Without considering the overall tax impact and looking at net costs, these "cherry picked" budget line items are irrelevant and misleading. OAS is taxable. Plus, RRSP's are fully taxed as single year income upon death. There is a lot more to consider here. Is it out of balance? Absolutely. Is it as bad as claimed, likely not but can't be determined until all variables are included.
Good point Steve, we don't include net costs here, but the disparity between spending on young and old is so wide that it doesn't seem possible this could account for the difference. We don't need to cherry pick to illustrate how spending on retirees is being prioritized.
For example, as Paul mentioned in an article this past December (link below), the federal government has announced $150 billion in new spending over the next 5 years for retirees (OAS + medical care). This is the main driver behind the $186-billion in federal deficits between now and 2028, the cost of which will be passed on to younger Canadians. At the same time, only a fraction of that amount is being invested in younger folks, for example, about $16 billion in child care.
I do not disagree with this point, never have. But, I just want to address all of the contributing numbers so we are working with an accurate baseline IE: child benefits incl daycare are tax free, OAS, CPP etc are not). Once the details are understood, adjustments can be made to address this. As a simple example, if the retirement age was shifted (something the Liberals severely chastised the Conservatives for attempting) by 5 years, the spread changes dramatically. Likewise, if RRSPs were forced into drawdown when OAS is taken, the impact would be staggering. Or if, like every other country with a "forced" retirement plan like CPP, the contribution cap was more in line with the more successful plans, things change fast.
What concerns me most is that when we ignore the details, everything we do to "correct" issues often has a negative cascading impact. The housing crisis is likely the best example. And what is most upsetting, is politicians (all stripes) pick on these individual elements, create supporting rhetoric to attract votes without any concept of real consequences (IE: Liberals claiming they support seniors vs their claim Conservatives don't). This is further evidenced by the $150billion announcement Paul referred to.
Sometimes I feel like people see the statistic about the number of workers to retirees when boomers were young, but think it's the current situation that is abnormal demographics. The current ratio of workers to seniors is about what you would expect if all generations were the same size when they were born! On average people spend 17 years retired, and 50 years in whats (maybe too broadly) defined as working age. The average person spends about three times as long working-age as over 65, so that would be about the ratio of workers in a stable population. (They weren't the same size, but the difference was already mostly made up by immigration.)
It's true that governments didn't plan for boomers to retire. But the whole structure of our safety nets, many put in place in the 60s as boomers were reaching adulthood, was basically made possible by boomers being such a huge demographic relative to their parents and simultaneously having fewer children than their parents did (so relatively less public resources were needed for spending on children). Governments didn't plan for that to end, but it was always an unusual (or transitional) situation.
That is such a great point Valerie, and one that I had not recognized. It makes me a bit optimistic in a way. If we can just get through this weird transitional period, back to a place where generations are more equal in number, then maybe things will fall back into balance fairly naturally. But I guess that's easier said than done....
Certainly “Young Age Supplement.” Is going in the right direction. Giving OAS to millionaires is counterproductive. Poverty costs far more than Universal Basic Income would. Eventually we will see this and go to UBI. Covid reliefs direct deposits worked, especially in the United States where one third of the children were raised out of poverty while saving the economy. This did not go unnoticed just like more people are seeing that corporate greed is the greater cause of inflation-by far. Too many of us see the economy as not man-made construct, when it is and can be remade with more enlightened rules. Too many see the national deficit like it they see household debt. There is more to Stephenie Kelton’s The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy than her dismissive critics give credit to. I wonder if Generation Squeeze has given a serious look at her ideas.
Was interesting to read this now - back when I wrote it, in 2021, I mentioned that "inflation hasn’t been an issue in quite some time", and was concerned that large government deficits might lead to inflationary pressures. Maybe I should've stuck to my job creating financial forecasts lol!
Kareem, I read your article on Stephanie Kelton and found your take lacking her most substantial points on debt. Our ideas a of ownership and debt must change if we are to prevent environmental ruin and thrive as a species. Actually tonight Astra Taylor on the CBC said more on our sickly notions of debt and ownership and the ridding of the commons and the common good more insightfuly than I have ever heard from any Canadian. Margaret Atwood also addressed our self -destructive notions of debt in her Massey Lectures titled payback .
