You can give away 'free shit' but you actually have to pay for it. Canada is learning that lesson. From Bloomberg Business:
Trudeau Drops Campaign Promises and Goes All In With Deficits
In for a penny, in for a pound.
With falling oil prices eroding Canada’s revenue base, newly elected Prime Minister Justin Trudeau is fully embracing deficits, with his finance minister hinting Monday the country will run a deficit of about C$30 billion ($22 billion) in the fiscal year that starts April 1.
It’s one of the biggest fiscal swings in the country’s history that, in just four months since the Oct. 19 election, has cut loose all the fiscal anchors Trudeau pledged to abide by even as he runs deficits. The government’s bet is that appetite for more infrastructure spending and a post-election political honeymoon will trump criticism over borrowing and unmet campaign promises.
“It looks like the Liberals want to front load as much bad news as possible in the hope when the election occurs in four years things will be better,” said Nik Nanos, an Ottawa-based pollster with Nanos Research Group.
Trudeau swept to power in part by promising to put an end to an era of fiscal consolidation the Liberals claimed was undermining Canada’s growth, which has been lackluster since the recession in 2009. Still, he has tried to temper worries by laying out three main fiscal promises: annual deficits of no more than C$10 billion, balancing the budget in four years and reducing the debt-to-GDP ratio every year.
Of course, the people who actually crunch the numbers on a daily basis have a different story to tell:
On Monday, Finance Minister Bill Morneau indicated none of those three promises will be met. A fiscal update -- released a month before the government’s first budget is due -- showed Canada’s deficit in the year that begins April 1 is on pace to be C$18.4 billion, even before the bulk of the government’s C$11 billion in spending promises and any other stimulus measures are accounted for.
The same document shows the nation’s debt-to-GDP ratio will be rising in the coming fiscal year, not falling. Morneau also reiterated that balancing the budget in the near term would be “difficult.”
“They’re trying to justify breaking a campaign promise by somehow suggesting it’s not their fault,” Rona Ambrose, leader of the main opposition Conservative Party, told reporters in Ottawa.
It will be interesting to see if the voters wake up four years from now or if they latch on to getting their free shit and ignore the costs being passed on to future generations.
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