The federal budget that came down Tuesday is a disturbing reminder of how fragile our economy remains. Instead of a whopping surplus, Finance Minister Joe Oliver delivered the thinnest of margins.
Last year at this time, Ottawa was predicting a surplus of $6.4 billion for 2015, followed by $8 billion for each of the following two years.
Instead, the revised target for this year is just $1.4 billion, with $1.7 billion and $2.6 billion to follow. That is a huge disappointment for the Harper Conservatives.
The Tories have been planning for this day ever since they formed a majority government in 2011. The script was always clear. Scrape, claw and hold back every nickel, so that come the 2015 election, there would be money to spend. But now, it appears, those hopes are largely dashed.
There are some goodies. The small-business tax rate will decline from 11 per cent to nine over the next four years. Employee contributions to employment insurance will fall by 21 per cent over the next two years.
Senior citizens will be allowed to draw down their registered retirement funds more slowly, if they wish. And the limit on annual contributions to tax-free savings accounts goes up, from $5,500 to $10,000.
There is also a new tax credit to help people with disabilities make their homes more accessible. And sa国际传媒鈥檚 security forces get a boost.
But this is not the kind of expansive budget the government had planned. And with this change in fortunes, the topography of the next election, due no later than October, has been fundamentally reshaped.
Originally, that contest looked like being a fiscal auction. With cash in hand for years to come, the question was how to spend it.
The Conservatives might have offered major tax cuts, perhaps a reduction in the goods and service tax or a sizable whack out of personal income taxes.
The two main opposition parties, meanwhile, would likely have promised generous spending lifts to rebuild the social safety net.
None of these options are now politically viable, at least without a return to deficit financing, which entails hazards of its own. The money isn鈥檛 there.
It鈥檚 hard to say how this all plays out. Do voters penalize the Tories for serving such thin gruel? Or do they take to heart the challenge facing our economy, and decide to stay the course?
Do they vote for an NDP or Liberal program of limited reinvestment, accepting that funds aren鈥檛 available for wider action? Or do they demand more aggressive measures, the risk of a deficit be damned?
These matters, no doubt, will be settled in October. But other questions linger.
The reality underlying Oliver鈥檚 disappointing presentation is this. Last fall鈥檚 decline in oil prices inflicted a devastating blow on sa国际传媒鈥檚 resource sector.
And more worrying still is the continuing malaise that besets Ontario and Quebec. Some of the major industries in central sa国际传媒, such as automobile manufacturing and textiles, have not recovered from the recession of 2008 and perhaps never will. Many of those jobs are now in Asia or Mexico and won鈥檛 return.
Which brings us to the central dilemma posed by this budget. If Ottawa has such difficulty paying its way, how are working families to do better?
Family debt is at an all-time high in sa国际传媒. If it takes the federal government seven years to eke out such a marginal recovery in its finances, how will any of us ever repay our loans?
The budget is a massive document. There might be more to it than meets the eye at first.
But the initial sense it generates is one of foreboding. There are still hard times to come.
