COMMENTARY: Liberals’ approach to deficits has back them into an unfortunate fiscal corner

Many have wondered, as the Liberals’ promised “modest” deficits turned into much-less-modest deficits, if we can’t balance the budget in good times, where does that leave us when things turn bad?

We’re about to find out, it would appear.

In the face of growing global economic uncertainty in the face of the COVID-19 outbreak — coupled with the economic uncertainty within our own borders caused by weeks of rail blockades — the Liberals’ upcoming budget will to make responding to these challenges a priority.

There are measures that don’t involve additional spending that could encourage economic growth and promote investment in Canada, but the indications at this point suggest that spending initiatives are the government’s preferred approach. That will prove tricky, however, especially if an economic slowdown means a hit to federal revenues.

Following a speech to a Toronto business audience Friday, Finance Minister Bill Morneau insisted that the government will “maintain our fiscal firepower to deal with potential challenges down the road while ensuring that we are also dealing with the issues immediately.”

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