‘Those costs are likely to grow’: How Pierre Poilievre’s budget letter signals a new deficit spending consensus

Rudyard Griffiths and Sean Speer discuss Conservative Party leader Pierre Poilievre’s recent letter highlighting a $42 billion federal deficit benchmark for the upcoming November 4th budget. They argue that this position represents a fundamental shift where the Conservative Party has now accepted the former Trudeau government’s deficit spending levels as the new baseline, effectively abandoning the balanced budget consensus that once dominated Canadian politics. They discuss the economic consequences of normalized deficit spending, and warn that Canada risks following the path of France and the U.K., where unsustainable fiscal policies have forced painful austerity measures or tax increases. You can listen to this episode on Amazon, Apple, and Spotify. Program Summary This is an automated summary. Please check against delivery. A consensus appears to be forming around a new and sobering fiscal reality: the era of large, persistent federal deficits is now a permanent feature of the political mainstream, accepted by the major parties that once battled over balanced budgets. The conversation, centered on an upcoming federal budget, dissects a recent letter from Conservative Leader Pierre Poilievre that effectively establishes the spending levels of the Justin Trudeau government as a new floor. Rather than advocating for a balanced budget, the Conservative position is portrayed as accepting a deficit potentially as high as $42 billion—a number that would have been unthinkable for the party in a previous era. This stance places the Conservatives in a surprising alignment with their political rivals, creating a bipartisan normalization of substantial deficit spending. This shift marks a fundamental departure from the balanced-budget consensus that defined Canadian politics in the 1990s and early 2000s. The discussion frames this change as not merely a fiscal adjustment but a significant political and intellectual defeat for the principle of fiscal restraint. The concern is that by severing the direct link between government revenues and expenditures, a dangerous precedent is set, socializing citizens to believe that spending can be consistently financed on the nation’s “proverbial credit card.” The implications of this new consensus are presented as profound and multi-layered. First are the direct public finance costs. With federal interest payments reaching $53 billion in the previous year, a massive portion of public funds is diverted from other national priorities. This money, it is argued, could have been channeled into healthcare, enhanced support for vulnerable populations like those with disabilities, or even tax cuts designed to stimulate economic growth. The choice to run large deficits is therefore not cost-free; it represents a conscious decision to prioritize current spending over future flexibility and other potential investments. Beyond the balance sheet, the conversation warns of broader economic consequences. In a post-pandemic world, global debt-to-GDP ratios have soared to 100%, resetting interest rates to a “permanently higher plateau.” For a medium-sized economy like Canada’s, which borrows in a non-reserve currency and faces lousy growth prospects, engaging in large-scale deficit spending commits the country to a future of growing interest costs. These costs act as a drag on the entire economy, as government borrowing pushes up interest rates for everyone—leading to higher costs for mortgages, car loans, and credit card debt for individuals and corporations alike. This dynamic, it is suggested, contributes to a kind of economic “scleroticism” or entropy that has gripped the nation. Perhaps the most poignant argument advanced is that this fiscal path is corrosive to the national character. The political class, across party lines, is seen as telling Canadians that they can have $1.10 in government services while only being willing to pay $1, or even 90 cents, for them. This refusal to reconcile public demands with a willingness to pay fosters a broken political culture, one that avoids difficult conversations about trade-offs and sustainability. The discussion draws parallels to current fiscal crises in other advanced economies, such as France and Great Britain, suggesting they offer a glimpse of Canada’s future. These nations, struggling with similar growth and debt challenges, now face an unenviable inflection point: they must either raise taxes, slash government spending painfully, or, in a worst-case scenario where bond market confidence evaporates, be forced to do both simultaneously. Canada itself underwent a similarly brutal period of readjustment in the 1990s, a memory that underscores the potential human cost of the fiscal reckoning that may lie ahead. The transformation is framed as the defining legacy of the Trudeau government, which has permanently increased the size and scope of the state to a point where it is now the accepted baseline for all parties. In this context, the role of the official opposition is critiqued. Historically, opposition parties like the Reform Party created the political space for governments to make tough choices, as seen in the 1990s. By validating a $40-billion-plus deficit, the current Conservative leader is seen as having missed a critical opportunity to be propositional—to advance a principled case for fiscal responsibility that could have shifted the entire debate. As the countdown to the budget announcement continues, the conversation concludes on a note of foreboding. The path of least resistance—of higher deficits and debt—is one that ultimately leads to higher taxes and greater economic strain. The new consensus may be giving Canadians the government spending they want, but it is doing so by deferring the bill, with interest, to a future that looks increasingly precarious.