RED INK: Because Of Trudeau’s Policies, A Serious Recession Could Push Budget Deficit To $120 BILLION

Trudeau’s massive budget deficits at a time when there is no global economic crisis could put our country into a brutally vulnerable position when a recession hits us.

A new study by the Fraser Institute shows that Canada’s budget deficit could explode to a gargantuan $120 billion in a worst-case scenario due to a recession.

Fraser Institute Federal Deficits Report
Photo – Fraser Institute

This massive financial vulnerability is due to the policies of the Trudeau government, who are deliberately choosing to run massive budget deficits – despite promising 3 ‘small’ deficits during the campaign.

Here are some key parts of the Fraser Institute report:

“There are serious financial risks associated with running deficits during times of positive economic growth. One of the principal risks is that the budget cannot be balanced regardless of economic conditions because a permanent imbalance between how much the government spends and the amount it raises from taxes and other revenues develops.”

“The Trudeau government took office in late 2015 and immediately increased budgeted federal program spending by $8.1 billion over the period from 2015/16 to 2019/20. Less than six months later, in its first full budget (2016), the federal government markedly increased budgeted program spending by an additional $65.9 billion over the same five-year period.”

They detail the consequences of different possible economic scenarios:

“If the 1991/92 recession, which had mild fiscal effects, was to repeat, the 2019/20 deficit is forecast to increase from its current budgeted level of $14.4 billion to $42.7 billion. The four-year accumulated deficit for the period from 2019/20 to 2022/23 would increase from $48.5 billion to $124.2 billion.”

“Finally, if the conditions of the most recent and fairly serious recession of 2008/09 were repeated, the annual deficit for 2020/21 is expected to reach $120.5 billion. The four-year cumulative deficit is estimated to increase from $48.5 billion to $335.1 billion.”

Trudeau makes Canada vulnerable

As you can see above, Justin Trudeau’s policies have made Canada very vulnerable, which is especially concerning given the fact that our economic growth is expected to be weak in the coming years.

Even worse, our housing market could be headed for a severe correction, and our household debt is the worst on earth.

All of this dramatically increases the risk of financial calamity, and the Trudeau government appears to be doing everything possible to make that risk even worse.

Read the full Fraser Institute Report here.

Spencer Fernando

Photo – YouTube

4 comments Add yours
  1. I said from day one Trudeau was “groomed” by the Elite to bankrupt Canada..Friends looked at me like I am one who had lost her mind. I am being proved right month by month, call me a bit Prophetic. When will Canadians rise up? Probably when it is too late. I am so grateful to be a pensioner as the next generation will have nothing; Canadians fault as Denial is easy. In my opinion pure Evil is being perpetuated on Canadians.

  2. Irresponsible leadership for what? Trudeau has no plans for economic prosperity. His party just makes decision as they please. Have you noticed that at the House of Commons we dont see Morneau anymore? What happened to him? Keeping a low profile?

  3. “…our economic growth is expected to be weak in the coming years.” In fact the IMF estimated Canada’s GDP growth at a robust 3% last year, way ahead of the US and expected to be #2 in the G7 this year.

    As for Canadians being in debt, yes the level is high but as a leading economist pointed out, the quality of the debt is high meaning the people in debt hold well-paying jobs and have money in the bank. The risks are nowhere near where they were in the US before the financial crisis. So that is not a drain on the economy.

    The deficit scolding is disingenuous. Deficits and sovereign debt is only money we owe OURSELVES when we control the currency. During this period of extremely low interest rates, it’s good economic policy for a government to spend freely on needed infrastructure. That stimulates the economy and kindles long-term growth.

  4. Bill… the debt and deficit are not just money we owe ourselves. Most is borrowed from other countries. We could be the next Venezuala. And one major misconception is that when interest rates are historically low, we should spend like drunken sailors…it’s practically free money! The truth is that when rates are low,this is the time to make heavy payments to reduce our national debt…..not increase it;Because when interest rates increase to a more normal range of 6 to 10 % Canada .(ie.our children and grandchildren )will be in dire straits trying to pay the higher national debt payment …..while at the same time coping with the enormous annual structural budget deficit Trudeau is passing along to our children. Many families and businesses are using this rare historical period to pay down their debt loads so that when interest rates go up again they will be in a better position.
    As well,we are in a housing bubble now and millenials should not buy now.When interest rates go up, housing prices go down, and vice versa. We baby boomers were buying homes when interest rates varied from 11% to 19% for one yr. terms. Then when interest rates sank quickly from 11 % to 6% , the homes soared in value…and then soared further when they went to 3%. Now, housing prices have nowhere to go but down. So wait it out.

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