Umm....about that deficit? Actually, it's not as bad as we thought.

I was shocked - SHOCKED - when I saw how much the deficit has increased according to the Fall Economic Statement yesterday.  Lots of people were freaking out.

Turns out, it sounds much worse than it actually is. 

Rough math, Canada’s deficit is at like 2.1% of gdp….. A little context: The U.S is at like 6%, The EU guardrail is 3%. The sky is in fact; not falling #Cdnpoli

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— booth4scartown.bsky.social (@booth4scartown.bsky.social) December 16, 2024 at 1:36 PM

Correct, don't let anyone tell you $61B is a terrible deficit. Canada has a larger population and much higher GDP than when Harper was PM. There are reasons for Trudeau to step down. The budget isn't one of them. #cdnpoli #bcpoli #onpoli

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— elcanaco.bsky.social (@elcanaco.bsky.social) December 16, 2024 at 7:59 PM

Dale Smith explains: 

 ...last year’s deficit was larger than expected because the government booked a bunch of legal settlements—primarily for the Indigenous communities—onto last year’s books (which is probably also why the Public Accounts have been delayed). These were one-time costs, so that means the deficit can continue to decline in the future, and economist Armine Yalnizyan noted that this was essentially a gift to the next government because it’s off their books, and they can make it look like they were more prudent managers when that’s not necessarily the case. Nevertheless, the government didn’t try to tease or hint that this was coming, which really makes you wonder about whoever is trying to decide on their communications strategy.

With all the goings on, there's probably no interest in why the 2023-24 deficit grew from $40B to $62B.

Just in case: ~75% due to contingent liabilities related to Indigenous rulings/awards; rest due to lower tax revenues.

Details: https://t.co/0VvSbWBIh9 #cdnecon #cdnpoli pic.twitter.com/UlWIpKDJQW

— Trevor Tombe (@trevortombe) December 16, 2024

...

The biggest ticket item in the FES is the extension of the Accelerated Investment Incentive. This is a huge deal. This allows companies to save taxes when they invest, and only when they invest. It will cost $17.9B in foregone revenue over the next 6 fiscal years.

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— Kevin Milligan (@kevinmilligan.bsky.social) December 16, 2024 at 3:44 PM

Next, debt to GDP. We put on some debt during the pandemic. (Which was the right thing to do!) We have now knocked a few points off it. (Which is the right thing to do!). I'm hoping to see this trend continue in the FES. (It's the right thing to do!) We are nowhere near 1995 levels. This is fine.

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— Kevin Milligan (@kevinmilligan.bsky.social) December 16, 2024 at 1:00 PM

Finally, here's the deficit to GDP. As a rough line, I'm pretty comfortable so long as the defict is under 2% of GDP. (We can run deficits of that size forever and still have Debt/GDP fall. Sustainable fiscal policy is about Debt/GDP.)

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— Kevin Milligan (@kevinmilligan.bsky.social) December 16, 2024 at 1:14 PM

So the next government will benefit from this?  I can't imagine that Poilievre and his cons will be thanking Trudeau for it.

And there is this, too:

Fun fact: Canada has the lowest deficit among the seven G7 countries.....#cdnpoli

— Rod Mickleburgh (@rodmickleburgh) December 17, 2024

And remember this, too:

Final report on foreign interference in Canada will be released no later than January 31, 2025.

Early election? sure, but not before the release of that inquiry. Too many rumors about Chinese, India, Russian interference & foreign countries wanting Pierre Poilievre elected.

— J Hunter🍁 (@MrJoKeR604) December 17, 2024