Rededicating the Cuss Jar

An interesting poll conducted by the Pew Research Center, based in Washington, was published last week. It measured the extent to which people in various countries thought their governments had handled the coronavirus crisis well.

Right near the top of the list was Canada. Some 88 per cent of Canadian respondents thought their government had done a good job —a positivity rating 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 to state whether their country was more or less unified 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 have supported our government in its determination to ‘do what it takes’ with funds to manage the coronavirus crisis and its immediate economic fallout.

That determination, however, has resulted in a federal deficit that will balloon from around $20 billion to some $380 billion this year, while at the same time economic output has shrunk, which will result in less revenue coming into the government’s hands. 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 it propose to get us out of it?

That question will begin to be addressed in the September 23 throne speech. Finance minister Chrystia Freeland has a long list of things she would like to be able 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. But how she would close the gap between income and expenses is less obvious.

Ms. Freeland has 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 programs left, right and centre and firing public servant en masse 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.

She can take a ‘long window’ approach and commit to bringing 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 stated firmly that it will reduce carbon emissions to 30 per cent below 2005 levels by 2030. That may necessitate considerable new expenditure. And long-term interest rates have nowhere to go but up.

In the end, Ms. Freeland and her government may need some new sources of revenue to bring the deficit under control. No doubt she could benefit from some fresh ideas. So here are a few.

Why not get Canadians to rededicate the family ‘cuss jar’ to give the proceeds for 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. And if they don’t, this would give them a reasonable incentive to get more cussing out of their systems—in a good cause.

Why not tax lottery winnings? Exempt the first million if you have to. And speaking of lotteries, why not have the jackpot default to the federal treasury every time there is no ticket for the winning number sold?

Why not encourage children to establish 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.

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. And it will need our help—even if that means rededicating the proceeds from the cuss jar.