Blacklock’s Reporter – Fed Debt Now $1.45 Trillion
Fed Debt Now $1.45 Trillion
September 30, 2020 – The federal debt will reach an unprecedented $1.45 trillion this year and eclipse $1.6 trillion by 2023, the Parliamentary Budget Office said yesterday. Analysts cautioned the record debt does not include pension liabilities, Crown corporation borrowing or new spending proposed since September 1.
“Should parliamentarians support extending temporary measures or introduce new response measures, program spending could rise significantly above the Budget Office’s baseline projection,” analysts wrote in an Economic And Fiscal Outlook September 2020. “The Office’s outlook does not reflect any of the commitments made in the recent Speech from the Throne.”
The Budget Office said pandemic spending is so high Parliament will exceed its current debt ceiling by 24 percent this year. The debt cap of $1.168 trillion was set three years ago under the Borrowing Authority Act.
“The Budget Office’s economic and fiscal outlook is conditional on the future course of the Covid-19 pandemic which itself is inherently uncertain,” said the report: “Given the recent uptick in new cases both within Canada and globally, it is possible a severe second wave of infections could result in another round of stringent containment measures and lockdowns.”
Analysts said in the best case scenario the economy will shrink by five percent this year, federal tax revenues will fall eight percent, and Canada will not recover until 2022. “We expect the Covid-19 pandemic and oil price shocks will have a permanent effect on the Canadian economy,” said the Budget Office.
Prime Minister Justin Trudeau has repeatedly promised cabinet will not raise taxes. “No,” Trudeau told reporters August 18. “The last thing Canadians need is to see a raise in taxes right now.”
“We are not going to be saddling Canadians with extra costs,” said Trudeau.
Then-Finance Minister Bill Morneau told the Commons May 21 that tax hikes were not considered. “What will the pain for Canadians be after this?” asked Conservative MP Bob Benzen (Calgary Heritage). “We have no plan to raise taxes,” replied Morneau.
The Budget Office yesterday said even without additional spending or tax increases Parliament faced ongoing budget shortfalls that would total more than half a trillion, about $580.5 billion, by 2024. “Beyond 2020 we are projecting budgetary deficits that are roughly $40 billion larger each year on average,” wrote analysts.
Cabinet has said it will introduce an autumn “update” on federal finances, and not a traditional budget. A September 23 Throne Speech proposed to tax Netflix and Google, and “identify ways to tax extreme wealth inequality including by concluding work to limit the stock option deduction for wealthy individuals at large established corporations”, but did not elaborate.
Original Link: https://www.blacklocks.ca/fed-debt-now-1-45-trillion/