In government spending and deficits Canada's now No. 1 in the world - Financial Post

Unproductive public spending outstripping economic growth will be our real albatross threatening prosperity in years ahead

The International Monetary Fund released its semi-annual Fiscal Monitor report last week. No surprise: it projects bigger deficits for all countries for 2020.

What is surprising is that Canada will have the distinction of running the largest deficit among all countries — advanced, emerging and developing — at 19.9 per cent of GDP. ... It’s almost double the average deficit for Euro area countries (10.1 per cent of GDP).

Here’s another kicker. Spending by all levels of government in Canada is projected to hit 57.3 per cent of GDP in 2020. That’s more than at any time in our history, including both world wars...

Why is Canada running deficits bigger than every other country in the world? Is there a good economic reason for that? ...

The real reason for our sky-high deficit and spending is that we have been throwing money around much more liberally (no pun intended) than other countries. The prime example is the WE Charity scandal, in which, halfway through the student summer, a $1-billion program was going to bepiled on to an already generous commitment of $8 billion to assist post-secondary students. Another is the federal government’s decision to maintain bi-weekly $1,000 Canada Recovery Benefit cheques all the way to Sept. 25, 2021...

Note that the CRB is subject to a 50 per cent clawback for each dollar earned above $38,000. Because the payment does not differentiate between full-time and part-time work, however, most part-time workers will get the entire benefit — unlike full-timers paid the same weekly wage. Thus the CRB will act as a work disincentive, causing many part-timers to delay joining the work force.

Overall, so much federal money has been spent that average Canadians have more personal income today than they did pre-COVID — even though average employment income has fallen dramatically. Doling out money may be a politician’s dream, but it will be a nightmare for our children and grandchildren when the bill comes due.

Read the full Jack M. Mintz article Here.