2021 federal budget spends heavily on Canadian credit cards

TheĀ· Federal budget for 2021 The Trudeau Government’s legacy, released on April 19, shows that it pays the country’s credit card spending and ignores the country’s growing debt.

As outlined in Budget 2021, Ottawa earns this year (2021/22) Economic updates Released in November 2020 for $ 19.2 billion. In other words, the Liberal government expects to generate about $ 20 billion more than its original budget this year.

Still, the 2021/22 deficit, or spending above revenue, is $ 33.5 billion higher than it was estimated just five months ago (November 2020). The explanation says. Interest expense on debt is $ 1.8 billion higher, while expected additional costs for public pensions are $ 3.4 billion lower. However, program spending in 2021/22 is $ 54.4 billion more than planned for November 2020, resulting in a large deficit.

In other words, if Ottawa simply maintained its 2021/22 spending level (established in November 2020), the deficit would have decreased by almost $ 20 billion instead of increasing by more than $ 33 billion. This reflects the Trudeau government’s tendency to spend, regardless of its deficit and its impact on debt.

And this is not the first time the Trudeau government has chosen to spend additional income.In Fall 2018For example, $ 5.5 billion in higher-than-expected revenue and $ 2.5 billion in debt interest costs resulted in an unexpected budget plunge of $ 8 billion. But instead of just sticking to planned spending Spring budgetThe liberals hurriedly increased their spending by $ 8 billion and spent all the money they found.

The enthusiasm for this spending Federal spending per capita (Inflation-adjusted) reached a historic high in 2019, surpassing even before COVID-related spending in 2020. In fact, per capita spending in 2020 (excluding COVID-related spending) reached $ 11,165 (an additional $ 5,956 was spent on COVID-related programs). However, $ 11,165 is Canada’s highest per capita spending, well above the $ 9,153 recorded during the 2009 recession or the $ 7,908 spent at the peak of World War II.

Canada can ignore the effects of cumulative borrowing and debt G7’s fastest growing debt.. It also explains that government bonds have increased significantly since the Trudeau administration was inaugurated.Net liabilities (total liabilities minus financial assets) $ 695.7 billion in 2015-16.. By 2019-20, net debt reached before the full impact of COVID and the recession $ 812.9 billion, Increased by 16.8% in just 4 years.Now reach $ 1.5 trillion by 2025/26.

Both before and after COVID, Canadian costs for Trudeau’s large spending not only increased the country’s national debt, but also put federal finances in a volatile position. The government has already expected a cumulative $ 20 billion in interest costs on national debt over the next five years, compared to the initial estimates provided last fall.

And this still assumes relatively low interest rates. An increase in the interest rate or risk premium associated with Canadian debt will result in a significant increase in interest rate costs and a further deterioration in federal finances.

Jason Clemens and Jakefuss are economists at the Fraser Institute.

The views expressed in this article are those of the author and do not necessarily reflect the views of The Epoch Times.