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Let’s consider a few facts about the Canadian economy:
Our household debt is at record highs.
Bankruptcies and insolvencies are surging.
Investor confidence is weak.
Growth is weak, and slowing.
The cost of living keeps rising.
Government debt and deficits are up.
Interest rates are low.
All of this is dangerous enough when there’s no economic crisis.
But it will be downright devastating once our country trips into recession.
And now, with the Trudeau Liberals announcing that they plan to double the budget deficit, we need to consider how big a risk that is:
With household debt already at such a high level, any downturn would push many Canadians into serious financial peril. People would reduce their spending, further creating a cycle of economic contraction.
That contraction would lead to more and more bankruptcies, which would once again feed into the decline in consumption and cause people to lose their jobs as the economy fell.
With investor confidence already shaky, it would get downright ugly out there, as investment fled our country.
Usually, such a large influx of government spending—as we’ve seen under the Liberals—would lead to an economic surge. But growth is weak and is weakening even further, and even a slight downturn means we would be in a recession.
And that’s where the high cost of living comes in. If people are already struggling to make ends meet, what do you think will happen when a recession hits?
The general response to an economic downturn from the government would be to increase spending to provide an economic boost. But the Liberals have already been increasing spending, and the economy continues to weaken. And, by running large deficits and adding to the debt even when there is no recession, the Liberals have deprived our country of fiscal room that could be used to respond to a crisis.
Finally, the Liberals are running up big budget deficits at low interest rates. When interest rates rise, the cost of serving that increased debt will also rise.
That’s why people say today’s deficits are tomorrow’s taxes.
The reality is that the Trudeau Liberals were handed a strong economy and a balanced budget.
They’ve squandered it, putting our budget into a large deficit, adding to the debt, and overseeing a period of weakening growth, surging household debt, and a big increase to the cost of living.
All of this has made our country much more vulnerable to a serious economic disaster.