Business
Balanced budget within reach—if Ottawa restrains spending
From the Fraser Institute
By Jake Fuss and Grady Munro
This level of debt-financed spending has contributed to an estimated $941.9 billion increase in gross federal debt from 2014/15 to 2023/24. In other words, partly due to its spending habits, nearly one in every two dollars of debt currently held by the federal government has been accumulated under Prime Minister Trudeau.
The Trudeau government will table its next budget on April 16. Federal finances have deteriorated in recent years due to the Trudeau government’s string of budget deficits, and high spending has led to a significant amount of debt accumulation, which imposes costs on current and future generations. Yet if the government presents a plan in Budget 2024 to rein in spending growth, it could balance the budget in two years.
Far from its promise to balance the budget by 2019, the Trudeau government has instead run nine consecutive deficits during its time in office. And it doesn’t intend to stop, with annual deficits exceeding $18 billion planned for the next five years.
The root cause of these deficits is the government’s inability to restrain spending. Since 2014/15, annual program spending (total spending minus debt interest) has increased $193.6 billion—or 75.5 per cent. If we control for population growth and inflation, this represents an extra $2,330 per person.
This level of debt-financed spending has contributed to an estimated $941.9 billion increase in gross federal debt from 2014/15 to 2023/24. In other words, partly due to its spending habits, nearly one in every two dollars of debt currently held by the federal government has been accumulated under Prime Minister Trudeau. Debt accumulation will only continue barring a change in course, as the federal government is expected to add another $476.9 billion in gross debt over the next five years.
Simply put, the Trudeau government’s approach towards federal finances has been characterized by high spending, large deficits and significant debt accumulation.
This approach to fiscal policy is concerning. Growing government debt leads to higher debt interest costs, all else equal, which eat up taxpayer dollars that could otherwise have provided services or tax relief for Canadians. And these costs are not trivial. For example, in 2023/24 the federal government is expected to spend more to service its debt ($46.5 billion) than on child-care benefits ($31.2 billion).
Accumulating debt today also increases the tax burden on future generations of Canadians—who are ultimately responsible for paying off this debt. Research suggests this effect could be disproportionate, with future generations needing to pay back a dollar borrowed today with more than one dollar in future taxes.
Although the Trudeau government promises more of the same for the coming years, this need not be the case. Instead, a recent study shows the federal government could balance the budget in two years if it slows spending growth starting in 2024/25. The following figures highlight this approach. The first chart below displays currently planned federal program spending from 2023/24 to 2026/27, compared with the spending path that will balance the budget, while the second chart shows the resulting budgetary balances.
As shown by the first chart, to balance the budget by 2026/27 the federal government must limit annual spending growth to 0.3 per cent for two years. As a result, annual nominal program spending would rise from $469.4 billion in 2024/25 to $472.3 billion in 2026/27. For comparison, the Trudeau government currently plans to increase annual spending up to $499.4 billion during that same period.
Should the government implement this level of spending restraint, the federal deficit would shrink to $21.8 billion in 2025/26 (as opposed to $38.3 billion), and the budget would be balanced by 2026/27 (as opposed to a $27.1 billion deficit). All told, by slowing spending growth to balance the budget, the federal government would avoid accumulating significant debt. Moreover, this also sets the government up to return to budget surpluses in the following years, which could be used to start chipping away at the mountain of federal debt already on the books.
Rather than continue its current approach to fiscal policy, and risk needing to employ more drastic cuts in the future, the Trudeau government should implement modest spending restraint now and balance the budget.
Authors:
Business
Report: Federal agencies spent millions of taxpayer money torturing cats
U.S. Sen. Rand Paul, R-Kentucky
From The Center Square
By
A new report published by U.S. Sen. Rand Paul, R-KY, highlights more than $1 trillion worth of taxpayer money spent on projects that he argues wastes and abuses taxpayer money.
Tucked in the report are three programs funded by federal agencies using millions of taxpayer dollars to experiment on cats.
The details are explicit and gruesome.
$11 million on Department of Defense “Orwellian cat experiments”
The US Department of Defense spent nearly $11 million on “Orwellian cat experiments” that have nothing to do with training the U.S. military or national defense.
“When George Orwell wrote 1984, he couldn’t have imagined the bizarre, dystopian reality we find ourselves in today where tax dollars are being spent to shock cats into having erections and defecating marbles. Yes, you read that correctly,” the report states.
Through the DOD’s, Defense Advanced Research Projects Agency (DARPA), $10,851,439 of taxpayer dollars were allocated to the University of Pittsburgh to conduct “grotesque and extremely invasive experiments on cats.”
This involved slicing open the backs of male cats to expose their spinal cords and inserting electrodes to send electric shocks “to make cats have an erection.”
The cats were then subjected to “even more electric shocks, sometimes for up to 10 minutes at a time, before having their spinal cords severed to paralyze their lower bodies,” the report states. “And just for good measure, the shocks continued for another 10 minutes. All this, in the name of ‘science.’”
In another DARPA-funded experiment, balloons were inserted into the cats’ colons and marbles into their rectums “to force these poor animals to defecate the marbles via electric shock.”
“Nothing says ‘national defense’ quite like torturing cats to poop marbles,” the report notes. “If we can’t stop the government from shocking cats into defecating marbles, then what can we stop?”
