This and That

I've written lots about child care but if I had to boil it down to what's relevant at the moment, it's that there are two flaws with what the Conservatives are proposing.

The first is that their proposal is not means-tested, and in fact will provide less support to poor dual income families (those who need help the most with child care) than it will to many wealthier families - especially those which can afford to have one parent stay home.

From today's Globe:

"The [Caledon] institute has calculated that the families who will benefit most from the child-care allowance, after taxes and clawbacks, are those making $200,000 a year or more with one parent at home. They will keep $1,076 of the $1,200 annually.

Families with two working parents and a combined income of $30,000, by contrast, will keep just $199 annually of the new payments."

The big gap is due to the family allowance subsidy being taxable in the hands of the lower income earner. The fact that it is taxable at all means that lower income families lose much of the benefit in reductions to other means tested benefits (this is why the Liberals consolidated all the different benefits into one). And the fact that it is taxable in the hands of the lower income earner means that it favours families where one person can afford to stay home (those which contain one person with a reasonably high income, one presumes).

There is an easy solution to this problem which is to increase the Child Tax Benefit (as proposed by the NDP) rather than giving $1,200 in taxable income to every family.

The second problem is that much of the money disbursed by the program will not actually be spent on child care, making it inefficient. This problem is mitigated somewhat by the desire to treat all families equally and the practical difficulties in ensuring that money given to a family which doesn't pay for child care is used for child care, but it is still a serious program weakness, nonetheless.

There is lots more to say, but that is the basics at the moment.

----
This article by Terry Glavin on the damage being done to B.C.'s forests and aboriginal communities by the pine beetle and by global warming, is interesting.

----
Are you kidding me? Further proof that so-called serious publications need some sort of statistical style guide to go along with writing style guides. This story somehow feels it is useful to tell us how much the price of some things have gone up since 1961 - without adjusting for inflation, and it also contains lots more attempts to deceive rather than inform.

If the Fraser Institute wants to try and gets its way by creating false impressions with statistical games, that is their right, but I don't see why the Globe and Mail would facilitate it.

----
The CEO Post has yet another big front page story keeping us up to date with what CEO's want. Personally, I fail to see how it is news that CEO's want taxes cut (although I like their use of the word 'must'), any more than it is news that the sun rose in the East this morning. A key part of the word 'news' is 'new' I always figured.

I thought this paragraph was particularly wtf?,

"They recommend that federal departments identify savings each year equivalent to 5% of their operating budgets, much as households regularly do to deal with unexpected costs."

Aren't you glad you weren't raised in a CEO household? I'm sorry son, you can only attend 19 of your soccer team's 20 games this year because we are cutting 5% out of our operating budget to deal with unexpected costs. Just tell your teammates that you are, uh, sick that week.

Personally I would be fine with cutting corporate taxes - if we simultaneously increased the marginal rate for the highest tax bracket to make up the lost income.

----
John Ibbitson has his best column in a while and is right on the money in today's globe (subscription only)

After discussing how the Conservatives' desire to pile tax cuts/rebates on top of the Liberals pre-election tax cuts and spending announcements puts the surplus in jeopardy, Ibbitson concludes:

"But we are in dangerous waters. There are people in high school now who have never been through a recession. Kids, you have no idea what one is like. Factories shut down, people are laid off, tax revenues dry up, even as demand for welfare and other economic assistance skyrockets.

Governments go into deficit, increasing the interest payment on the debt, which causes the bond rating services to lower credit worthiness, which means even higher interest on the debt, leading to even higher deficits. It's called a vicious circle, and it's hell.

That is why, at a time when current finances are sound but long-term demographic projections are worrisome, a prudent finance minister would hold spending increases to inflation plus population growth, while throwing every available dollar at the debt, even if it requires a bit of political chicanery.

But the Liberals gradually gave up on fiscal discipline, and the Tories don't seem the least interested in returning to it."

----
Finally, via the blogging of the president, this article (pdf file) by two economists is somewhat slanted, but is nonetheless a good antidote to all the bleating by the armchair experts on the French economy who figured that France was doomed because it didn't introduce a new law to make it easier to fire young people.

As it turns out, there is little net difference between youth unemployment in France and in the United States.