When I read her book my strongest thought was she should have left the subtitle off it. Her book is not so theoretical but filled with ideas and examples where nations with sovereignty over their currency did rid of debt. I suffered watching her being interviewed with her critics giving full focus on MMT. Finally, in later interviews, she has said what I felt about her insights-ideas-She admitted she should have left her sub-title off her book. Marketing is EVERYTHING in this attention economy. Kelton learned this lesson the hard way. If I was her I would re-package the same book without MMT just her ideas-observations-points. I refer to some of her points in my book. I do not give a shit about theory.
A better title would have been Deficit Myths: Notions that hold us back. But the MMT subtitle and presenting herself as an expert -a specialist-economic theorist interfered with her points. She probably sold more books with that sub-title, so she and her publisher profited but her ideas suffered. MMT was sexy at the time. I use her marketing story as an example were ideas- get lost in the packaging of specialists-professionalization-technical terms-expertise and marketing at the cost of wisdom. Her professions theoretical terms- bullshit left her defending that rather than just presenting her clearest thinking in human terms. Ivan Illich wrote about this back in the 1970s in his numerous books. One being The Disabling Professions. There is no profession that has been more crippling and crueler than economics. Say's I.
The next time Paul gets national media attention there is no topic that needs addressing more than the Alberta Tar Sands that effects the quality of life for generations to come. Chris Hedges recently did a report on it. I was staggered by this most damaging way to get fossil fuel.
No enterprise in the world contributes more to the ruination of our life support system than the Alberta Tar Sands. Our most likely next prime minister wants to axe the carbon tax . Rome burns while we fiddle.
No enterprise is the world contributes to the ruination of our life support system than the Alberta Tar Sands. Our most likely next prime minister wants to axe the carbon tax . Rome burns while we fiddle.
Without considering the overall tax impact and looking at net costs, these "cherry picked" budget line items are irrelevant and misleading. OAS is taxable. Plus, RRSP's are fully taxed as single year income upon death. There is a lot more to consider here. Is it out of balance? Absolutely. Is it as bad as claimed, likely not but can't be determined until all variables are included.
Good point Steve, we don't include net costs here, but the disparity between spending on young and old is so wide that it doesn't seem possible this could account for the difference. We don't need to cherry pick to illustrate how spending on retirees is being prioritized.
For example, as Paul mentioned in an article this past December (link below), the federal government has announced $150 billion in new spending over the next 5 years for retirees (OAS + medical care). This is the main driver behind the $186-billion in federal deficits between now and 2028, the cost of which will be passed on to younger Canadians. At the same time, only a fraction of that amount is being invested in younger folks, for example, about $16 billion in child care.
https://www.gensqueeze.ca/globe_mail_past_governments_boomers_retirement
I do not disagree with this point, never have. But, I just want to address all of the contributing numbers so we are working with an accurate baseline IE: child benefits incl daycare are tax free, OAS, CPP etc are not). Once the details are understood, adjustments can be made to address this. As a simple example, if the retirement age was shifted (something the Liberals severely chastised the Conservatives for attempting) by 5 years, the spread changes dramatically. Likewise, if RRSPs were forced into drawdown when OAS is taken, the impact would be staggering. Or if, like every other country with a "forced" retirement plan like CPP, the contribution cap was more in line with the more successful plans, things change fast.
What concerns me most is that when we ignore the details, everything we do to "correct" issues often has a negative cascading impact. The housing crisis is likely the best example. And what is most upsetting, is politicians (all stripes) pick on these individual elements, create supporting rhetoric to attract votes without any concept of real consequences (IE: Liberals claiming they support seniors vs their claim Conservatives don't). This is further evidenced by the $150billion announcement Paul referred to.
Sometimes I feel like people see the statistic about the number of workers to retirees when boomers were young, but think it's the current situation that is abnormal demographics. The current ratio of workers to seniors is about what you would expect if all generations were the same size when they were born! On average people spend 17 years retired, and 50 years in whats (maybe too broadly) defined as working age. The average person spends about three times as long working-age as over 65, so that would be about the ratio of workers in a stable population. (They weren't the same size, but the difference was already mostly made up by immigration.)
It's true that governments didn't plan for boomers to retire. But the whole structure of our safety nets, many put in place in the 60s as boomers were reaching adulthood, was basically made possible by boomers being such a huge demographic relative to their parents and simultaneously having fewer children than their parents did (so relatively less public resources were needed for spending on children). Governments didn't plan for that to end, but it was always an unusual (or transitional) situation.
