Chrystia Freeland went all\u002Din on spending after Finance said a downside economic scenario was survivable, now Canada must deliver. Read on.
Given the world is in a fragile state amid war in Europe, potential for war in Asia and a financial system weakened by a long period of complacency about risks such as inflation, a prudent government would have made anti-fragility its priority. Prime Minister Justin Trudeau’s government didn’t do that, signalling that it’s in no hurry to pay off its COVID-19-era debt.
“With spending failing to right-size following the pandemic — program spending as a share of GDP is still significantly higher than before the pandemic — the government has left itself in a difficult position as it heads into an economic slowdown,”Cynthia Leach and Josh Nye said in a note. “With the federal government taking on a larger role in funding health care and promoting the energy transition, progress on reducing deficit and debt-to-GDP will be sluggish at best.
The government didn’t leave itself in a difficult position with this budget, as the Royal economists observed. That happened before, when Trudeau followed an early election call with a weak campaign, a disastrous combination that ultimately led to a power sharing deal with the New Democratic Party. Freeland budgeted an additional $30 billion for health care and affordable dental care, the price NDP leader Jagmeet Singh demanded for his support.
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