A ship without an anchor risks drifting into stormy waters. The same is true of governments that borrow and spend. More than six months into the global pandemic, it’s time for the Trudeau government to figure out what safeguards to put in place to ensure our temporary plunge into record deficits doesn’t become a permanent problem.
Unfortunately, the government doesn’t have a great record when it comes to fiscal anchors. In its 2015 election platform, the Liberal party proposed two: balancing the budget by 2019 and reducing the federal debt-to-GDP ratio to 27 per cent in the same year. Suffice it to say, the government failed on both counts. And did so well before the pandemic hit.
But the pandemic did hit and now, with a deficit that could reach as high as $400 billion, some kind of guidance isn’t just a good idea; it may be essential to keeping the federal government’s borrowing costs low.