The federal debt has come down $24.4 billion since the Conservatives came to power two years ago, thanks to the government underestimating the surpluses being generated.

But the era of huge unexpected surpluses is probably over now that the Tories have made good on their election promise to cut the goods and services tax by two percentage points. A one-point cut in the GST reduces revenue by about $6 billion annually.

As a result, Finance Minister Jim Flaherty expects only small drops of $3 billion or less in the debt going forward. His budget projections estimate debt of $444.5 billion as of Mar. 31, 2013, down only $12.6 billion from the $457.1 billion expected when fiscal 2006-07 closes in five weeks or so.

And there’s a real question about whether the debt will, indeed, keep going down, given the weakness in the U.S. and global economies.

The budget assumes that the U.S. will grow by 1.5% this year. Although that may mean a technical recession — with two quarters of drops in real gross domestic product in a row — its projections do assume that growth will resume, albeit slowly, in 2009 with real GDP up 2.4%.

Because Canada exports so much to the U.S., Canada tends to follow the U.S. economy. The budget is assuming increases in Canadian real GDP of 1.7% this year and 2.4% in 2009.

But there is a significant group of forecasters who think the U.S. could have a deeper and more protracted downturn.

If that happens, the Tories could be looking at a deficit this year and/or in 2009. Every one percentage point decrease in real GDP lowers the budgetary balance by $3.3 billion in the first year and $2.8 billion the following year. Currently, Flaherty is projecting surpluses of $2.3 billion in 2009 and $1.3 billion in 2010.

Furthermore, the budget doesn’t have much of a cushion if revenues don’t increase as much as expected, or unexpected expenditures come up.

The previous Liberal government set aside $3 billion a year in a contingency fund and also included a provision for what they called “economic prudence,” specifically aimed at the impact of weaker than expected economic growth. This started at $1 billion for the first year and got higher for each successive years after.

The Conservatives decided not to continue this formula. But they expect to reduce the deficit by at least $3 billion a year, with the understanding that this would be used as a contingency reserve if revenues were lower or expenditures higher than expected.