Federal Government Surplus / Deficit (1989-2009)

This chart shows how Canada's Federal Government under PM Chretien pursued the necessary strategy of cutting expenditures to return federal finances to a slight surplus. The generation of revenues and the cutting of expenses will be looked into further, program by program, to determine how this has affected provinces and federal services especially the military. Despite the problems the cuts generated it was necessary to pursue to avoid near bankruptcy (see Greece 2010). We can also see that the surpluses that were considered 'massive' in the media were hardly enough to offset the previous decade's prolific spending and deficits.

The period under PM Harper when the world was hit by a massive recession, and Keynesian economics was brought back into favor among Western democracies will also need to be examined. In a period of a few years the decrease in tax revenues and a massive increase in spending sent the federal government back into huge deficits, that will likely erase all the gains from the surplus years.

The analysis of federal finances must take into account the cyclical economy (business cycles). Politicians are all to eager to take responsibility for strong finances through the crest of the business cycle, and to eager to assign blame for poor finances on the weak global/national economy. Proper analysis must look into how the government grew spending on poor programs, or how previous governments helped to grow the economy in the long-run (signing free trade agreements, eliminated inter-provincial trade barriers etc.).