Finance Minister Chrystia Freeland claims the deficit is “affordable,” but that assumes interest rates will never be going up.
The federal government has put forth a ‘fiscal update,’ though not a full budget.
The numbers show a deficit of $381 billion, the largest in Canadian history.
For comparison, Canada’s total debt before this year was about $700 billion, meaning this will by far the largest one-year increase in our debt in history as well.
In addition to the large budget deficit – due in large part to a huge drop in revenue from the economic contraction – the Liberals are planning another $100 billion in spending over the next three years.
In her remarks, Freeland attacked the Conservatives:
“As we have learned from previous recessions, the risk of providing too little support now outweighs that of providing too much. We will not repeat the mistakes of the years following the Great Recession of 2008.”
Notably, Freeland’s remarks don’t line up with the facts, as the Conservative government of Stephen Harper was widely praised for their response, which boosted spending to provide a stimulus, then got back to a balanced budget relatively quickly.
By contrast, the Liberals appear to be pushing for a massive expansion of government, leaving the government far larger even when the crisis is over.
This is a serious risk, as it means our debt could continue to surge, even as the private sector recovers after the crisis.
With the vast majority of economic activity in Canada driven by the private sector, if the Liberals continue to try and increase the size of government, Canada could be in for years of stagnation and debt-driven problems.
Photo – YouTube