Deficits: Liberals learned nothing, forgot nothing, from past mistakes

Deficits: Liberals learned nothing, forgot nothing, from past mistakes

The State
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[Fraser Institute] The federal government risks repeating the mistakes of the mid-1960s to mid-1990s — when Ottawa repeatedly ran deficits and racked up massive amounts of debt — that nearly led to a currency and debt crisis in Canada, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

VIDEO: [Global News] Jason Clemens explains significance of growing debt-per-person during Prime Minister Trudeau’s period of office. [Feb 21, 2019]


“Today’s federal deficit and mounting debt are the result of discretionary spending, taken with little concern for the immediate risks, long-term impact and the history of deficit-spending in Canada,” said Jason Clemens, Fraser Institute executive vice president and co-author of Federal Deficits Then and Now: Is Canada Repeating the Fiscal Mistakes of 1965 to 1995?

The study finds that, due in part to higher-than-planned government spending and lower-than-forecast government revenue, the federal government ran budget deficits every year (except one) from 1965 to 1995 (when the federal debt increased from $17.2 billion to more than $500 billion) until a period of reform beginning in 1995.

Fast-forward to 2015, when federal finances were on track to budget balance, the newly-elected federal government increased spending immediately after entering office, resulting in a deficit instead of a balanced budget. The federal debt is now close to $700 billion and projected to total almost $1 trillion by 2040/41.

Crucially, since 2015 actual federal spending has exceeded budgeted spending. For example, in 2018, despite higher-than-expected revenue, Ottawa spent $8.0 billion more than originally budgeted with no improvement in its deficit. We saw similar trends during the 1965-1975 period when the federal government routinely spent every dollar of its higher-than-expected revenues.

This article continues at [Fraser Institute] Liberals set to repeat deficit mistakes of the twentieth century

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