Trudeau’s massive budget deficits at a time when there is no global economic crisis could put our country into a brutally vulnerable position when a recession hits us.
A new study by the Fraser Institute shows that Canada’s budget deficit could explode to a gargantuan $120 billion in a worst-case scenario due to a recession.
This massive financial vulnerability is due to the policies of the Trudeau government, who are deliberately choosing to run massive budget deficits – despite promising 3 ‘small’ deficits during the campaign.
Here are some key parts of the Fraser Institute report:
“There are serious financial risks associated with running deficits during times of positive economic growth. One of the principal risks is that the budget cannot be balanced regardless of economic conditions because a permanent imbalance between how much the government spends and the amount it raises from taxes and other revenues develops.”
“The Trudeau government took office in late 2015 and immediately increased budgeted federal program spending by $8.1 billion over the period from 2015/16 to 2019/20. Less than six months later, in its first full budget (2016), the federal government markedly increased budgeted program spending by an additional $65.9 billion over the same five-year period.”
They detail the consequences of different possible economic scenarios:
“If the 1991/92 recession, which had mild fiscal effects, was to repeat, the 2019/20 deficit is forecast to increase from its current budgeted level of $14.4 billion to $42.7 billion. The four-year accumulated deficit for the period from 2019/20 to 2022/23 would increase from $48.5 billion to $124.2 billion.”
“Finally, if the conditions of the most recent and fairly serious recession of 2008/09 were repeated, the annual deficit for 2020/21 is expected to reach $120.5 billion. The four-year cumulative deficit is estimated to increase from $48.5 billion to $335.1 billion.”
Trudeau makes Canada vulnerable
As you can see above, Justin Trudeau’s policies have made Canada very vulnerable, which is especially concerning given the fact that our economic growth is expected to be weak in the coming years.
Even worse, our housing market could be headed for a severe correction, and our household debt is the worst on earth.
All of this dramatically increases the risk of financial calamity, and the Trudeau government appears to be doing everything possible to make that risk even worse.
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