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If you spent and borrowed like Ottawa you’d be in big trouble

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From the Fraser Institute

By Jake Fuss and Grady Munro

If the median household chose to spend like the Trudeau government, it would spend $109,982 and incur a deficit of $8,161, which it would put on a credit card. And this year—again, if the family was in the same fiscal situation as the federal government—it would pay $11,066 in interest on an overall debt burden of $427,759.

According to polling released earlier this year, two-thirds of Canadians are concerned about the size of the federal deficit. And considering its size, Canadians are right to be concerned, but it can be hard to wrap our heads around the scale of the numbers involved. A new study puts the federal deficit in more familiar terms, and shows what the median Canadian household’s finances would be like if it budgeted like the federal government.

This year, the Trudeau government plans to spend $537.7 billion while expecting to collect $497.8 billion in revenues—a $39.8 billion difference or deficit, which represents the amount of money Ottawa must borrow in 2024/25 to cover its spending commitments. The Trudeau government has run deficits every year for the last decade, and plans to continue running deficits for at least the next five consecutive years.

Consequently, the government has racked up massive amounts of debt. In 2024/25, federal gross debt is expected to reach $2.1 trillion, which is nearly double the $1.1 trillion held in 2015/16.

So what would the median household budget look like in 2024 if it managed its finances like the federal government?

In 2024, the median household will earn $101,821 after taxes (median means half of Canadian families earn more than this amount and the other half earn less). If the median household chose to spend like the Trudeau government, it would spend $109,982 and incur a deficit of $8,161, which it would put on a credit card. And this year—again, if the family was in the same fiscal situation as the federal government—it would pay $11,066 in interest on an overall debt burden of $427,759.

While it’s clear that a family spending 11 cents of every dollar it earns on debt interest, and ending the year with $8,161 in new credit card debt, is not in a good financial situation, there’s an important nuance that makes this situation even worse.

For this comparison (the federal government and a Canadian household) to work, we shouldn’t view the $427,759 in debt as a mortgage. Why? Because when a family takes out a mortgage, the amount of debt is balanced by the value of the house. In other words, the family could sell the house and use that money to pay off most or all of the outstanding mortgage.

The same cannot be said about government debt. In many cases, government debt is not backed by many assets. In the unlikely scenario the federal government used all of its financial assets to pay off its debt, it would still be left with $1.4 trillion in debt this fiscal year. If the government went a step further and sold all its non-financial assets (which includes all buildings and land owned by the federal government), it would still have $1.3 trillion in debt. In other words, more than half of the federal government’s debt cannot be paid off simply by selling its assets.

The Trudeau government continues to spend beyond its means and rack up mountains of debt every year, which has eroded federal finances. If a family budgeted like the federal government, it would be in big financial trouble.

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Every Federal Regulator Destroys 138 Jobs

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From the Brownstone Institute

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This lost output is made of jobs and businesses that were never started. Or were stunted by strangling regulations — mom and pops chased into bankruptcy as collateral damage to new regulations — say, a diner forced to spend $30,000 on a low-energy exhaust fan.

An Auburn University study says every single regulator destroys fully 138 private sector jobs every year you keep him on the job.

With nearly 300,000 federal regulators, the shock is that we still have any jobs at all.

The Two Scariest Words in the English Language

A lot of the excitement around the Department of Government Efficiency — DOGE — focuses on the dollars saved. But more important is all the things the federal government destroys with those dollars.

Specifically, the millions of jobs destroyed by the two scariest words in the English language: federal regulators.

A few weeks ago I mentioned how DOGE under Elon and Vivek is taking aim at the regulatory mothership that strangles the American economy and fuels the totalitarian administrative state — you may remember it from Covid.

A mother ship that is oddly enough unconstitutional according to a pair of recent Supreme Court decisions — Loper Bright Enterprises v Raimondo and West Virginia v EPA.

I asserted this could unleash the economy like nothing we’ve seen in the past century.

And the reason is because it’s hard to overstate just how destructive regulations are.

Every Regulator Destroys 138 Jobs

One 2017 study by the Phoenix Center and Auburn University found that every single full-time regulator destroys 138 jobs.

GDP-adjusted to today, that translates to $16.5 million of economic output. For a hundred-thousand dollar bureaucrat.

This lost output is made of jobs and businesses that were never started. Or were stunted by strangling regulations — which are generally bought by big corporations specifically to strangle small competitors.

Along with mom and pops chased into bankruptcy as collateral damage to new regulations — say, a diner forced to spend $30,000 on a low-energy exhaust fan.

So it’s not the bureaucrat’s hundred thousand salary that matters. It’s the 138 jobs he takes out. Every single year you keep him around.

In fact, you could fire him, keep paying him for life, and still put a hundred families in the middle class.

In recent videos I’ve mentioned research saying one dollar in taxes destroys 3 dollars in GDP. A regulator blows that out of the water — each dollar in regulator salary destory 112 dollars in output.

