According to this article, Harper’s win could cost voters their homes. The author describes how Harper’s policies could end up causing some people to lose their homes, as increased government spending on military campaigns by the Harper government will lead to higher interest rates.
Both Reagan and Bush Jr. sharply cut taxes, particularly for the rich. Both of their administrations also went on military-spending binges. The combination of reduced revenues and higher military expenditures created whopping deficits. The Bush administration’s shortfall approaches a half-trillion dollars.
Harper has promised to increase military spending and cut taxes. He also plans to redo the fiscal framework to ensure more money goes to the provinces.
The Liberals claimed during the recent campaign that this would blow a huge hole in Ottawa’s finances. The Conservatives vehemently denied it. However, given the record of socially conservative U.S. Republican administrations, it’s easy to imagine that Harper’s approach could result in a large deficit.
Whenever a government collects less than it spends, it competes with the private sector to borrow money. This puts upward pressure on Canadian interest rates.
Vancouver already has the highest housing prices in the country, with many people carrying large mortgages. This makes them especially sensitive to rising interest rates, which can occur when a government rings up a huge deficit.
During the 2004 federal election, Liberal candidate Kwangyul Peck, an economist, claimed that Harper’s flawed fiscal policy could cause some voters to lose their homes.
I am not so worried about some voters losing their homes. I do not think interest rates would increase so dramatically that people who were not already at a high risk of losing their homes would lose their homes. And the point is a bit moot. If you ever lose a home (or anything) you can always blame someone. Blaming the prime minister seems a bit ridiculous. But I think the threat of increased government deficit is very real, especially after what I saw on the news last night. Harper talking about how Canadian forces will not “cut and run,” and that “the Canadian Forces need to be in Afghanistan for 10 years or longer to help rebuild the battered country.” Peter Mackay said “the length of Canada’s commitment to Afghanistan remains an ‘open question.’” We could see our federal surplus and/or federal spending in various areas drop dramatically.
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