Sent to you by nigel via Google Reader:
Eighteen months ago, I posted a brief history of the federal budget surplus, based on data up to the end of fiscal year 2005-6 - that is, up until the Conservatives took power. At the time, I said:
After ten years of surpluses, we can perhaps breathe a little easier. The debt is less and less of a burden, and the cost of servicing it is almost back to what it was in the 1960s. So now that the deficit is not the burning preoccupation it once was, we can start thinking of other priorities. Do we ... decide to cut taxes? Or do we ... decide to increase spending?
It would appear that Stephen Harper's government has done both. The Department of Finance will be releasing the final numbers from 2007-8 in a couple of weeks, and I'll revisit the graphs in that brief history post when they come out.
So today I'm going to look at the trends in the monthly numbers on revenues and expenditures, as published in the Fiscal Monitor. These numbers are pretty noisy, especially around the beginning and the ends of the fiscal years, so I've smoothed them by taking 12-month moving sums. Here is what has happened to revenues and expenditures (program spending + debt service charges) since April, 2006:
Sometime last fall, federal government revenues started to plateau - the result of slower growth and tax cuts. But program spending continued to grow (debt service charges were either stable or falling during this period). If we were in a mood to indulge in a completely unjustified extrapolation of the trends in that graph - and apparently I am - we'd get something like this:
It's been a very long run, but the era of indestructible federal surpluses is over.
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