. It was conducted by the Pew Research Center, based in Washington. It measured the how well people, in various countries, thought their national government managed the coronavirus crisis.

Canada is near the topic satisfaction with government.

Right near the top of the list was Canada. Eighty-eight per cent of Canadians said their government managed the pandemic well. This positivity rating was pipped only by Denmark, Australia and South Korea. In contrast, the bottom of the barrel was scraped by the United Kingdom, at 46 per cent, followed by the United States, at 47 per cent.
The survey also asked respondents if their country was more unified than before than before the crisis. Canada came in second to Denmark in this one, with 66 per cent of respondents saying that it was more unified, The United States stood in stark contrast: 77 per cent of Americans thought their country was less unified and only 19 per cent though it was more unified. 

The conclusion is clear. Canadians support the government determination to do what it takes, with funds to manage the coronavirus crisis and its immediate economic fallout. Canadians survived a mighty blow by virtue of good government.

That determination, however, has resulted in a federal deficit that will balloon from around $20 billion to $380 billion this year, while economic output has shrunk and will provide less revenue for the government. We supported our government in its spending decisions, so we can’t point fingers at it for getting us into this deficit hole; it got there with our concurrence.

The question is, how does the government propose to get us out of it? The government began to talk of that process in 23 September throne speech. Finance minister Chrystia Freeland had a long list of things she would like to spend money on; child care, long term care, general health care, infrastructure, the green economy, gender inequality and income disparity, to name the most obvious, How she would close the gap between income and expenses is less obvious.

Freeland has a little room to manoeuvre.

If she has the resolve, she can find more revenue from increasing income tax rates, taxing capital gains at the same rate as dividend and interest income, introducing a wealth or inheritance tax, increasing the consumption tax on high aggregate purchases, target taxing the super-rich, ending the principal residence exemption and beefing up minimum tax rules. She can reduce expenditures by cutting programmes left, right and centre and firing public servants to shift them from salaries to unemployment benefits. She can cross her fingers and hope the economy will grow so rapidly the debt burden will lighten into insignificance, but that would be to take the same approach as Donald Trump did to the original crisis and the Pew survey shows where that got him.

Freeland can take a long window approach, committing to bring the deficit to a sustainable level over several generations, but the longer she stretches it out, the more she is exposed to the risk that another serious or even more serious calamity besets our economy. For instance, the government has said, firmly, how it will reduce carbon emissions to thirty per cent below 2005 levels by 2030. That may call for considerable new expenditure and long-term interest rates have nowhere to go but up.

In the end, Freeland and her government may need new revenue sources to control the deficit. No doubt she would be receptive to fresh ideas. Here are my suggestions.

Why not get Canadians to rededicate the family cuss jar to deficit reduction, instead of saving it up for buying the family a round of ice cream cones? Canadians must cuss collectively about 380 billion times a year, so a dollar a cuss should do it. If they don’t cuss so ofen , this would give them a reasonable incentive to get more cussing out of their systems for a worthy cause.

Why not tax lottery winnings? Exempt the first million, if you must. Speaking of lotteries, why not have the jackpot default to the federal treasury every time there is no ticket for the winning number sold? I wonder how this would go over with inveterate lottery players.

Why not encourage children to set up individual debt reduction accounts? For each $100 saved and donated to the federal government for debt reduction, the government would match the donation and send the child a certificate of participation, with a big gold star on it. This would build good lifetime debt reduction habits and grow voters who are deficit averse.

Re-directing cuss jar revenue.

In order to pull the public debt back to a manageable size, the government is going to have to show the same resolve to do what it takes that it showed In spending money to address the coronavirus crisis. Government will need our help, even if that means rededicating the proceeds from the cuss jar.