Before this economic downturn hits bottom, it's almost a given Mr. Flaherty will wear the Deficit Jim label as the Conservative who put the red back into Canada's budget books for the first time since they were balanced in the mid-1990s.

That would be an ugly legacy for the charismatic Mr. Flaherty, who served as Ontario's finance minister in 2001 when federal Liberals were racking up the largest surpluses in fiscal history.

It's been almost two years since his most notorious flip-flop - the Halloween announcement the government would break its pre-election promise and start taxing income trusts - and now he's careening toward another big-gulp policy reversal. Mr. Flaherty, it seems certain, will have to renege on his hell-or-high-water vow that the Conservatives would not lurch into deficit.

He's now waffling on that campaign promise in the face of $10-billion deficit projections by some economists, a red tidal wave that could not be rebuffed with spending cuts or tax increases. More...