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article imageCanada's Finance Minister says deficit will hit $50 billion

By Bob Ewing     May 26, 2009 in Politics
Finance Minister Jim Flaherty says the federal deficit will reach $50 billion this fiscal year, an increase of more than $16 billion from a January forecast.
This is believed to be the highest federal deficit ever.
"We will run a substantial short-term deficit this year which I would estimate at more than $50 billion," Flaherty said Tuesday. "We are going through a deeper economic slowdown than anticipated."
He added that "the systemic stabilizers that we have automatically -- more employment insurance, a couple of billion dollars, plus more, and lower taxes -- are to be expected during a recession, which we are seeing. We also have the substantial auto payments that are going to be required."
Ottawa Bureau Chief Robert Fife said, "Government sources say half of (the deficit) is a result of falling revenues and having to pay more people unemployment insurance, and the rest of that money is the result of the auto bailout,"
Flaherty hinted the deficit would be "substantially more" than the government projected in January's 2009-2010 budget.
The initial deficit forecast was $34 billion, however, Flaherty said government revenues have been hit harder by the recession than expected.
The Liberals wasted no time in responding to Flaherty's announcement Prime Minister Stephen Harper suggested he may have to raise taxes to deal with the soaring deficit.
"Today at 2:23 pm in the House of Commons during Question Period, Prime Minister Stephen Harper admitted that he will not introduce another budget "until we need to raise taxes," the party said.
Harper, responding to a question about employment insurance, said in full: "When we did our pre-budget consultation, the Liberal party wanted two more weeks of employment insurance. So, we did five more weeks, plus all kinds of additional money for training for people, both on EI and not on EI. These are measures to help the unemployed in this recession. What we're not going to do is every two or three months come up with another economic policy, another budget, until we need to raise taxes. Our deficits are affordable but they will remain short-term."
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