Spending ourselves silly
The Citizen assured us it'll be steady-as-she-sinks for the feds, with "no new spending measures or tax cuts beyond what the Harper government has announced already in its plan to stimulate the economy, says a senior government official." The newspaper reported that the government official's comments "appear to douse speculation the Conservatives are transitioning to a period of serious belt tightening" -- that, despite Treasury Board president Stockwell Day's hints that the government would identify specific programs to be cut, "there will be no absolute spending cuts in the budget" (according, again, to that senior government official.)
Gosh, was that just rube bait?
For added horror, I read this solemn guff in parallel with Benjamin Franklin's mid-18th-century Poor Richard's Almanack maxims. Back then, people were so weird they believed in right and wrong and humility and other age-of-whale-oil barbarities like frugality. Who today would say, "If you'd be wealthy, think of saving, more than of getting: The Indies have not made Spain rich, because her Outgoes equal her Incomes." To be fair, our governments don't seem to be thinking of doing either.
Of course we'll be assured Thursday that in a few years, when the ship of state stops leaking red ink, they'll batten the hatches, trim the sails and get things back in balance. So here's Franklin: "To-morrow you'll reform, you always cry;/ In what far country does this morrow lie?"
Not Europe, that's for sure. It's old news that the PIIGS (Portugal, Italy, Ireland, Greece and Spain) have ghastly financial problems. But sophisticates have assumed countries like Germany and Britain would bail them out.
Guess again. Germany's deficit is way above the EU's alleged limit. And last week the Daily Telegraph reported: "In surprise news which sent the pound sliding on Thursday, official figures showed that the "British) Government borrowed £4.3 billion last month. It was the first time since 1993 that the public finances had gone into the red in January -- a month in which tax revenues usually push the Exchequer into the black," so Britain's deficit could exceed "even the Chancellor's forecast of a record £178 billion."
I especially like the fact no one saw it coming; in Britain, as here, finance ministers reliably give you 10 highly technical reasons why their predictions can't go wrong and, a month later, 10 equally brainy excuses why they did. As Franklin warned, "There are no fools so troublesome as those that have wit."
Big trouble is coming here. U.S. Defence Secretary Robert Gates just blasted America's European NATO allies for military feebleness. He's glad they've stopped attacking each other, as are we all. But he called the "demilitarization of Europe -- where large swaths of the general public and political class are averse to military force and the risks that go with it ... an impediment to achieving real security and lasting peace" because it might be "a temptation to miscalculation and aggression" by bad guys.
Europe's democracies have had this problem for ages, hence the unpleasantness over Hitler a few generations back. Bread and circuses leave little for legions. But who is he to talk?
Last week, foreigners dumped a record $53 billion of U.S. government debt, topping April 2009's $44.5 billion, led by geopolitical rival China tossing $34.2 billion. As the Associated Press observed, "The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits." So hear Franklin again, "He that would have a short Lent, let him borrow money to be repaid at Easter."
Mr. Gates' government is running larger deficits than at any time since the Second World War while spending less of GDP on defence than at any time since Pearl Harbor. Such recklessness threatens America's capacity to carry the strategic burden that Europe and Canada have shrugged off. But all Barack Obama and Congress can think of is to spend more, on health, job creation, housing subsidies (again) and anything else with votes in it.
As Franklin said, "Experience keeps a dear school, yet Fools will learn in no other." Remember the deficits of the 1980s and early 1990s? And remember when you were a teenager and wanted to do some dumb thing all your friends were doing and your mother asked if they were all jumping off a cliff would you? Apparently if you're a finance minister the answer is yes.
So excuse my harping on this fiscal crisis engulfing Western civilization. It beats singing about responsibility while plucking a pitchfork.
[First published in the Ottawa Citizen]