Saturday, March 31, 2012

OAS and GIS Cuts Are a Travesty

The Harper's government's first majority budget is being portrayed as some kind of "moderate" or "compromise" budget because it doesn't gut as deeply as the wingnuts in Harper's caucus and Canadian wingnut welfare think tanks like C.D. Howe, Fraser and the Candian Taxpayers Federation have been calling for.   Good job moving the 50 yard line of moderate centrism, wingnuts.  The US political playbook continues to work here.  Canada's "paper of record" the Globe and Mail, calls the budget "prudent."   It's not.  It's a travesty that seeks to reduce the deficit on the backs of poor (future) seniors by delaying eligibility for Old Age Security (OAS) and the Guaranteed Income Suppliment (GIS) retirement income programs (and very little attention is being paid to the GIS cuts, even though they're actually more disturbing). 

Everyone younger than 54 has just had approximately $12,000 in OAS ($6,000/yr) and potentially another $12,000 in GIS taken away from their retirements.  That's $24,000 in 2012 dollars, of course by the time people aged 53 hit 65, assuming 2% inflation, that figure is over $30,000.  The people who qualify for GIS are of course those least able to sustain the loss of this income, and particularly so at age 65, where the potent mix of health issues and workplace age discrimination mean it will be particularly hard for these seniors to find paying work.  There are just only so many Walmart greeter jobs, and for even those you have to be in reasonable health to work them.

Let's be clear that people receiving GIS are poor pushing on destitute.  The income cutoff to receive GIS in 2012 is just over $16,000.  That figure doesn't include OAS benefits, but CPP payments (which max out at about $12,000 a year anyway) would count.  However not everyone qualfies for CPP and you don't necessarily get the maximum depending on your work history contributions to the program.  Also, the numbers aren't trivial, in 2011, over 1.6 million Canadians received GIS

The arguments for the OAS changes are the usual stew of mistruths and tendenicious rationalizations:  People live longer ("People" here meaning: "middle to upper class" people; working age poverty has a dramatic effect on life expectancy), there's more retirees per worker than when these programs were created, the boomer bulge (you can safely ignore anyone citing this since boomers are cynically exempted from this cut) and so on.  For GIS, there are no good arguments for cutting it, as this progressive economist notes.  In general, I don't buy any of these arguments, for this basic reason:  Canada today is a much wealthier country than the Canada that created OAS in 1951 under Liberal PM Louis St. Laurent. 

OAS is Completely Affordable if We Want To Afford It

A little math here:  Canada's GDP per-capita in 1970 was $4047 (using 1970 dollars).  I couldn't find a figure for 1951, but 1970 is far enough back and yet modern enough that we had most of the same modern safety net programs in place, and found them evidently affordable at the time.  Using the bank of Canada's inflation calculator that leads to a figure of $24,282 in 2012 dollars.  Canada's actual 2010 GDP per capita?  $46,236.  That's 1.9 times higher even after the biggest recession since the Great Depression.  We're almost twice as wealthy as a society than our 1970 cousins.  According to this, we may actually be more than twice as wealthy (not sure how the difference emerges).  Why could those 1970 Canucks afford OAS but not us?   
This is the Big Picture 

All the sophist minutia about the number of seniors per working age Canadian, the deficit, the percentage of the federal budget this stuff eats and stats on how long people live after 65 cannot withstand this basic fact.  Yes, you can persuade me that OAS will become modestly more expensive as a percentage of our GDP in the coming years, but not that it isn't, at a very fundamental level, affordable.  We're simply allowing this government to make the choice not to afford a decent and humane retirement for all Canadian seniors.  We decided more than a generation ago that leaving seniors in poverty was unacceptable (in fact income programs for seniors pre-date the Great Depression in Canada).  How can we afford this?  Clearly there are people who can pay more taxes.  The answer really is that simple.  Raise the taxes of those who are doing best, who are far wealthier than their 1970 peers were and maintain this basic social intergenerational compact.  We don't need another complicated neoliberal four letter (RRSP, TFSA etc) Rube-Goldberg scheme.  Tax the people with the most money and ensure the poorest seniors aren't left relying on foodbanks and soup kitchens. 

I'm also not moved by arguments around what our OECD/First World peers are doing with pensions.  Neoliberal dogma has infected the whole rich world, and a bunch of other neoliberal government unwilling to tax the rich appropriately to maintain the social contract are just proof the problem is very big, not that reducing retirement guarantees is some kind of hard economic necessity. 

I am looking for the two main opposition leaders to promise to overturn this decision.  Ian Welsh likes what he is seeing from Mulcair on this, so I'm optimistic.  Rae perhaps cannot make promises given that he is supposedly only the interim leader, but NDP supporters should pressure Mulcair and when it comes time to pick a Liberal leader, voters in that process should ask the candidates to commit to reversing this.  It doesn't have to be this way. 

1 comment:

  1. That's awful, awful and disgusting. Of course the thieves at the Globe like it; now they will squeeze another taxcut on the backs of the poor and destitute.

    OAS is Completely Affordable if We Want To Afford It

    Yes, the keyword is "Want." The money is there. Canada and the US aren't going broke. They just don't want to direct it at those that need it.