When I look at my federal and provincial government, I see 50% or more being spent on interest only payments. I've seen that number fluctuate a bit, but it's always been between 30% and 50%, if not higher at times.
When you look at the US fed, you see the same sort of thing.
That's demonstrated, therefore, over and over.
I'll put it another way. If Canadian federal and provincial governments weren't paying 1/2 their yearly tax revenue to interest payments on debt, I'll repeat that.. only interest payments, not principle, all of the funding issues with health care, and the military would be gone.
Put yourself in the same situation. Imagine you decide to spent 1/2 your post-tax income on only interest payments. You never make headway on the principle. So the debt is never going away. Now if times are tight (after all, why did you borrow to start with?!), how much worse are you with half your money gone to do absolutely nothing of value?
That's what many of our governments are doing.
In times of economic boom, some frugal governments pay off debt. They reduce that figure. But here's the kicker...
When times are bad, typically interest rates go up. So not only are you paying more as a government for those interest only payments, you have less tax revenue in a recession.
Frankly, I think it should be illegal for governments to borrow money. It's too tempting to gain votes. Politicians often don't care about 20 years from now, they care about the next election, and will tell themselves wild stories about how it will all be OK.
you don't have to convince me that governments are doing dumb shit, but it's not because of debt. it makes sense to borrow when it's cheap. especially for a state. (because when it's cheap it means inflation is low anyway. and arguably when it's too cheap it's imperative for the state to stimulate the economy.)
a lot of things should be "illegal", but since voters don't care legislatures don't either. :/
the obvious problem is the ROI on that debt. (hence the usual opposition to financing rich folks' tax cuts with debt, or subsidizing projects that are not sustainable financially, giving money to wasteful municipalities, etc.)
When you look at the US fed, you see the same sort of thing.
That's demonstrated, therefore, over and over.
I'll put it another way. If Canadian federal and provincial governments weren't paying 1/2 their yearly tax revenue to interest payments on debt, I'll repeat that.. only interest payments, not principle, all of the funding issues with health care, and the military would be gone.
Put yourself in the same situation. Imagine you decide to spent 1/2 your post-tax income on only interest payments. You never make headway on the principle. So the debt is never going away. Now if times are tight (after all, why did you borrow to start with?!), how much worse are you with half your money gone to do absolutely nothing of value?
That's what many of our governments are doing.
In times of economic boom, some frugal governments pay off debt. They reduce that figure. But here's the kicker...
When times are bad, typically interest rates go up. So not only are you paying more as a government for those interest only payments, you have less tax revenue in a recession.
Frankly, I think it should be illegal for governments to borrow money. It's too tempting to gain votes. Politicians often don't care about 20 years from now, they care about the next election, and will tell themselves wild stories about how it will all be OK.