Oh, Tuesday.

Stock up on the Tums, scotch and weed for tomorrow (but please inebriate responsibly). It’ll be a day of stress and surprise. Maybe shock and awe?

In the dawn we get the latest inflation stat. The betting is it’ll be higher than the last 2-handle ones. Maybe 3%. Maybe a titch more. Blame that on $85 oil, Iran maybe, and $2-a-litre gas. In any case, it may temper expectations for a June interest rate cut – especially if the other thing on Tuesday lands hard.

That’s the federal budget. Yeah, the one that’s had more leaks than Cody on a long walk. We know it’s got a huge housing agenda – including fresh billions to try and spur construction, those 30-year mortgages, the fatter RRSP homebuyer plan, a renter’s bill of rights and gobs of federal land to be leased to developers.

As the Libs fight for their political life (young voters are now 2-to-1 supporting the Cons), they’re promising 3.9 million new builds in the next eight years. Of course, it’s fiction. “Laughable,” says Scotiabank’s Derek Holt. “Canada would have to sustainably ramp up annual housing starts to much more than double what has ever been achieved in any prior year and despite labour shortages. The housing plan they have announced has some constructive elements, such as training for the skilled trades, but its targets are a pure and simple photo-op.”

The real problem with what our PM and non-financial finance minister do on Tuesday is encapsulated in the nifty chart below. Remember how the federal government went nutso during the pandemic? The deficit of $33 billion that the Libs shamefully ran during the boom years of 2019-20 turned into a sea of red ink – $327 billion in the hole – when Covid hit. Those CERB bucks flowed like water cascading down Niagara Falls. Our debt bloated to over $1 trillion.

Well, guess what, little beavs? It’s happening again.

“Ottawa is sending it out faster than it comes in on the assumption that the skies stay sunny forever; this assumption through the 1970s and 1980s ultimately led to a crisis,” says Holt. Incredibly, with the pandemic in the rearview mirror, the spending has not stopped. It’s jumped by a third from the pre-pandemic year of 2018 and within six years is slated to be a stunning 60% higher. By next year we will be back at Covid levels – and without a global health emergency, lockdowns, 14% unemployment, restrictions, free vaccines or hundreds of billions in emergency payments to laid off-people and gasping businesses.

As economists and this pathetic blog have pointed out repeatedly, if it were not for this Liberal-NDP spendfest (enhanced child benefits, more OAS for wrinklies, dentalcare, cheap daycare, pharmacare, Indigenous settlements, billions for housing) interest rates would be lower, and would likely already be heading down.

By the way, word is the feds will not only be spending more, but taxing more. The Hoovering of upper-income people (over $240,000 annual income) may be on the agenda, despite the fact our top tax rate is already plus-54%. Also look for the assault on private corporations to be resumed. The fact that successful people and entrepreneurs make an outsized contribution to the economy is (cynically) less important than giving more stuff to the bulk of voters (envy).

We’re now 18 months (or less) from the next federal election.

The deficit in the first nine months of this year was $23 billion. That’s up from $5 billion in the same period last year. Oops. Federal spending increased by 6.6%, or more than twice the rate of inflation, while tax revenues grew only 2.6%. Service charges on the federal debt of $1.2 trillion have ballooned by 35.6%. By the time Canadians vote the debt will be at least $1.3 trillion. It was $612 billion when the Liberals were elected. It sat at $765 billion when Covid arrived. Now we’re headed for $1,300 billion.

The saddest part of this?

People want more. It’s a steady whine and moan that governments should be everywhere, all the time – plowing extra funds into health care, paying for prescriptions, making real estate more affordable, spending on the military, building houses, giving away free heat pumps, plus enhancing pensions and financing families.

Apparently, we got the government young voters requested.

Enjoy Tuesday.

About the picture: “This,” writes Dave, “is Pedro.” So there.

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