Business
Federal government poised to pile on more spending and debt
From the Fraser Institute
Next week, the Trudeau government will release its fall fiscal update, which, considering the sorry state of federal finances, should demonstrate a newfound approach to spending and borrowing. But don’t hold your breath.
Although the Trudeau government describes itself as “fiscally responsible,” in reality it has a track record of unrestrained spending and large budget deficits. And it’s overseen the five highest years (2018 to 2022) of per-person program spending (adjusted for inflation) in Canadian history. Even excluding COVID-related spending, 2020 and 2021 remain the two highest years of per-person spending on record.
The Trudeau government has also run deficits every year since it took office in 2015—according to forecasts, this year’s deficit will eclipse $40 billion even though COVID is in the rearview mirror. Consequently, federal debt will have increased nearly $900 billion since 2014/15, up to $1.9 trillion for 2023/24.
While the prime minister and Finance Minister Chrystia Freeland often downplay the level of debt accumulation by noting that Canada has the lowest net debt-to-GDP ratio among the G7 countries (Germany, Italy, Japan, France, the United Kingdom and the United States), this is misleading.
Net debt is calculated as total (gross) debt minus all financial assets, with the implicit assumption that those assets could be used to offset debt. However, the Canada and Quebec Pension Plans (CPP and QPP) are included in the financial assets used to calculate net debt in Canada. But because CPP/QPP assets are needed for existing and future retirees, in reality they can’t be used to offset government debt.
Therefore, a better measure is gross debt, which measures all liabilities that require future payment of interest and/or principal by the debtor to the creditor. Compared to 29 other advanced economies, including the G7 countries, Canada’s gross debt as a share of the economy ranks 20th—meaning Canada is among the most indebted countries.
Clearly, the Trudeau government has been anything but fiscally responsible. And the current levels of spending and borrowing impose real costs on Canadians.
For example, since 2014/15 federal government debt interest costs have nearly doubled—reaching an estimated $43.9 billion, or 9.6 per cent of total revenues, for 2023/24. This means roughly one in every 10 dollars Ottawa collects from Canadian taxpayers this year will go towards debt interest costs, rather than government services or tax relief.
In light of these fiscal realities, if the Trudeau government wants to move anywhere close to a balanced budget in the foreseeable future, it must take meaningful steps in the upcoming fall fiscal update to restrain spending growth.
Unfortunately, this is unlikely to happen.
In a recent report, the Parliamentary Budget Officer (PBO) estimated that, due to spending increases, the federal government will run a deficit of $46.5 billion for 2023/24—$6.4 billion more than the government’s budget projections in March.
The government will also likely include new spending in the upcoming fiscal update meant to address housing and affordability. And will likely soon table legislation on national pharmacare, which the PBO estimates will cost $11.2 billion in 2024/25 alone.
Finally, not only does this unprecedented level of spending rack up mountains of debt, according to Bank of Canada Governor Tiff Macklem, “government spending is starting to get in the way of getting inflation back to target.” In other words, more spending by the federal government to address affordability concerns could actually worsen the problem by keeping inflation (and interest rates) higher than would otherwise be the case, eroding the purchasing power of Canadians.
While Ottawa’s fiscal situation demands a fiscally responsible fall fiscal update, it’s likely we’ll see much of the same next week from the Trudeau government—more spending and more borrowing.
Authors:
MxM News
Quick Hit:
A shocking new poll reveals that a staggering 71% of likely Democratic voters support imprisoning Elon Musk for his brief service in the Trump administration’s Department of Government Efficiency (DOGE). The survey, conducted by The Heartland Institute and Rasmussen Reports, underscores an alarming shift in progressive politics: jailing political opponents for attempting to rein in bureaucratic waste. As Justin Haskins writes in his May 9 Townhall op-ed, this poll is not just about Musk—it’s about the dangerous normalization of authoritarianism among America’s political left.
Key Details:
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71% of likely Democratic voters support jailing Musk for his role in eliminating government waste via DOGE.
