The Record's view: Sunny ways and cloudy deficits

Opinion Mar 23, 2016 by Editorial Waterloo Region Record

Canadians can expect sunny days to follow Justin Trudeau's first budget — at least until he runs out of their money.

And considering that the prime minister and his federal Liberals plan to pile more than $100 billion on top of our national debt Matterhorn in the next five years, the country should fear its painful day of reckoning will come sooner, not later.

In the election campaign that brought him to power last fall, Trudeau sold voters "modest" deficits as a way to spark Canada's sluggish economy, while pledging the kind of steely fiscal discipline that would drag the federal budget back into balance by 2019. At the time it seemed a reasonable risk and one worth taking. But Trudeau's maiden budget has toasted those promises until they're broken bits of charcoal.

With Tuesday's budget, the so-called "modest" deficits of no more than $10 billion a year have tripled to nearly $30 billion this year, $29 billion the next year and with more whoppers to follow. Nor is there a hint of when the hemorrhage of budgetary red ink will be staunched and the deficit genie put back in the bottle.

This is not what this newspaper signed on for when it backed the Liberals in that election. Millions of Canadians will surely feel the same way today, and with it a mixture of consternation, disappointment, even betrayal.

Yet millions more will toss caution to the wind and luxuriate in the shower of goodies paid for by a projected program spending increase of $44 billion, or 16 per cent, by 2020. Let them beware.

The intent of at least some of this new spending is laudable. Living conditions in too many of the country's First Nations communities are deplorable with substandard housing, education and water quality. Spending $8.4 billion more on improving the lives of aboriginal Canadians over the next five years is justified — though it would be even better if the Liberals were doing more to ensure the money is well-spent and properly accounted for.

The billions that will pay for new infrastructure could, if wisely allocated, provide the country with needed improvements to roads, bridges and public transit while interest rates are still low. But infrastructure accounts for only a fraction of Trudeau's ambitious new spending agenda. The government's investment in public transit over the next three years is just $3.4 billion while Canada's annual gross domestic product is nearly $2 trillion.

So Canadians have reason to doubt that the vaunted Liberal promise to rev up the struggling economy will do much more than gamely push a spluttering machine uphill. This budget, and the ones predicted to follow, will be heavy on new social spending, much lighter than anticipated on economic stimulus.

To be fair, it is early days for this regime. If its fiscal gamble succeeds, if the economy roars ahead, the lot of First Nations improves and the lives of poorer Canadians are brighter, the Liberals will have the right to say they told us so. If this budget doesn't deliver, if the Liberals cannot show important, measurable results from their new spending, they could always scale it back.

Yet we doubt they would be inclined this way. Trudeau seems to have forgotten the hard lessons learned by Canadians — and the Jean Chrétien federal Liberal government — in the mid-1990s after decades of never-ending deficit spending created a boa constrictor of a debt that was crushing the life out of the economy. Then, the country had to endure painful, divisive and disruptive years of cuts to spending and programs to balance the books.

The worry now is that Trudeau is condemning this country to another protracted period of structural deficits, rather than providing a brief, necessary boost in the economic cycle. And remember: The spending spree taps have been turned on when the Canadian economy is still growing, albeit slowly. What will Trudeau have left in his increasingly empty stimulus tank if, heaven forbid, we actually tumble back into recession?

The Record's view: Sunny ways and cloudy deficits

Opinion Mar 23, 2016 by Editorial Waterloo Region Record

Canadians can expect sunny days to follow Justin Trudeau's first budget — at least until he runs out of their money.

And considering that the prime minister and his federal Liberals plan to pile more than $100 billion on top of our national debt Matterhorn in the next five years, the country should fear its painful day of reckoning will come sooner, not later.

In the election campaign that brought him to power last fall, Trudeau sold voters "modest" deficits as a way to spark Canada's sluggish economy, while pledging the kind of steely fiscal discipline that would drag the federal budget back into balance by 2019. At the time it seemed a reasonable risk and one worth taking. But Trudeau's maiden budget has toasted those promises until they're broken bits of charcoal.

With Tuesday's budget, the so-called "modest" deficits of no more than $10 billion a year have tripled to nearly $30 billion this year, $29 billion the next year and with more whoppers to follow. Nor is there a hint of when the hemorrhage of budgetary red ink will be staunched and the deficit genie put back in the bottle.

This is not what this newspaper signed on for when it backed the Liberals in that election. Millions of Canadians will surely feel the same way today, and with it a mixture of consternation, disappointment, even betrayal.

Yet millions more will toss caution to the wind and luxuriate in the shower of goodies paid for by a projected program spending increase of $44 billion, or 16 per cent, by 2020. Let them beware.

The intent of at least some of this new spending is laudable. Living conditions in too many of the country's First Nations communities are deplorable with substandard housing, education and water quality. Spending $8.4 billion more on improving the lives of aboriginal Canadians over the next five years is justified — though it would be even better if the Liberals were doing more to ensure the money is well-spent and properly accounted for.

