It's worth remembering that during Canada's last recession, the federal government had no compunctions about running a deficit to spend the country back to recovery.
In 1993 alone, Ottawa raised spending by $8-billion, saw its revenues shrink by $2-billion and watched its deficit grow by $7-billion, reaching a record high $39-billion.
Fiscal policy has been overshadowed by that experience ever since. In the 1990s, policy-makers eradicated the deficit; in the 2000s, they avoided a repeat.
Now, though, Canada is flirting with recession once again. Deficit financing is not an option; memories are still too raw. But there is no room to manoeuvre; the surpluses are now hovering around zero.
How did it come to this? The Finance Department's fiscal tables show that Ottawa has been so busy cutting cheques and cutting taxes that it has wiped out about $60-billion a year in potential surpluses that could have been directed to tackle any number of problems.
While the Conservatives may be blaming the Liberals, and the Liberals blaming the Conservatives, the key to the disappearing surplus lies in the frequency of elections.
Since 2000, we have had four federal elections. We have also watched federal surpluses dwindle from a peak of $20-billion in 2000, to nothing at all this year - or perhaps even a deficit.
Where did it all go? Much of it went to pre-election or campaign attempts to woo voters with their own money - either through income-tax cuts and health-care transfers by the Liberals, or through cuts to the Goods and Services Tax, increased military spending and too-numerous-to-mention small but targeted programs and tax incentives by the Tories.
"There has been no master plan in how to deal with the surplus," says Peter Dungan, professor of economics at the University of Toronto.
If taxation policies were the same now as in 2000, and spending patterns had stayed the same too, Ottawa would be showing an enormous $60-billion operating surplus this year.
"We reduced the debt, we reduced the tax level, and spending was running at a pretty good clip. It looked like Christmas," said Dale Orr, chief economist at forecasting firm Global Insight Canada.
Spending has gone from 12.1 per cent of the size of Canada's economy in 2000, to above 13 per cent now. The climb is worth about $15-billion in extra annual spending, with the total bill officially forecast to surpass $208-billion this fiscal year.
Because of tax cuts, revenues have declined from 18.1 per cent of the economy in 2000, to just 15.1 per cent this year — the lowest since 1963. The decline means a loss of about $40-billion a year.
Add to that a few billion that would have been saved on debt charges if all that extra money had gone to paying down debt, and we're facing a $60-billion-a-year fund of forgone opportunities.
Instead, the 2008-09 surplus, according to Finance Minister Jim Flaherty, will come in around $3-billion - slightly above the $2.3-billion projected in the last budget.
Or, according to some economists, it will be close to zero or slightly less, especially if commodity prices continue to slide and the U.S. financial crisis strikes at Canadian corporate profits, which in turn hurts Ottawa's revenue stream. Others disagree and say our economy still has enough momentum to pay for the government's spending and tax plans, but warn that next year will be a close call.
It's too easy, however, to say the surplus has been squandered. Canadians do have something to show for their taxation money in the past eight years.
Substantial increases in transfers to the provinces have meant that provincial budgets are now far healthier, and federal-provincial bickering has dropped to a dull roar.
Much of the federal transfer money was earmarked for health care, and indeed, health care is not in as dire financial straits as in 2000. Ditto for education.
