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British Columbians will have a better picture of our collective financial situation next week when the budget is presented, but an article in the Globe and Mail suggests that the province is facing a $3 billion shortfall, about seven times what was o

British Columbians will have a better picture of our collective financial situation next week when the budget is presented, but an article in the Globe and Mail suggests that the province is facing a $3 billion shortfall, about seven times what was originally suggested when the government announced plans to allow deficit spending to combat the global economic crisis. The finance minister also admitted last week that the province is facing deficits for the next four years, instead of two as originally planned.

All the signs are there for a financial blowout - the introduction of the Harmonized Sales Tax, the gaming grant program review, the demise of the Homeowner Protection Office, the assimilation of quasi-independent Tourism B.C. into the tourism ministry, the early death of the surprisingly popular LiveSmart B.C. home renovation program, and so on.

Large numbers get thrown around a lot these days to the point that they're almost meaningless so it helps to put it in plain language. So here goes - roughly 4.5 million British Columbians will shoulder an additional $3 billion in debt this year, which works out to about $667 for every man, woman and child in the province.

That also wipes out the roughly $3.1 billion in debt that the province paid back between 2004 and 2008 and will leave total provincial debt in the neighbourhood of $40 billion - roughly $9,000 for every man, woman and child.

B.C. is hardly the only province going through a slump right now. If anything we're probably in better shape than other provinces, including usually rich-as-hell Alberta.

Nationally, deficits over the next three years are expected to add $85 billion to our debt load (although some experts say it will be double that), wiping out almost four-fifths of the progress we've made on our debt in the last 12 years or so.

The circumstances that led us to this point were completely predictable, even in the realm of normal economic cycles. No boom can last forever, and every two steps forward is followed by at least one step back - and yet we're constantly caught with our pants down whenever it happens with no money in the bank or contingency to draw from.

Yet, Canadians still cling to the false narrative that our taxes are too high and vote for any party or politico that promises to let us keep more of the money we earn. This leaves no room for the occasional economic meltdown and gives us no choice but to assume new debt that will eventually have to be repaid by future generations.

The Conservative Party's decision to cut the GST from seven cents to five cents costs the federal government about $15 billion a year. They also cut income taxes to the tune of $2 billion, and then loudly proclaimed in July that they would continue deficit spending as long as it takes to turn the economy around instead of raising taxes or cutting programs.

The logic is that new taxes would stifle a recovery, but that makes no sense as those taxes were in place during our last sustained period of prosperity and didn't hamper growth in the slightest.

So now we're facing a deficit of $85 billion through 2013. If the Conservatives left income taxes and the GST untouched we would have raised up to $102 billion in taxes in that period and just might have wound up with a surplus.

I understand the psychology that makes us think exclusively about the here and now instead of tomorrow - it's the same collective psychosis that makes us shrug over issues like climate change, population growth, species extinction, and every other major problem facing the planet.

It wasn't always like this. Over the first two World Wars, still the most expensive wars ever fought if you don't include the Cold War, Canada took on very little debt. Instead of going to foreign banks and investors to pay for our forces, our government asked the people to do the patriotic thing and buy bonds. And the people did, converting their savings to bonds, giving bonds as gifts and even receiving bonds in lieu of a portion of their paycheques.

When a government can borrow money from its own citizens in hard times it's a beautiful thing. It keeps the money in the country for one thing, while the interest paid to bondholders after the war once upon a time helped to finance the growth of the middle class. Bond money can also be spent on things that benefit everyone like upgrading infrastructure, which puts Canadians to work and builds a base for future economic growth. We could put bond money into small businesses, into research and development, into developing our industrial base so we're not so reliant on imports. Instead, we are in a situation where Canada pays down almost $40 billion a year in interest to foreign banks and investors that hold our debt, with a lot of that money leaving the country or being used to purchase Canadian companies and assets.

While an economic crisis doesn't have the same cachet as a world war, I don't think Canadians are any less patriotic now or would ignore a call to buy bonds if it's for the good of the country - especially at a time when banks aren't paying much interest to start with, and people have had their confidence shaken in the stock market.

I would also increase taxes, especially consumption taxes like the GST that tend to target the people who spend, and therefore earn, the most money.

There will always be times where it might be necessary to go into debt to avoid an even bigger crisis, but debt should always be a last resort - after raising taxes, issuing bonds, and showing some restraint.