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What a surprise…

Canada’s deficit to balloon by $18-billion, economists say

The worsening recession will drive Ottawa $18-billion deeper into deficit over the next two years, a leading economist is predicting…

Toronto-Dominion Bank says Ottawa’s budget shortfall will be $5.5-billion deeper in the 2009-10 fiscal year starting April 1 because the slowing economy will cut tax revenue even more than expected and rising joblessness will require $1-billion in extra employment insurance payments from federal coffers.

This would drive the deficit to $39.2-billion in 2009-10 instead of $33.7-billion as the Harper government predicted in January…

The fiscal year hasn’t even begun, and they’re already off their deficit forecast by about 15%. And next year? Try 40%:

But the gap widens even more in 2010-11… They’re forecasting that Ottawa will be $12.5-billion poorer than expected in that fiscal year due to lower than anticipated tax revenue as well as $2-billion in extra EI payments. This would push the 2010-11 deficit to $42.3-billion instead of the $29.8-billion projected.

The Globe tries to amp up an already shocking story by claiming these are the largest budget deficits on record, but of course that’s only in nominal (dollar) terms. As a share of the economy — which is the only meaningful way to measure the burden — they’re nowhere near where they were in the mid 1980s: roughly 2.5% of GDP, versus 8%.

But jeepers. The trend line sure isn’t good. There will be no “quick return to surplus” such as the Tories promised. To save their government, they have blown a hole in the budget that will take years and years to repair.

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