And there’s no end in sight to the increasing red ink.
The Trudeau government was handed a balanced budget. And though they promised budget deficits, those deficits were supposed to be small and temporary. After all, Justin Trudeau assured Canadians that “the budget would balance itself.”
Instead, we have red ink as far as the eye can see, with deficits projected to continue for many decades.
Now, because of that surge in debt under the Trudeau government, Canada’s market debt has surpassed $1 trillion for the first time in Canadian history.
According to a CBC report, “Market debt is different from the federal debt and deficit figures, which are regularly presented to and debated by Canadians and reflect the federal government’s estimated total liabilities, or cash needs, and what must be borrowed from the markets. Think of market debt as something like a mortgage — or the balance on a line of credit.”
Kevin Page – the Former Parliamentary Budget Officer – says, “It’s debt that generates interest. And Canadians will be surprised at how fast interest on the public debt is going to grow over the next five years.”
In a sign of the continuing explosion of debt under Trudeau, the total market debt is set to increase from $1.029 trillion in 2017-2018, to $1.066 trillion in 2018-2019.
As noted by Page, “We’re a $2-trillion economy. So, to have at the federal level more than a trillion dollars of liabilities, most of which is market debt, it’s significant.”
Notably, Trudeau’s time in office has led to a surge in debt being accumulated by Crown corporations:
“Department of Finance figures show the debt of those agencies has risen by almost $40 billion — rising from $266.5 billion in 2015-16 to $305.7 billion in the current fiscal year. The last time spending on Crown corporations approached that level was under Paul Martin’s Liberal minority government of 2004-05.”
This means Trudeau’s broken deficits promise is even worse than it first appeared, since our debt is growing more rapidly than it once appeared behind the scenes – as Crown corporation debt is rarely discussed.
Nassim Nicholas Taleb – one of the few people who foresaw the 2008 financial crisis – regularly points out that debt makes countries far more fragile when an economic crisis hits.
Meanwhile, reducing debt makes a country more resilient, and the Trudeau government had an opportunity to do exactly that. They were given a balanced budget and a stable economy, yet instead of being prudent and responsible they started spending our tax dollars with reckless abandon.
And despite all that spending, our economy is still slowing down, and the one area of spending that could have long-term benefits (infrastructure) has been far less than promised and is being constantly delayed.
So, we are now left with huge deficits, increased debt, slow growth, and an economy that will be far weaker in the case of a crisis.
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