Like Father, Like Son: Justin Trudeau Places Canada in Permanent Deficit
There are many things to say about the Liberal’s most recent Budget 2018 and few of them are good.
During the years of Trudeau the Elder, deficits were justified by the Liberals for the same reasons they are being justified today—that rising economic fortune justifies increasing deficits. This worked for a while in the 1970’s as a commodity boom across the world helped the Liberals finance a 300% increase in the size of government. History shows us, however, that economic growth doesn’t last forever. The recession of the early 1980’s, with its increases to inflation and consequent high interest rates, nearly bankrupted the Government by the early 1990’s. It took nearly 30 years for successive Conservative and Liberal Governments to bring spending back under control.
Today Trudeau the Younger is picking up where his father left off. During Election 2015, he promised to run modest deficits to stimulate economic growth. This would be followed by fiscal tightening and a balanced budget by 2019. This promise he has officially broken as of the Government’s most recent budget, which includes no plan to bring our budget into balance. History is repeating itself: the Liberals are content to run a permanent deficit. The fiscal nightmare of the 1990’s, when healthcare spending was slashed and Canada’s currency was called the “Canadian Peso,” was the result of Trudeau the Elder’s fiscal incompetence, and with his son, we are back on that path to destitution.
Despite record high commodity prices, a near doubling of oil prices and a rapidly growing United States economy, the Liberals are refusing to take fiscal responsibility and lay out a clear plan for balanced budgets. Economists call this a “structural deficit,” meaning that even if the economy operates at full capacity and efficiency the Government will still run a deficit.
The Liberals are governing like a person who takes a loan out on their house and buys risky stocks at the top of the market. As long as interest rates remain low and stocks keep rising, the policy appears sound. We all know, however, how quickly stock markets can fall, and how what once appeared as prudent, can quickly unravel. The Bank of Canada is already beginning to hike interest rates from record lows. If the price of oil or any of the other goods we produce plentifully drops, our Government is in for a shock. $18 Billion deficits will look modest compared to the cost of maintaining their vast new social programs, with lower tax revenue and higher interest borrowing rates.
As the Conservative MP for Sturgeon River-Parkland, I want to offer a clear alternative to Trudeau’s economic mismanagement. This alternative involves using the economic strength of the global economy to bring Canada’s budget back to balance. It involves finding efficiencies in Government to bring back the investment we need to grow. I don’t want Canada to run austerity budgets; but when Liberals blow the bank during good economic times, they will leave Canadians of the (near) future with no choice but to be austere. Balancing the budget today means having the fiscal flexibility to invest in the future, especially when storm clouds appear on the horizon. Running permanent structural deficits is a recipe for fiscal disaster. It’s time to lay out a plan to balance the budget.
- Dane Lloyd