$2.24 million on feline COVID experiments
The report also notes that under the direction of Dr. Anthony Fauci, since 2022, the National Institute of Allergy and Infectious Diseases and the U.S. Department of Agriculture allocated $2.24 million in grants to Cornell University to conduct feline COVID experiments.
Through a University of Illinois NIAID subgrant, Cornell received $1.59 million over the past two years in addition to a $650,000 USDA grant, bringing the total to $2.24 million, the report notes.
The experiments led to the suffering and death of 30 cats, according to the records of the experiments, the report notes.
The experiments involved injecting healthy cats with COVID-19, observing them suffer and then killing them in groups of four. The cats were not given any type of vaccine or treatment but killed as early as two days after being injected and left isolated in cages.
NIAID funding for the program is slated to continue through 2025; the USDA’s through May 2026, the report notes.
“It’s a mystery as to why the U.S. government continues to fund these barbaric types of studies, especially when the knowledge gained is either useless to society or could be learned without torturing an animal,” the report states.
$1.5 million to torture primarily female kittens
The National Institutes of Health spent more than $1.5 million to torture primarily female kittens in an extreme example “of waste and cruelty,” the report found.
“If you learned that your money is being used to electro-shock young kittens, torturing them for hours on end, and to the point that they vomit, would you believe it?” the report asks. “Since 2019, $1,513,299 worth of taxpayer money has been going to these medieval-type experiments. This is not some distant, dystopian future; it’s happening right now at the University of Pittsburgh, courtesy of a grant from the NIH.”
According to the report, primarily female kittens between four and six months old were strapped to a hydraulic table, spun 360 degrees, flashed with bright lights, injected with copper sulfate, had holes drilled into their skulls, to be “shocked, and abused without resistance.”
According to NIH, the purpose of the experiments is to study how different species, like cats and monkeys, respond to motion sickness. Understanding responses to the test “could have implications for human health, potentially aiding in the treatment of conditions like vertigo or helping us understand the effects of space travel on the human body,” the report states.
The report cites primary sources and includes photographs of the animals and diagrams of the machines used.
Business
Trump 2.0 means Canada must put income tax cuts on the table
From the Canadian Taxpayers Federation
By Jay Goldberg
The topic on everyone’s mind is tariffs: Will Trump act on his threat to impose 25 per cent across-the-board tariffs on the Canadian economy?
But there’s something else Canadians should worry about: income taxes.
During President-Elect Donald Trump’s first term, he lowered income taxes for Americans at virtually at all income levels. And Trump pledged during the presidential election campaign to cut taxes further.
Here in Canada, our tax rates are already uncompetitive. With a possible tax cut south of the border, it’s time to re-examine Canada’s income tax policies.
Let’s take a gander at how Canadians who earn $75,000 a year are taxed compared to Americans.
A taxpayer in Ontario earning $75,000 a year pays an income tax rate of about 30 per cent.
Compare that to the two states bordering Ontario: Michigan and New York. In Michigan, a taxpayer earning $75,000 a year pays a 26.3 per cent income tax rate. And in New York, one of the highest-taxed states in the U.S., that taxpayer would face a 27.5 per cent income tax bill.
Considering that sales taxes and hydro rates are lower south of the border, Canada is clearly at a disadvantage. Add to that the fact that Canadians pay a punishing carbon tax while Americans don’t.
The situation is even more stark for those with higher incomes.
A taxpayer earning $150,000 in Ontario sends roughly 41.7 per cent of their income to Queen’s Park and Ottawa in income taxes.
Compare that once again to Michigan and New York. A Michigander making $150,000 a year pays a 28.3 per cent income tax rate. And a New Yorker pays 30 per cent.
These numbers are glaring. Canadians pay dramatically higher income taxes than our neighbours to the south. And Michigan and New York are some of the higher-tax states.
In Texas, a taxpayer earning $150,000 pays a 24 per cent income tax rate. That’s lower than the income tax rate for an Ontarian who earns half that much.
The cross-border tax gap will likely grow further in the new year. Trump says he plans to further lower income taxes while the Trudeau and Ford governments show little appetite for providing taxpayers up north with a similar break.
For the sake of Canada’s economic competitiveness, income tax cuts need to be placed firmly back on the public policy agenda.
Premier Doug Ford promised to cut income taxes for middle-class Ontarians by nearly $800 a year when he was first became premier six years ago. He pledged to do so by lowering Ontario’s second income tax bracket by 20 per cent.
If there was ever a time for Ford to follow through on his election promise, that time is now.
The feds need to look at cutting income taxes too. Most of the income tax burden in Canada is caused by high tax rates at the federal level.
To insulate Canada from the magnetic pull that will be triggered by a second round of Trump tax cuts, Prime Minister Justin Trudeau must look at lowering personal income tax rates.
Trudeau can cut income taxes substantially without hiking the deficit because there’s plenty of opportunities for savings.
Here’s where to start: The Trudeau government spent $47 billion on corporate welfare in 2021.
If Trudeau eliminated corporate welfare, the feds could cut personal income taxes by 20 per cent across the board without hiking the deficit.
Canada’s politicians can’t be complacent. We can’t control what Trump chooses to do when he gets back into the White House, but Canada’s politicians can control public policy north of the border to make the Canadian economy more competitive.
That starts with cutting income taxes.
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