Business
Fiscal update reveals extent of federal government mismanagement
From the Fraser Institute
By Jake Fuss and Grady Munro
Following the sudden departure of Chrystia Freeland as finance minister, the Trudeau government released its 2024 fall fiscal update on Monday. Unsurprisingly, spending is up, the deficit has ballooned even higher, and the Trudeau government continues to utterly mismanage Canada’s finances.
Let’s get into the numbers.
For the current fiscal year (2024-25), the update estimates the federal government will spend $543.4 billion while taking in $495.2 billion in revenues. This means the government plans to run a $48.3 billion deficit—$8.5 billion higher than the $39.8 billion deficit that had originally been planned just eight months ago.
The Trudeau government’s incessant need to introduce new spending at every turn has driven this increase in borrowing. Indeed, discretionary spending on programs is now expected to be $6.1 billion higher than initially projected in this year’s budget tabled in April. Revenues have also taken a hit compared to projections from the spring, primarily from the federal government’s new GST holiday.
Not only will the government run a larger deficit this year, but future deficits are also expected to rise. Cumulative deficits from 2025-26 to 2028-29 are now expected to be $14.9 billion higher than projected in the spring budget.
There are costs associated with running deficits and accumulating debt, and Canadians ultimately bear these costs. Just like anyone who takes out a loan at a bank, government must pay interest on the money it borrows. In the case of the federal government, these interest costs will reach an estimated $53.7 billion in 2024-25 alone—more than all revenue collected via the federal GST. In other words, every dollar that Canadians are expected to pay in GST this year will go towards federal debt interest, as opposed to any services or programs. And as the federal government continues to borrow more, all else equal, these interest costs will continue to rise.
While the updated deficits for 2024-25 and beyond are still estimates, the 2024 FES presents what’s likely the final deficit number for the 2023-24 fiscal year. In a remarkable display of fiscal mismanagement, the Trudeau government ran a $61.9 billion deficit last year—$21.9 billion higher than the $40.0 billion deficit projected in the budget.
This means the federal government has broken one of its fiscal rules (a.k.a. guardrails) that help guide policy on spending, taxes and borrowing. One year ago, the Trudeau government established three fiscal rules—including to keep the 2023-24 deficit at or below $40.1 billion. These rules were reaffirmed in the spring budget, and have been a key feature of the Trudeau government’s so-called “responsible economic plan.”
However, there’s nothing responsible about establishing a rule only to break it a year later. Unfortunately, the Trudeau government has made a habit breaking its self-imposed rules. In 2015, the government established its first fiscal rule—balancing the budget by fiscal year 2019-20. But it quickly abandoned this rule in subsequent months and proposed an alternative rule—to reduce federal debt relative to the size of the economy (GDP). But again, this rule became an afterthought, as federal debt increased relative to GDP in 2019-20 and continued to sharply increase during the pandemic and has yet to return to anywhere near pre-COVID levels.
As has happened consistently in the past decade, this year’s fall update reveals that spending and deficits are up compared to the budget plan the government presented just months ago. The Trudeau government is utterly mismanaging the Canada’s finances, which has caused turmoil inside the government while Canadians bear the consequences.
Jake Fuss
Director, Fiscal Studies, Fraser Institute
Grady Munro
Policy Analyst, Fraser Institute
Business
‘There Are No Sacred Cows’: Charles Payne Predicts DOGE Will Take Bite Out Of Military Industrial Complex
From the Daily Caller News Foundation
By Harold Hutchison
Fox Business host Charles Payne predicted Monday that the Department of Government Efficiency (DOGE) will likely cause a short-term hit to the stock market as companies that sell the Pentagon a “$500 hammer” will “take a hit.”
President-elect Donald Trump named Tesla CEO Elon Musk and former Republican presidential candidate Vivek Ramaswamy as co-chairs of the Department of Government Efficiency (DOGE) Nov. 12. Payne said that the committee had “no sacred cows” after discussing the committee’s plan to target federal spending and policies military and health care industries with former White House press secretary Kayleigh McEnany and “America’s Newsroom” co-hosts Bill Hemmer and Dana Perino.
“Here is the way I look at the next Trump 2.0. I look at Trump 2.0 as not necessarily, we’re gonna get everything in the next four years, but we’re gonna put things into place to create prosperity for America that I think could last at least three decades and the key part of this is, look where they’re going – there are no sacred cows,” Payne said. “Look at what they are going after.”
WATCH:
“On Friday, you had legislation to go after the pharmacy benefit managers, right? CVS stock is cratering. Eisenhower warned us about the industrial-military complex. Well, now we’ve got a health insurance industrial complex, we got a healthcare industrial complex, we got a military industrial complex now,” Payne continued. “There are hundreds of billions of dollars floating around and guess what? It’s not necessarily good news for the stock market initially. You know, because, some of these companies that get all of this money and charge us $500 for a hammer and $1,000 for a toilet seat, they may take a hit, but ultimately, it’s better for the country and that means it’s ultimately better for the stock market.”
Republican Sen. Joni Ernst of Iowa sent Musk and Ramaswamy a seven-page letter in November with suggestions ranging from addressing unused space in buildings owned or leased by the federal government to halting uncommitted spending for COVID relief, with the proposed cuts totaling over $2 trillion.
In April, Republican Rep. Michael Waltz of Florida confronted Secretary of the Air Force Frank Kendall about the Air Force paying $90,000 for a bag of bushings. The Pentagon also paid $14,000 for a 3D-printed toilet seat and $1,280 for cups, according to a release from Republican Sen. Charles Grassley of Iowa.
Ernst released a 60-page report on Dec. 5 that covered findings from Ernst’s investigations into telework since she sent an August 2023 letter to 24 government agencies seeking a review of the issues involved with telecommuting.
Trump reportedly is planning on privatizing the United States Postal Service, which lost $9.5 billion in fiscal year 2024, according to the Washington Post.
From the Canadian Taxpayers Federation
The Canadian Taxpayers Federation is demanding spending cuts after the federal government broke through its own budget guardrail by running massive deficits and wasting $1 billion every week on debt interest charges as outlined in today’s Fall Economic Statement.
“Prime Minister Justin Trudeau went $20 billion over budget with his deficit,” said Franco Terrazzano, CTF Federal Director. “Trudeau said he had a guardrail in place to keep Canada’s finances safe and he just drove the deficit right through it.
“It’s dangerously irresponsible to blow through fiscal guardrails and the federal government needs to hit the brakes on spending immediately.”
The federal government repeatedly promised to keep the 2023-24 deficit within its own fiscal guardrail “at or below $40.1 billion.” However, today’s Fall Economic Statement shows the 2023-24 deficit was $61.9 billion. This year’s deficit is projected to be $48.3 billion.
The debt will total almost $1.3 trillion this year. When Trudeau first became prime minister, the debt was $616 billion. That means the Trudeau government is responsible for doubling the national debt.
Interest charges on the debt will cost taxpayers $53.7 billion this year. For context, the government will spend $52.1 billion through the Canada Health Transfer this year.
“Interest charges on the government credit card are costing taxpayers more than $1 billion every week,” Terrazzano said. “Years of massive deficits mean the government is wasting more money on debt interest charges than it’s sending to the provinces in health transfers.”
Budget 2024 forecasted spending this year to be $534.6 billion, but the Fall Economic Statement now forecasts spending to increase to $539.5 billion.
“Trudeau has lost control of the finances and our kids and grandkids will be paying the price for years to come,” Terrazzano said. “Canadians can’t afford to keep paying for a reckless government in Ottawa. Canadians need our federal government to cut spending and balance the budget.”
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