There is an argument to be made for running deficits sometimes, and it was one the federal Liberals made during their successful election campaign.
Originally, the budget deficits were going to be about $10 billion annually, with a return to balanced budgets within three years.
Now we’re looking at almost $30 billion in budget deficits, and no return to balance until after the next election, when the balancing job may or may not be the Liberals’ to undertake.
There is nothing wrong with good debt. When people say the government should be run like a business, or budgeted like a household, they often ignore the fact that virtually every business, large and small, carries lines of credit, loans, and other forms of debt to finance its start and expansion. Households borrow for mortgages, cars, and education.
Good debt turns to bad when it becomes unsustainable, and when it is used to finance day to day expenses that should be covered by ordinary sources of revenue. That’s as true of a family or business as anywhere else. If you’re using your line of credit for clothes and groceries and the heating bill, things are going badly wrong.
The Liberals told us that they were investing in Canada, and so they see this as good debt, as debt that will pay off in infrastructure and healthier, wealthier Canadians. Ultimately, if it works, we should see money flow back to the federal government in savings on social programs like EI as well as increased tax revenue as Canadians find good jobs and firms grow.
It will take time to see what the return on investment will be. The press and opposition parties will have to keep an eye on that investment over the next few years.