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80% of ideological liberals, across parties, say they would imprison Musk for his public service.
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Nearly 70% of Democrats support banning Musk from ever serving in government again—an unconstitutional measure.
Diving Deeper:
In his recent Townhall column, Justin Haskins warns that Elon Musk’s fall from liberal darling to “Public Enemy No. 1 for the modern left” stems from a single transgression: daring to challenge the D.C. establishment. Haskins opens by recognizing Musk’s past achievements—electric vehicles, space exploration, and defending free speech. But after briefly working in the Trump administration’s Department of Government Efficiency (DOGE)—an initiative aimed at cutting federal waste—Musk became a target of left-wing ire.
According to the Heartland Institute/Rasmussen poll, “Seven in ten likely Democratic voters want to imprison Musk for trying to make government more efficient.” Haskins adds, “This isn’t satire. This is the modern Democratic Party, where liberalism has evolved into authoritarianism dressed in the clothes of compassion and equity.”
The numbers become even more disturbing among self-identified liberals. A staggering 80% of ideological liberals said they’d support jailing Musk for participating in DOGE. Additionally, nearly 70% of Democrats back a proposal to ban him from ever working in government again—a position that clearly violates constitutional protections.
Musk’s unpopularity among Democrats has grown since his acquisition of X (formerly Twitter) and his commitment to restoring banned voices. Once celebrated as a climate champion, Musk is now demonized by the very groups that once hailed his green energy innovations. “He was supposed to walk in lockstep against conservatives at all times,” Haskins notes. “When he chose a different path… he committed a sin that some on the radical left simply cannot forgive.”
More importantly, the poll reflects a dangerous national trend: criminalizing political dissent. Haskins writes, “When nearly three-fourths of Democratic voters support jailing someone for participating in an effort to streamline federal agencies, we’ve crossed a dangerous line.” He continues, “This is the stuff of banana republics, not constitutional republics.”
The column concludes with a chilling reminder that the targeting of Elon Musk is not an isolated incident. “If they’re willing to jail Elon Musk for doing his job, what do you think they’ll do to the rest of us?” Haskins asks. The poll results reveal a left-wing movement increasingly comfortable using state power to punish those who refuse to conform.
MxM News
Quick Hit:
President Trump said “great progress” was made in Saturday’s trade talks with China, calling the outcome a “total reset” negotiated in a “friendly, but constructive” way.
Key Details:
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The talks took place Saturday in Geneva between U.S. officials—led by Treasury Secretary Scott Bessent—and Chinese negotiators, amid a high-stakes standoff over tariffs.
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President Trump said on Truth Social that “many things [were] discussed, much agreed to,” describing the tone of the talks as “friendly, but constructive.”
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While no final agreement was reached, Trump said the goal is mutual: “an opening up of China to American business.” Further talks are scheduled for Sunday.
Diving Deeper:
President Donald Trump on Saturday night announced what he described as a significant breakthrough in trade negotiations with China, saying U.S. and Chinese officials agreed to a “total reset” during marathon discussions in Geneva, Switzerland.
In a post on Truth Social, Trump said, “A very good meeting today with China, in Switzerland. Many things discussed, much agreed to. A total reset negotiated in a friendly, but constructive, manner. We want to see, for the good of both China and the U.S., an opening up of China to American business. GREAT PROGRESS MADE!!!”
The session reportedly lasted over 10 hours, and was led on the U.S. side by Treasury Secretary Scott Bessent. While no specific deal was announced, officials described the negotiations as productive, with additional talks set to continue Sunday.
The Geneva meetings come amid escalating tariff measures. On April 2nd, the Trump administration rolled out “Liberation Day” tariffs on Chinese goods, followed by the imposition of a 145% tariff across a broader range of imports. In response, China raised duties on U.S. goods to 125%, even after briefly reducing tariffs for other trade partners to 10%.
With talks continuing into Sunday, the White House is framing the Geneva reset as a pivotal moment in its effort to realign trade policy.
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