One trillion dollars. A one with twelve zeroes after it. A thousand billion dollars.
It’s where Canada’s federal debt is heading in the next half year.
We all knew the number was going to be jaw-dropping, but it turned out to be even worse than the even the most pessimistic predictions.
On March 27, the Parliamentary Budget Office estimated this year’s federal deficit would hit $112 billion. By April 30, its estimate had jumped to $252 billion.
But when Finance Minister Bill Morneau revealed his ‘fiscal snapshot’ this week, the deficit had ballooned to a whopping $343 billion. That means our existing $775 billion federal debt will now increase by over 40 per cent in a single year. That will put it well over a trillion dollars for the first time.
By comparison, the last time the debt rose by $343 billion it took about 28 years.
We’re talking about this depressing trillion-dollar milestone right now because of the slew of emergency pandemic spending combined with a collapse in tax revenues due to the economic shutdown. It’s the haystack of spending that broke the camel’s back. But make no mistake, that poor dromedary’s spine was already strained.
Trudeau can’t be faulted for the worldwide health pandemic. It’s a global crisis that caught everyone less prepared than they should have been. But the Trudeau government is definitely responsible for the fiscal footing it put the country on when the crisis hit.
When the economy was growing and times were good, the Trudeau Liberals ran deficits and racked up nearly $100 billion in new debt. That would have been enough to pay for nearly half of all pandemic spending.
Simply put, Trudeau and Morneau spent the rainy day fund while the sun was shining.
It’s a grim rebuke to the don’t-worry-be-happy attitude that constantly preached that ever increasing debt is fine. It’s a vindication for the common sense principle that being prudent in the good times is a good way to prepare for the bad times when they inevitably come.
But coming back to this week’s fiscal update, even more troubling than their track record is the Liberals’ complete lack of a plan for the future.
There was no indication of how they would wind down expensive temporary spending, or even adjust programs such as the monthly emergency benefit which effectively penalizes people who are willing and able to get back to work.
There was no sign that they’ve begun to look at ways to reduce the cost of government, even as Canadians who have lost jobs and taken pay cuts watch idled government employees continue to get their full paychecks.
There was no hint of a plan to revive the economy they put into an induced coma, even as every day brings news of more businesses going bankrupt.
Morneau insists that it’s too hard to predict the future, but he’s obligated to try rather than simply leave Canadians in the dark about how the government plans to climb out of this cavernous hole.
There are tough times ahead, and the sooner Morneau grabs the bull by the horns and starts making hard choices, the better. But given that he wasn’t even able to keep spending in check when the deficit was one tenth the size, Canadians could be forgiven for worrying whether he has the steel to get us out of a much bigger mess.