The billions that will pay for new infrastructure could, if wisely allocated, provide the country with needed improvements to roads, bridges and public transit while interest rates are still low. But infrastructure accounts for only a fraction of Trudeau's ambitious new spending agenda. The government's investment in public transit over the next three years is just $3.4 billion while Canada's annual gross domestic product is nearly $2 trillion.

So Canadians have reason to doubt that the vaunted Liberal promise to rev up the struggling economy will do much more than gamely push a spluttering machine uphill. This budget, and the ones predicted to follow, will be heavy on new social spending, much lighter than anticipated on economic stimulus.

To be fair, it is early days for this regime. If its fiscal gamble succeeds, if the economy roars ahead, the lot of First Nations improves and the lives of poorer Canadians are brighter, the Liberals will have the right to say they told us so. If this budget doesn't deliver, if the Liberals cannot show important, measurable results from their new spending, they could always scale it back.

Yet we doubt they would be inclined this way. Trudeau seems to have forgotten the hard lessons learned by Canadians — and the Jean Chrétien federal Liberal government — in the mid-1990s after decades of never-ending deficit spending created a boa constrictor of a debt that was crushing the life out of the economy. Then, the country had to endure painful, divisive and disruptive years of cuts to spending and programs to balance the books.

The worry now is that Trudeau is condemning this country to another protracted period of structural deficits, rather than providing a brief, necessary boost in the economic cycle. And remember: The spending spree taps have been turned on when the Canadian economy is still growing, albeit slowly. What will Trudeau have left in his increasingly empty stimulus tank if, heaven forbid, we actually tumble back into recession?

The Record's view: Sunny ways and cloudy deficits

Opinion Mar 23, 2016 by Editorial Waterloo Region Record

Canadians can expect sunny days to follow Justin Trudeau's first budget — at least until he runs out of their money.

And considering that the prime minister and his federal Liberals plan to pile more than $100 billion on top of our national debt Matterhorn in the next five years, the country should fear its painful day of reckoning will come sooner, not later.

In the election campaign that brought him to power last fall, Trudeau sold voters "modest" deficits as a way to spark Canada's sluggish economy, while pledging the kind of steely fiscal discipline that would drag the federal budget back into balance by 2019. At the time it seemed a reasonable risk and one worth taking. But Trudeau's maiden budget has toasted those promises until they're broken bits of charcoal.

With Tuesday's budget, the so-called "modest" deficits of no more than $10 billion a year have tripled to nearly $30 billion this year, $29 billion the next year and with more whoppers to follow. Nor is there a hint of when the hemorrhage of budgetary red ink will be staunched and the deficit genie put back in the bottle.

This is not what this newspaper signed on for when it backed the Liberals in that election. Millions of Canadians will surely feel the same way today, and with it a mixture of consternation, disappointment, even betrayal.

Yet millions more will toss caution to the wind and luxuriate in the shower of goodies paid for by a projected program spending increase of $44 billion, or 16 per cent, by 2020. Let them beware.

The intent of at least some of this new spending is laudable. Living conditions in too many of the country's First Nations communities are deplorable with substandard housing, education and water quality. Spending $8.4 billion more on improving the lives of aboriginal Canadians over the next five years is justified — though it would be even better if the Liberals were doing more to ensure the money is well-spent and properly accounted for.

The billions that will pay for new infrastructure could, if wisely allocated, provide the country with needed improvements to roads, bridges and public transit while interest rates are still low. But infrastructure accounts for only a fraction of Trudeau's ambitious new spending agenda. The government's investment in public transit over the next three years is just $3.4 billion while Canada's annual gross domestic product is nearly $2 trillion.

So Canadians have reason to doubt that the vaunted Liberal promise to rev up the struggling economy will do much more than gamely push a spluttering machine uphill. This budget, and the ones predicted to follow, will be heavy on new social spending, much lighter than anticipated on economic stimulus.

To be fair, it is early days for this regime. If its fiscal gamble succeeds, if the economy roars ahead, the lot of First Nations improves and the lives of poorer Canadians are brighter, the Liberals will have the right to say they told us so. If this budget doesn't deliver, if the Liberals cannot show important, measurable results from their new spending, they could always scale it back.

Yet we doubt they would be inclined this way. Trudeau seems to have forgotten the hard lessons learned by Canadians — and the Jean Chrétien federal Liberal government — in the mid-1990s after decades of never-ending deficit spending created a boa constrictor of a debt that was crushing the life out of the economy. Then, the country had to endure painful, divisive and disruptive years of cuts to spending and programs to balance the books.

The worry now is that Trudeau is condemning this country to another protracted period of structural deficits, rather than providing a brief, necessary boost in the economic cycle. And remember: The spending spree taps have been turned on when the Canadian economy is still growing, albeit slowly. What will Trudeau have left in his increasingly empty stimulus tank if, heaven forbid, we actually tumble back into recession?