TD Bank forecast today that Trudeau deficits could hit hit a whopping 150 billion dollars over 5 years, causing a double-take reaction from the financial community. In the 2015 election campaign the Trudeau Liberals had originally promised “modest” deficits of 10 billion dollars a year over 3 years. This promise, like so many others, appears to now be a mere afterthought.
In the face of criticism over increased spending with slowing economic growth, the Liberal argument spun by Finance Minister Bill Morneau et al. is that “a less ambitious government might see these conditions as a reason to hide, to make cuts or to be overly cautious.”
In reality, the Prime Minister and Finance Minister seemingly appear to be unable to say “no” to any interest group with their hand out.
The Canadian economy is not growing as quickly as we would like it to, and there are many challenges facing our resource sector. There is a case to be made for spending money as a means to stimulate the economy – the previous administration took on significant amounts of debt as a means to combat the global economic crisis we faced in 2008. However, this is 2016 and global conditions are not what they were in 2008, and Liberal spending is not expected to generate enough growth to pay for itself.
Journalist David Akin reported that the spending done by the Trudeau Liberals in their first 100 days in office was not only greater than what was spent by the previous Government, but that the bulk of Liberal checks handed out were for projects outside of Canada.
It remains to be seen how this outside spending will assist Canadians trying to make ends meet. Excessive spending that doesn’t help stimulate our economy will only snowball our ever increasing national debt – interest rates are at a low point today, but these rates will eventually increase, making the debt mountain grow ever higher and more expensive. The Government needs to show some restraint and realize that spending money for the sake of spending money doesn’t always generate growth in the economy. Excessive spending points to eventual Liberal tax increases as a means to increase revenue – a death sentence for Canadian wallets everywhere.
Even future spending within Canada appears as if it will be disproportionate beneficial to some and not others. Much of the infrastructure spending chatter touted by the Liberals seems to have a focus on Canada’s urban centers. Little has been mentioned for rural Canada, and areas like Pontiac (QC) appear to be left out in the cold for now.
The Liberal decision to continue moving forward with unrestrained spending in the face of shrinking revenue has already made many Canadians uneasy. Patience and restraint are virtues that are often in short supply when Governments are flying high in the polls, as this one is. With financial challenges mounting, these virtues are needed more than ever. Otherwise, taxpayers are apt to be swept overboard for a generation.
Morneau quote obtained here: