Was thinking about the sheer size of this COVID-19 deficit this morning. $343B is a big number.

https://www.canada.ca/en/department-finance/services/publications/economic-fiscal-snapshot.html

Perspective: I’m an economist, & also a mom whose spouse is spending this week in quarantine, *again*.

1. The “snapshot” is 168 pages. I didn’t get through them all this morning, because priorities. Great GBA+ included, will review later.

2. ~$212B is direct support to CDNs - CERB, CEWS, CEBA, GST credit boosts, etc. It’s these items I hear the most criticism.

3. Could we have spent less on support? Sure. eg. I would not have sent benefits to high income seniors. That would have saved ~ $1.3B…. Bringing us down to ~$342B deficit…

3b. We could have made it harder to be eligible for CERB? Say we cut that by 10% (just making that up), we could have saved ~$7B this year. But extra eligibility criteria would have delayed CERB for weeks, so I’d say no.

3c. We could keep trying to chip away, but there’s tradeoffs each time. Going forward, lots of room to improve and that’s the job for all our MPs to figure out right now. Hindsight: I don’t see big ticket items that CDNs didn’t broadly support.

4. So how scary is $343B? This isn’t ongoing spending, it’s pandemic. So we need to think about debt servicing….

My back-of-the-envelope (with the help of @PBO_DPB http://readyreckoner.ca ): The debt servicing on $343B is equivalent to something less than 0.5 pts of GST. I’m old enough to remember GST at 7%, so moving us from 5% to 5.5% doesn’t seem that scary to me.

5. What is scary? My spouse’s potentially increased probability of death this week. 0.5% extra GST vs. more sick or dead family members? You can pick your own comparisons & counterfactuals, but that risk is top of mind in my house this week.

Ok, back to being a mom, dealing with a family in quarantine. (We’re okay, just waiting on tests, etc. & it’s a crazy/stressful way to live.) See you later.