Federal Liberals addicted to overspending

To the list of lies, damned lies and statistics, we have a new addition: budget promises made by the federal Liberals.

This week, Finance Minister Bill Morneau issued a fiscal update. It was the kind of legerdemain that would have embarrassed even U.S. President Donald Trump (supposing such a thing were possible).

As you’ll recall, Justin Trudeau promised, during the election campaign of 2015, that his government would run no deficit exceeding $10 billion. He also gave his word that the books would be balanced by 2019.

Had there been one word of truth in that, we should be looking at a deficit this year in the $6-billion range, followed by perhaps $3 billion next year and a balance in 2019.

Instead, despite an unexpected strengthening of the economy and a gusher of new revenues, the deficit this year will be $20 billion, falling to $18.6 billion next year and never declining below $12.5 billion throughout the six-year forecast period. Red ink, in other words, to the horizon. (Morneau’s own staff predicted last December that deficits would continue until at least 2051.)

There is an Alice in Wonderland feel to Morneau’s explanation: “Our strong fiscal position allows us to do what other countries would like to do, but can’t afford to do.”

On which planet does that make sense? Because we have a strong fiscal position, we’re going to borrow our brains out? Morneau’s statement is an exercise in self-parody. After pages filled with graphs showing Canada’s superior economic performance, he segues into the need for more deficit spending.

Watching the minister dispensing his largesse in the House of Commons reminded me of an ancient Scottish ritual. When a bride and groom were setting off on their honeymoon, the man would take out a small bag of coins and throw them on the ground for the children to scramble after.

That was essentially the scene in Parliament, as the government backbench erupted in squeals of ecstasy while money showered down around them.

If I might inject an element of perspective, here’s how our borrowing record stacks up. Of 20 countries with the largest current-account deficits, Canada’s federal and provincial governments, combined, rank third, just behind the U.S. and Great Britain. That’s not the kind of company you want to be in.

The U.S. Congress is a lunatic asylum, and the U.K. is dealing with the financial consequences of trying to leave the EU After that, we lead the world in living beyond our means.

The hard truth is this: We’re not overspending because we have a strong economy. We’re overspending because we’ve become addicted to it. The last time we went on a long-term deficit binge, Trudeau’s father had just taken office. For the 15 years Trudeau senior ruled, he ran deficits every year. That practice was continued by following administrations, both Liberal and Conservative, and lasted 30 years. The country was nearing bankruptcy by the end.

Economics might be a subtle discipline, but it’s not quite as elastic as Morneau would have it. At a certain point, you come up against hard realities. And one of them is that when the economy is charging ahead and your revenues are surging, you balance the budget. But Morneau will have none of it. Let the future take care of itself.

We are tasked purely with the needs of the moment, and in Liberalland (nearly wrote La La Land), the needs of the many are not only innumerable, but resolvable only with more cash. And when the economy takes a downturn, as economies always do eventually? What then?

But don’t ask our finance minister that question. He’s too busy reenacting the miracle of the loaves and fishes.