That’s the current projection for the federal deficit this fiscal year. It was officially announced on November 30 in the House of Commons.
Don’t gloss over this number. Don’t slough it off. Don’t explain it away. Let this figure properly sink in for a minute or two.
Now, consider this.
The previous federal deficit projection for the 2020-21 fiscal year was $342.2 billion. This figure was first announced on July 8, when the Tories and opposition parties forced the Liberal government’s hand and demanded transparency with respect to COVID-19 spending. That would have already been the largest economic shortfall in Canada since the Second World War.
This means the federal deficit projection has increased almost $40 billion between July 8 and November 30, or an average of about $10 billion per month.
Again, don’t gloss over these numbers. Don’t slough them off. Don’t explain them away. Let these figures properly sink in for a minute or two.
Here’s one more point to consider.
Before COVID-19 struck, the federal deficit projection was an estimated $28.1 billion. That’s a difference of $353.5 billion since the first wave in March led to a national lockdown, many businesses closing their doors for health and safety measures, and the introduction of emergency relief measures to help Canadians survive this pandemic.
Most Canadians knew the federal deficit would increase dramatically during COVID-19. This lengthy period of social distancing, wearing masks, washing our hands and limiting physical contact in our homes with family, friends and loved ones meant that individuals and businesses had to be protected. We understood there would have to be a significant cost involved in doing so.
No-one ever assumed it would reach $342.2 billion, and then skyrocket to $381.6 billion. This was far higher than most expectations and financial predictions. The Liberals clearly weren’t paying close attention to the programs they were introducing, and the hundreds of billions of taxpayer dollars they were spending. It also shows why the Liberals didn’t want to reveal these staggering figures until push came to shove.
This number could also end up being much higher, which is a frightening proposition.
How does the federal government plan on paying down this deficit? When Finance Minister Chrystia Freeland tabled the economic statement yesterday, she announced there would be a stimulus package of between $70 billion to $100 billion over the next three years. “When the virus is under control and our economy is ready for new growth, we will deploy an ambitious stimulus package to jump-start our recovery,” she said.
The Liberal stimulus package would reportedly help reduce the federal deficit to $121.2 billion in 2021-22, to $50 billion in 2022-23 and back to $24.9 billion by 2025-26.
Fair enough. What programs will be introduced by Ottawa to help jump-start the shattered Canadian economy once more?
Prime Minister Justin Trudeau and the Liberals didn’t have a whole lot to say about a specific plan. There will apparently be down-payments on so-called “transformative initiatives” like child care, job training and green initiatives. How these flighty initiatives that most Canadians barely understand or care about right now will translate into a trusty sword to help slay the ravenous federal deficit monster is unknown at this stage.
Which isn’t to say the federal government doesn’t have a plan. It does. We won’t find out most of the specifics until the next federal election is called, however. As a guess, this will likely occur in spring 2021.
Trudeau will likely try to counter the staggering federal deficit with the ol’ stimulus funding-cum-election strategy. His messaging will include simple, easy to understand language, direct themes that resonate with Canadian communities, and an all-encompassing, “we’re in this together” mentality that helps bring out a warm, fuzzy magic carpet for the PM to ride on.
For instance, he’ll say that Ottawa was there for Canadians when they needed them most. He created programs like the Canada Emergency Response Benefit (CERB) and Canada Emergency Wage Subsidy (CEWS) to help individuals, families and businesses during COVID-19. This new round of stimulus funding will enable Canadian businesses to thrive, consumer confidence to increase – and the federal deficit to be tamed.
As is often the case with the Trudeau Liberals, they’ll openly cheer increased spending measures and frilly green policies – but plead the fifth when it comes to fiscal prudence, tax relief and reducing the size of government. And make no mistake about it: there won’t be a whiff of the latter when the election writ is finally dropped.
Will this strategy succeed? The Liberals believe that words speak louder than actions – a reversal of the old saying – and will tug at heartstrings to win a third straight election. If the Tories, NDP, Greens and other parties emphasize the eye-popping federal deficit, wasteful Liberal spending during COVID-19 and how long it could realistically take to pay it down, then all bets are off.
Photo Credit: Jeff Burney, Loonie Politics
Michael Taube, a long-time newspaper columnist and political commentator, was a speechwriter for former Canadian prime minister Stephen Harper.
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