Good morning. The new federal budget offers a leaner public service, a louder military and a much bigger deficit – more on that below, along with Montreal’s transit strike and People’s Sexiest Man Alive. But first:

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• Conservative MP Chris d’Entremont crosses the floor to the Liberals

Although Donald Trump’s name doesn’t actually appear in the 2025 federal budget, the U.S. President’s trade war and its threats to Canada’s economy are all over the 500-page document. Yesterday, Prime Minister Mark Carney unveiled his blueprint to counter American protectionism, with nearly $90-billion in new spending and a promise to spur $1-trillion of investment. But it comes at a cost: The deficit is ballooning, federal jobs are on the chopping block and immigration is about to shrink – fast. Let’s take a look at what’s up, what’s down and what’s out in the federal budget.

UP: The deficit

It’s expected to clock in at $78.3-billion this fiscal year, which is almost twice the amount forecast in the 2024 fall economic statement. That works out to 2.5 per cent of Canada’s GDP, though the budget predicts its deficit-to-GDP ratio will decline over the next few years, hitting 1.5 per cent by 2030. Still, Randall Bartlett, senior director of economics at Desjardins, thinks the markets will be pretty sanguine on the deficit. Stacked up against other G7 and major global economies, “Canada is among the cleanest dirty shirts in the fiscal laundry basket,” he told The Globe.

DOWN: The number of federal employees

To shrink the work force to its 2022 numbers, Ottawa plans to cut 40,000 jobs in the next five years. It’s not exactly the DOGE-level slashing seen in the U.S., and the federal government believes it can hit that target largely through attrition and early retirements. It says the cuts will save $1.5-billion by 2031, and $82-million each year after that.

WAY DOWN: Immigration levels

Canada will admit 380,000 permanent residents next year, down from the Trudeau government’s annual intake of 500,000. The federal government also further hacks away at the inflow of temporary residents: Next year, admissions will tumble to 385,000 from this year’s target of 673,650. And in a move likely to frustrate colleges and universities, it will halve the number of international students who can come here, admitting only 155,000 people in 2026.

UP: International researchers

The U.S. brain drain could be Canada’s gain – the budget commits $1.7-billion to recruit top talent from other countries, including 1,000 “exceptional international researchers” to fill university chairs.

OUT: National souvenirs

No more soapstone carvings and cans of maple syrup – the federal government has ended a program that let cabinet ministers dole out souvenirs as official gifts to foreign dignitaries.

DOWN: Medical marijuana for vets

The budget includes a page or two from each major federal department laying out their plans to find the “ambitious” internal savings that Finance Minister François-Philippe Champagne requested in July. Most descriptions lean toward vague, high-level summaries, but some departments got very specific (see: the souvenirs above). Veteran Affairs and the RCMP said it would no longer reimburse its members $8.50 per gram of medical marijuana, instead capping those claims at $6. They expect that’ll save $4.4-billion over four years.

UP: Dollars for defence

Ottawa is boosting defence spending by $84-billion over the next five years, with much of that money going to military pay raises, new equipment and infrastructure repairs. Will that mean Canada meets its NATO commitment to spend 3.5 per cent of the GDP on the military? The budget doesn’t say. But it frames the investment as putting Canada on a war footing, contending that the country needs a stronger defence “in an increasingly divided and dangerous world.”

UP: Mentions of defence

No surprise, then, that the budget talks a whole lot about defence, dropping the word nearly 150 times. Justin Trudeau’s first budget didn’t crack 20 mentions.

WAY UP: Mentions of investment(s)

Nearly 800 of them, signalling the budget’s lofty goal to bring in $500-billion in private-sector spending over the next five years. To help get there, the government is proposing a “productivity super-deduction” – a cluster of tax incentives that allow companies to write off their investments in buildings, machinery and equipment more quickly. But most of those incentives had been announced already, and the budget doesn’t mention lowering corporate taxes, despite the Liberal Party’s flirtations with a rate cut.

OUT: The luxury tax on fancy planes and boats

Apparently, it just costs too much to collect. The government is also