The Canadian National Newspaper: CBC's "The Current" misses the boat on economic issues

On Thursday, January 15, Anna-Maria Tremonti of CBC's "The Current" announced that "Debt Burden" would be discussed on Friday, January 16. But what a disappointment it was. So one sided. We heard a 30 second clip or two from Jack Layton and Michael Ignatieff, and then a long interview with Niels Veldhuis of the Fraser Institute explaining why increased government spending and deficits would not be good for the economy. While I didn't agree with him, he made his case very well. He did not need the support of Barbara McDougall who took most of the rest of the program.

What we needed to hear was an equally well-made case for government spending. This could have been provided by the Canadian Centre for Policy Alternatives as well as other like-minded economists.

We also needed to hear how government deficit need not add to "debt burden" if the government borrowed from its own bank, the Bank of Canada. Leaving Canadians with a massive debt will be harmful, as Niels Veldhuis said, but only if it is carrying the burden of interest charges. The debt servicing cost to the government when it borrows from the Bank is zero because the government owns the Bank and all interest paid to it comes back as dividend less a small administrative cost. To prevent an increase in inflation due to the extra money in circulation, the statutory reserves (eliminated by Brian Mulroney) would have to be re-instated.

We need massive amounts of money to kick start the economy through upgrades in infrastructure, health, education, low cost housing and improvements to the environment. The financing for this should come from the Bank of Canada.

The huge federal debt accumulated during the past 30 years, which reached a peak of $588-billion in 1997, is due mainly (94%) to compound interest, not government programs. Total interest paid on the federal debt from 1975 to 2006 amounts to $959-billion - and this does not include the interest paid on provincial and municipal debt.

Had we used the Bank of Canada to finance government capital expenditures during the past 30 years, we would not be carrying the huge debt that we are to-day. We must not repeat that mistake.

Richard Priestman helps coordinate the Kingston Chapter of the Committee on Monetary and Economic Reform

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