Trudeau's first budget: Welcome to a decade of deficits

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POLITICS BRIEFING

By John Ibbitson (@JohnIbbitson)

You have to be in your sixties to remember the last time a federal finance minister took the books out of balance even though there was no recession. So maybe there are only a few old codgers left who await today's Edgar Benson budget in quiet dread.

Yes, yes, Bill Morneau is the finance minister, not Edgar Benson, who was Pierre Trudeau's first finance minister. But the similarities are uncanny.

As you know, the Liberals pledged to finance their many spending commitments through a small federal deficit of no more than $10-billion in the first year. But "at this point in time that statement is no longer operative."

Ah, Ron Zeigler, the infamous aide who explained away the many mendacities of the Nixon administration. Mr. Zeigler was Richard Nixon's press secretary when Mr. Benson was Pierre Trudeau's finance minister. Like his son, Pierre Trudeau had ambitious spending plans – he called his the Just Society – that couldn't be met with the revenues at hand. And so even though the economy wasn't in recession, Mr. Trudeau had Mr. Benson introduce a modest deficit in the 1971 federal budget. And that was that.

The nation's finances became a dreary succession of headlines: "John Turner quits in disgust as Trudeau's finance minister." "Joe Clark vows budget will tackle deficit." "Clark government defeated over budget." "Mulroney government promises to finally rein in deficit." "Mulroney government fails to rein in deficit." "Chretien confronts debt crisis."

Between 1995 and 1997, finance minister Paul Martin finally, painfully brought the budget back into balance. If you're in your mid-thirties or older you'll remember the overcrowded waiting rooms, overcrowded classes, deteriorating roads, increased homelessness, layoffs in the public service, public servants' strikes, and on and on. Yet bad as it was – and it was awful – by the early 2000s the federal and provincial governments were back in the black, paying down debt and reinvesting in hospitals and schools.

But man is born into sin. Provincial governments began running deficits in order to finance "strategic investments," which is always how it starts. The Harper government reluctantly fought the 2008-09 recession with deficit spending; it took half a decade of painful cuts to get the books back into the black. (Some will say that a deteriorating economy would have created a deficit this year regardless of who was in charge, but anyone who knows Stephen Harper knows he would have ordered his finance minister to balance the books this year no matter how much blood had to flow.)

And now, for the first time since 1971, a federal finance minister is taking the budget out of balance even though there is no recession. Then, it took two-and-a-half decades to bring things back under control. Maybe we should start a pool on how long it will take this time. If you remember Edgar Benson, don't join, because you might not live to collect.

WHAT YOU SHOULD KNOW THIS MORNING

By Chris Hannay (@channay)

> Today's budget, which will be released at 4 p.m. (ET), will feature new investments for indigenous people, The Globe's Robert Fife and Bill Curry are reporting. Meanwhile, here's a full look at the state of Canada's economy heading into the budget.

> Bombardier is defending its plan to outsource jobs to Mexico and China, even as it seeks $1-billion in aid from the Canadian government. "Bombardier is a global company and we have to take advantage of opportunities to grow our business and market presence on a worldwide basis," a company spokesperson said.

> A lawsuit alleges the federal government's $15-billion arms deal with Saudi Arabia is illegal.

> The United Nations is asking Canada to restore its funding for the UN group that works with Palestinian refugees. "In the political desert of the Israeli-Palestinian conflict, in terms of solutions, you need at least to give some hope to the Palestinians, and much of that hope, I'm afraid, these days comes from the education programs of UNRWA, the health programs that are provided to the Palestinian refugees," UN High Commissioner for Refugees Filippo Grandi told The Globe.

> And the swearing-in of the seven new senators has been delayed, as one of the seven doesn't yet meet the constitutional requirement of owning property in the Quebec district he represents, sources tell The Hill Times.

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WHAT EVERYONE'S TALKING ABOUT

"[Former Supreme Court justice Ian] Binnie's report notes that senators, as independent legislators, authorize their own expenses. There are guidelines on what is Senate business, but there's still a lot of subjective choice in them – a senator, Mr. Binnie noted, can pick any issue he wants as his interest, even if no one else thinks it's worthwhile. [Senator Colin] Kenny picked security issues. "He essentially made and pursued his own agenda at public expense," Mr. Binnie said." – Campbell Clark (for subscribers).

William Thorsell (Globe and Mail): "Senators are not elected. They are not representative by proportion of the population. But the Constitution says they are pretty well equal in power to the people we elect. They must not be allowed to use that power against the will of the House of Commons."

David Akin (Sun): "Too many honourable senators still don't get it. Too many are still squawking that they are entitled to their entitlements."

Lawrence Martin (Globe and Mail): "While there are several positive signs, it is too early in the Trudeau stewardship to draw firm conclusions. The Senate still faces a major rebuilding job. For all the Liberals' good intentions, big tests have yet to come."

Sherry Cooper (Globe and Mail): "While it's clear that the beleaguered energy sector is driving these unemployment highs, there is one strong facet of the current Canadian economic climate: housing in British Columbia and Ontario, driven by Toronto and Vancouver. The government would do well to avoid stunting the growth in that sector given the fragile economy."

Margaret Wente (Globe and Mail): "When I grew up, kids were urged to be blind to differences. Now they're urged to see nothing but. Perhaps one day we'll stop trying to identify ourselves by labels and just call ourselves human beings. Some people think that would be terrible. But I think it would be rather nice."

Chantal Hébert (Toronto Star): "The Liberal success is the opposition's failure. The two main opposition parties have not had a really good week since the election. Party leaders Rona Ambrose and Thomas Mulcair might as well be firing blanks at the rookie Liberal government."

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