That is such a great point Valerie, and one that I had not recognized. It makes me a bit optimistic in a way. If we can just get through this weird transitional period, back to a place where generations are more equal in number, then maybe things will fall back into balance fairly naturally. But I guess that's easier said than done....
Certainly “Young Age Supplement.” Is going in the right direction. Giving OAS to millionaires is counterproductive. Poverty costs far more than Universal Basic Income would. Eventually we will see this and go to UBI. Covid reliefs direct deposits worked, especially in the United States where one third of the children were raised out of poverty while saving the economy. This did not go unnoticed just like more people are seeing that corporate greed is the greater cause of inflation-by far. Too many of us see the economy as not man-made construct, when it is and can be remade with more enlightened rules. Too many see the national deficit like it they see household debt. There is more to Stephenie Kelton’s The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy than her dismissive critics give credit to. I wonder if Generation Squeeze has given a serious look at her ideas.
"Too many of us see the economy as not man-made construct, when it is and can be remade with more enlightened rules."
So many great points in here, as always, Glen!
I haven't thought about Kelton's ideas in quite sometime, but I would consider myself a skeptic. I did, , write up my thoughts on "The Deficit Myth" a while back, long before I joined Gen Squeeze: https://medium.com/alpha-beta-blog/do-government-deficits-matter-55eab48ac5fe?sk=dd31c06b6db7eef63a96af98cfe94741
Was interesting to read this now - back when I wrote it, in 2021, I mentioned that "inflation hasn’t been an issue in quite some time", and was concerned that large government deficits might lead to inflationary pressures. Maybe I should've stuck to my job creating financial forecasts lol!
Kareem, I read your article on Stephanie Kelton and found your take lacking her most substantial points on debt. Our ideas a of ownership and debt must change if we are to prevent environmental ruin and thrive as a species. Actually tonight Astra Taylor on the CBC said more on our sickly notions of debt and ownership and the ridding of the commons and the common good more insightfuly than I have ever heard from any Canadian. Margaret Atwood also addressed our self -destructive notions of debt in her Massey Lectures titled payback .
I wouldn't be suprised if I was missing something within Kelton's work! What am I missing regarding debt?
When I read her book my strongest thought was she should have left the subtitle off it. Her book is not so theoretical but filled with ideas and examples where nations with sovereignty over their currency did rid of debt. I suffered watching her being interviewed with her critics giving full focus on MMT. Finally, in later interviews, she has said what I felt about her insights-ideas-She admitted she should have left her sub-title off her book. Marketing is EVERYTHING in this attention economy. Kelton learned this lesson the hard way. If I was her I would re-package the same book without MMT just her ideas-observations-points. I refer to some of her points in my book. I do not give a shit about theory.
A better title would have been Deficit Myths: Notions that hold us back. But the MMT subtitle and presenting herself as an expert -a specialist-economic theorist interfered with her points. She probably sold more books with that sub-title, so she and her publisher profited but her ideas suffered. MMT was sexy at the time. I use her marketing story as an example were ideas- get lost in the packaging of specialists-professionalization-technical terms-expertise and marketing at the cost of wisdom. Her professions theoretical terms- bullshit left her defending that rather than just presenting her clearest thinking in human terms. Ivan Illich wrote about this back in the 1970s in his numerous books. One being The Disabling Professions. There is no profession that has been more crippling and crueler than economics. Say's I.
The next time Paul gets national media attention there is no topic that needs addressing more than the Alberta Tar Sands that effects the quality of life for generations to come. Chris Hedges recently did a report on it. I was staggered by this most damaging way to get fossil fuel.
No enterprise in the world contributes more to the ruination of our life support system than the Alberta Tar Sands. Our most likely next prime minister wants to axe the carbon tax . Rome burns while we fiddle.
Sirens Are Blaring': WMO Says 2023 Shattered Key Climate Metrics
"Fossil fuel pollution is sending climate chaos off the charts," U.N. Secretary-General António Guterres said.
When I said eventually we will have UBI I meant long after this civilization is finished as we rise out of the aches
No enterprise is the world contributes to the ruination of our life support system than the Alberta Tar Sands. Our most likely next prime minister wants to axe the carbon tax . Rome burns while we fiddle.