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Personally, I do not fuss about a potential federal deficit in 2016/17. There will probably be some modest deficit 2016/17, and then possibly a larger deficit in 2017/18 as most of the more ambitious spending initiatives take a year or two to set up and get running at full speed. While any deficit is a bit disturbing to those of us who grew up in households where debt was mostly viewed as irresponsible, with a federal budget of $280B, a deficit of $10B or $15B is certainly modest should not be the cause of a national panic, as long as the spending which contributed to the increased deficit was useful and well conceived to begin with.

No, I am more worried about the provincial governments. If we end up heading into a recession (there is room for debate about whether that is currently happening), the existing provincial deficits could grow considerably, just like they did in 2008-09. Add to that the rapidly shrinking pot of money for equalization because falling petroleum prices have "equalized" the provinces more effectively than federal taxation, and you will likely see some serious pain in the Maritime provinces and in Quebec. I cannot even articulate my feelings about the fiscal disaster that has been playing out in slow motion in Ontario over the past five or so years.

Anyway, if people are concerned about the fiscal situation of governments and the possibility of an impeding recession, it is worth spending 15 minutes or a half-hour perusing the Fiscal Monitor, which is a truly excellent document that describes where the federal government and each province is at ( see ). Look at what happened in 2007-08 and 2008-09 as the last recession took effect. Look at where the federal government and the provincial governments are currently situated and then mentally overlay a somewhat lighter version of the last recession. The results in most provinces are not pretty.

Above all, be thoughtful of what has happened in the past and what is currently happening. The paid political hacks on both sides of the political spectrum will come out with the usual nonsense of "Trudeau is spending Canada into bankruptcy" or "Harper gutted Canadian tax revenues which resulted in a deficit." The reality will be much more complex and will have very little to do with any political decisions, past or present. Neither Harper nor Trudeau caused oil to fall into the US$20s, neither Harper nor Trudeau caused growth in China to slow, and if a world recession does ultimately drag Canada down too, that certainly is not a mess of our own making.

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