The Conservatives plan to run budget deficits of $64 billion over the next two fiscal years, according to a senior government source, which marks a sharp reversal from predictions the Tories made only a few months ago.
Next year, the government will spend $34 billion more than it takes in, with a deficit of $30 billion slated for the year after, the official said.
The source added that the specific numbers have been leaked in order to stop rampant speculation about next week's budget.
However, the Tories plan to pull their budgets back into the black over the next five years, the source said.
"That's how long it will take to get out of deficit," said CTV parliamentary correspondent Graham Richardson, as the news broke Thursday afternoon.
"We've come a long way from balanced books."
Richardson noted that the deficit figure has been leaked early so that Prime Minster Stephen Harper and Finance Minister Jim Flaherty can concentrate on selling the budget's economic merits next week.
The Tories plan to table their budget, which will include billions of dollars for kick-starting the economy, in Parliament on Jan. 27.
"They've taken the big number and put it out before the budget," Richardson told CTV Newsnet.
Some of the budget's main pillars will include funding for infrastructure projects and unemployment insurance.
The $64 billion debt announcement marks a significant shift for the country's finances. Between 1998 and 2008, the Canadian government ran sizeable surpluses and paid down about $105 billion on the national debt.
Just two months ago, the Tories flatly dismissed that deficit spending was imminent and championed their conservative fiscal policies.
And during the fall federal election, Harper said repeatedly that his government would keep the country's finances out of the red.
But newly-minted Liberal international trade critic Scott Brison assailed the budget shortfall on Thursday and said it was the result of "reckless and irresponsible" Conservative policies.
During an interview on CTV's The Hill, Brison said that the Conservatives will try and blame the deficit on the global financial plague, when in fact, the shortfall is due to tax cuts and spending increases that have "weakened Canada's fiscal capacity."
Brison said that under the Tories, the $12 billion surplus they inherited from the Liberals - along with years of fiscal restraint - will evaporate.
"In three years, all of that progress will be eliminated," he said.
But Dale Orr, an economist with the Global Insight group, told The Hill that the GST cuts would have had little impact on the overall budget.
Orr explained that had the GST not been rolled back, the extra $11 billion of revenue would have been immediately plowed into debt repayment.
"Not much of that money would be helping us out in 2009 and 2010; it would have already gone to debt reduction," he said.
Deficits could become 'status quo' says budget watchdog
Meanwhile, a report released Wednesday by parliamentary budget officer Kevin Page warned that deficit spending could become "status quo" for Ottawa.
In fact, Page's report blamed the coming deficits on permanent tax cuts and spending programs implemented by the Tories since 2006.
In particular, the two per cent GST cut brought in by the Conservatives costs national coffers about $12 billion a year.
CTV's Chief Parliamentary Correspondent Craig Oliver said Thursday that the deficit is one of the largest in Canadian history, "but not as large as many people started to speculate."
Still, the deficit is partially the result of collapsing government revenues, which have shrunk as the global economy continues to slump, said Oliver.
On the bright side, Canada's debt-to-GDP ratio will come in at a relatively small 28 per cent next year, compared to a 56 per cent figure in the U.S., said Oliver.
In the early 1990s, that ratio was about 70 per cent.
"Canada is starting in much better shape," he said, noting that Japan's debt-to-GDP ratio could climb to more than 90 per cent next year.
With files from The Canadian Press
