Canada moves to 2% GDP end of FY25/26 - PMMC

[ytz]

If Trump had said, "I don't believe the bounty of the US should be shared with countries that don't help defend our common prosperity," I think most people would have agreed with him and we wouldn't have been where we are. We would have increased the defence budget à bit, bitched about les Américains and moved on. Instead, he went light on China and actually argued that allies should be deindustrialized. That's some Warsaw Pact shit. And Congress didn't stop him from trying. So much for "checks and balances". Even the Supreme Court can't fix anything there apparently. So what's the point?

Time to accept that the empire is falling apart. They've crossed the Rubicon and will only get worse from here. Those of us at the periphery should plan for our own interests.

As a fan of American kit, this absolutely sucks. But my loyalty is to Canada. Not Lock Mart shareholders. I just want the transition to be orderly. Not dumb shit like buying Gripens as a knee jerk. Though I'm resigned to the fact that all transitions are chaotic and we'll do dumb shit along the way.

 

[IKnowNothing]

Who cares? This is the only way money flows. You still don't seem to get that. And the government is more than happy to pay the higher price when most of it stays in circulation here.



We've had decades where people said that about 2%. And look at where we are now.

Who knows if we'll hit 5% in a decade (and really it's 3.5% on defence and 1.5% on infrastructure and resiliency), but we are as hell won't be close if all we're doing is telling the taxpayer who can least afford it to ship more money out of country.

This is exactly what I was trying to say in the fighter thread a few weeks back. Our spending ebbed and flowed through the Cold War, but we spent decades averaging higher than 2% GDP, with a low water mark of 1.7% - Pierre Elliot Trudeau, the definition of a butter over guns PM, averaged 1.9%. Harper and JT were 1.2 - 1.3.

Even if we write off the 3.5% as unlikely, and discount the possibility of this period of geopolitical tension lasting as long as the cold war's 41 years, we're looking at piles of additional defense dollars being spent. Even just 10 years at 2.5-2.6% is upwards of 300 billion dollars (additional to baseline, 600 billion+ overall) before accounting for GDP growth. That's a lot of dough.

To me the fiscal side comes first. Regardless of the absolutist theoretical application of some dusty libertarian economics textbook, not taking the steps to spend as much of that can be reasonably* spent at home in order to avoid the perils of things costing a little more on the margin vice free market competition is... categorically silly. Estimates on the tax recovery rate on advanced manufacturing (most capital defense expenditure) are like 30-45%. Then you get down stream spending multipliers. Then IP and sovereignty and supply chain control considerations. Then you get get the potential for the goods you're able to make at home being exported, effectively reducing our net spend on said goods.

*We still need to get at least "good enough", and the cost premium can't be too onerous.

Which leads to the political side. As you say- writing cheques to send 10's of billions out of country is going to be a hell of a hard sell, and will significantly increase the likelihood that the spend level stays lower at peak, and comes off that peak faster. Spend it domestically, and Canadians will be less grudging about it.

 

[Good2Golf]

This is the only way money flows. You still don't seem to get that. And the government is more than happy to pay the higher price when most of it stays in circulation here.

Which leads to the political side. As you say- writing cheques to send 10's of billions out of country is going to be a hell of a hard sell, and will significantly increase the likelihood that the spend level stays lower at peak, and comes off that peak faster. Spend it domestically, and Canadians will be less grudging about it.

This.

We know that at least our PM understand the Expenditure multiplier concept quite well. A premium to keep as much of the expenditure in Canada, will be significantly offset by the internal multiplication flowing within Canadian industry and the supply chain.

 

[IKnowNothing]

This.

We know that at least our PM understand the Expenditure multiplier concept quite well. A premium to keep as much of the expenditure in Canada, will be significantly offset by the internal multiplication flowing within Canadian industry and the supply chain.

Rough math-

a 20% premium on an equivalent product with only a 50% domestic inclusion is more than offset by an (in band) 40% tax recovery rate, before getting into multipliers and downstream stimulus.

 

[Maxman1]

This is exactly what I was trying to say in the fighter thread a few weeks back. Our spending ebbed and flowed through the Cold War, but we spent decades averaging higher than 2% GDP, with a low water mark of 1.7% - Pierre Elliot Trudeau, the definition of a butter over guns PM, averaged 1.9%. Harper and JT were 1.2 - 1.3.

I found a site that graphs out the defense spending over the years as percentage of GDP.

World Bank Open Data

Free and open access to global development data

data.worldbank.org

You can also view the dollar amount instead, in USD.

World Bank Open Data

Free and open access to global development data

data.worldbank.org