Canada’s Debt Spiral
Living beyond our means requires us to borrow money to cover the difference between our income and our spending. Many Canadians now understand the financial consequences of this practice and regret the choices they’ve made. Unfortunately, Prime Minister Trudeau is not one of them, as evidenced by his government’s budget deficits which are further eroding the financial wellbeing of Canadians. He has broken a campaign promise, ignored basic economic principles, and seems hell-bent on setting an ignominious record. According to the Fraser Institute: “Justin Trudeau is the only prime minister in the last 120 years who has increased the federal per-person debt burden without a world war or recession to justify it.”
The Broken Promise
The Liberals had won the 2015 federal election with a pledge to run annual shortfalls of no more than $10 billion over the first three years of their mandate, and to eliminate the deficit by 2019-20.
The deficit for 2016-17, Trudeau’s first full fiscal year, was $17.8 Billion. The forecast for 2017-18 is $19.9 Billion, and for 2018-19, the forecast is $18.1 Billion.
And now, from the government’s 2018 budget, we read this:
While austerity can come from fiscal necessity, it should not turn into a rigid ideology about deficits that sees any investment as bad spending.
The government says deficits are economically beneficial, and compares deficits to loans taken out by entrepreneurs and business owners. But here’s the rub: in order to spend, the government must first raise money by taxing or borrowing (deficits). This deprives the private sector of money which would otherwise be available for businesses to borrow and invest in new production, thereby creating jobs and raising our standard of living.
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