Given there’s roughly 288,000 full-time federal employees involved in regulatory activities, that implies an annual cost of regulation of around $5 trillion. One-fifth of our entire economy.

This means DOGE slashing tens of thousands of regulations could spark Morning in America even if we keep every last one of them on the payroll.

The Top 3 Regulatory Offenders

The worst 3 regulatory offenders are the EPA, which prey especially on small businesses least able to afford their never-ending mandates.

Second is securities mandates — namely Dodd-Frank and Sarbanes-Oxley — that have all but closed public markets to start-ups and shelter banks and insurers from competition.

And labor regulations — namely FLRA, NLRB, an alphabet soup including Obamacare mandates and occupational licensing. There are brutal for small businesses that might take a gamble on marginal workers but are locked in.

And they raise the cost of hiring to the point that companies downsize or move to China to survive.

Of course, these are just the start. The regulatory code has grown like a monster for a hundred years in literally every domain you can imagine, from braiding hair to collecting rainwater on your property to giving health advice — which is illegal unless you’re a doctor.

And, my personal favorite, the regulatory mandate to literally add poison — ethanol — to any alcohol that’s not taxed, including mouthwash. In case you thought the federal government would never poison you on purpose.

What’s Next

Deregulation is central to Trumponomics — low inflation and fast growth.

Because the best way to do both is to reduce the federal burden — the spending, sure, but above all the forest of regulations strangling our economy. Even if DOGE doesn’t manage to save a penny, gutting the regulatory state will pay us back 138-fold.

Republished from the author’s Substack

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Peter St Onge

Peter is an economist, a Fellow at the Mises Institute, and a former MBA professor.

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Trump faces federal employee unions in government efficiency battle

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From The Center Square

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President-elect Donald Trump has pledged to drastically cut government and clean out inefficiencies, but he faces an entrenched power in Washington, D.C. that may throw a wrench in his plans: federal government public employee unions.

“For president-elect Trump to succeed at making the federal bureaucracy more efficient and accountable to the American people, he’ll have to once again do battle with federal unions,” Max Nelsen, a labor policy expert at the Freedom Foundation, told The Center Square.

Trump has tapped top businessmen Elon Musk and Vivek Ramaswamy to lead the new Department of Government Efficiency effort. Musk has claimed he can cut $2 trillion in federal spending.

In a November joint editorial in the Wall Street Journal, Musk and Ramaswamy pledged “mass head-count reductions” in the federal government.

Firing federal workers is notoriously rare and difficult, but Ramaswamy has publicly said that mass, indiscriminate firings may allow for circumventing the usual bureaucratic holdups for firing a federal employee.

Trump himself recently pledged to cut “hundreds of billions” in federal spending.

“Government unions are hands down the single most significant defenders of the administrative state,” Nelsen said. “Their interests are always served by bigger, more expensive, less accountable government, and their partisan allegiance to the radical Left leads them to both overtly and covertly undermine conservative policy changes across the federal government…”

The first battle with unions in the DOGE war may be federal work from home policies, where unions have already threatened legal action to protect their pre-arranged deals with the Biden administration.

Trump threatened to fire federal employees who are not willing to report to the office, a clear shot at federal work-from-home policies, something Musk has also blasted in recent weeks.

“If people don’t come back to work, come back into the office, they’re going to be dismissed,” Trump told reporters during a news conference at Mar-a-Lago.

The largest federal employee union quickly shot back after Trump made the comments and threatened legal action.

Trump’s comments are likely at least in part reacting to a Biden administration official negotiating a deal with a union that extends until 2029, after Trump is scheduled to leave office.

As The Center Square previously reported, Social Security Administrator Martin O’Malley negotiated a deal with union leaders to codify work-from-home policies, keeping telework in place for his 42,000 employees until 2029.

Everett Kelley, national president of the American Federation of Government Employees, the largest federal employee union, pointed out that these contracts are legally binding.

“Collective bargaining agreements entered into by the federal government are binding and enforceable under the law,” Kelley said. “We trust the incoming administration will abide by their obligations to honor lawful union contracts. If they fail to do so, we will be prepared to enforce our rights.”

Trump’s backers may have an ace in the hole, though, in the form of new Supreme Court precedent.

The U.S. Supreme Court ruled earlier this year in a landmark case to overturn Chevron deference, the longstanding legal practice of giving federal agencies broad power to interpret and practically change and expand federal laws as they deemed fit, citing their expertise.

Now, Musk and Ramaswamy will likely have more leeway in cutting rules from the books and workers from the payroll.

Nelsen said Trump should limit the amount of federal dollars that go toward unions, and that he should increase union transparency.

“Additionally, President Trump will need a cadre of energetic appointees at the Office of Personnel Management, the Federal Labor Relations Authority, and in labor relations departments government wide to aggressively implement his directives,” Nelsen said. “Finally, to truly have a long-term impact, President Trump will need a successor in four years committed to continuing the fight.”

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