After undemocratically shutting down Parliament for 2½ months, the federal Conservatives have released their 2010 budget. They said they needed the time to “recalibrate”; what they actually did was increase the transfer of wealth from the poor to the rich. On the one side, the budget contains $5-billion per year in tax giveaways to banks and corporations. On the other side, there are plans for program cuts, privatization, and attacks on public sector workers. This all comes at the same time as the Big-5 banks are reporting $5-billion profits in the 1st quarter.
To save themselves from what has now been called the “Great Recession,” Canada joined other capitalist governments in doling out billions of dollars of so-called “stimulus.” A large part of these transfers went directly to the banks and corporations that caused the crisis in the first place. For example, GM and Chrysler executives were given over $10-billion, and Canada’s banks were bailed out of $75-billion worth of risky mortgages. At the same time, workers who had nothing to do with the crisis were forced to accept lay-offs and wage cuts. Housing foreclosures spiked upwards. In other words, the victims are being forced to give compensation to the thieves.
These bailouts to the corporations have resulted in a $54-billion federal budget deficit. The 2010 budget lays out their plan to get back to a balanced budget in five years. Is this being done by asking the corporations to pay for all the damage they caused? That would seem rational, but capitalism is not a rational system. In fact the corporate tax rate is being reduced to 15%, down from 29.12% in 2000. This has cost the public $100-billion to date, and will mean an additional $20-billion of corporate welfare over the next five years. Yet again, it is the working class that has to make up for this shortfall.
Harper’s Conservatives hope to generate $15-billion from cuts in federal programs over five years. Operating budgets of all government departments (except the military) are to be frozen. This also includes Crown corporations such as Canada Post. This actually means significant program cancellations, wage cuts, and lay-offs to pay for cost-of-living increases. Programs that help immigrants, women, natives, and the 1.5 million workers who have lost their jobs in the crisis, are likely to be on the chopping block. There is also a hidden threat of increased privatization. Finance Minister Jim Flaherty was quoted on 9th March saying that he was looking for “assets that no longer serve the purpose of public ownership.” Amazingly, commentators have mentioned that this budget is merely a preparation for bigger cuts to come. The 2011 budget is set to be even more Draconian.
The Great Banking Swindle
One week after Canadians are being told to accept less, the Big-5 banks posted their profits for the first quarter of 2010. Collectively BMO, Scotiabank, TD, CIBC, and RBC posted profits of over $5-billion, a 75% increase from the previous year. These super-profits have been facilitated by what can only be characterized as a massive giveaway from the public purse. The Bank of Canada is “loaning” money to the private banks at what amounts to a 0% rate. At zero percent, “giving” is a more accurate term than “loaning.” What have the Big-5 been doing with all this free money? They have been using it to buy the Canadian government’s debt (known as government bonds), with approximately a 3% return. In other words, the government is cutting jobs and services and handing the money directly to the super rich.
All this moving of money around can be confusing. Here is how it would work if you tried to do this yourself. Lets start with the easy part: first go to your bank and ask to borrow $100. That shouldn’t be too hard for most people. The second part is much harder –- go back to your bank a year later and give them the $100 they loaned you; however, you also demand $3 (3%) from your bank for the privilege of holding their money! I don’t imagine many would have much luck pulling off this trick, but this is in effect what the private banks are doing with the public purse. The only difference of course is that instead of $100, it is a $54-billion deficit. And the 3% “profit” doesn’t come from any sort of productive investment; it comes from the already over-exploited Canadian people. Remember this when the corporate press tells us there is no money!
Workers have accepted cuts and austerity because they have been led to believe that this is a temporary situation. The leaders of the workers organizations, the unions, and the NDP, have been complicit in spreading this soothing bedtime story. Unfortunately, the reality is that these cuts are not temporary; they are intended to be permanent and continuing. The Economist magazine recently stated that yes, things will return to normal, but it will be a “new normal.” Once workers see that permanent austerity is combined with super profits for the corporations, they will demand that their organizations fight back. This year the CEOs of the Big-5 got a 10% compensation increase to $50 million, while they are suckling on the public teat. In this situation workers in both the private and public sectors will increasingly ask themselves why they should accept wage cuts.
In Greece, the acuteness of the crisis has removed all pretence that the austerity is temporary. The capitalists are cutting everything that previously made life semi-tolerable. Workers and youth have responded with general strikes and mass demonstrations. The 2010 federal budget is just a first step on a “Greek” pathway for Canadian capitalism. The only question is when Canadian workers will decide that they have had enough.
