Canada has always fascinated me, slightly less land area
than the USA but with only about 10% of the population, that Trans-Canada
Railway and stories of incredible beauty and fishing and gnats. We have vacationed in Quebec City and Vancouver/Victoria and have visited Toronto and were always duly impressed. Admittedly,
much of Canada is frozen over, but rich in natural resources and expected to
gain millions of acres of fertile farmland and US emigrants as global warming
progresses and thaws some of the semipermafrost and converts the fertile US
south into desert...or ocean floor. Well, we’ll see about
that.
Canada is known for its more liberal political climate, supporting universal single-payer health care for example, so a September 23 WSJ article by
Mary Anastasia O’Grady, How Canada Saved Its Bacon: Deep cuts in government
spending pulled Canada back from an epic fiscal crisis in the 1990’s, caught my
eye and inspired a bit of research. The
article is about a former Canadian Finance Minister and later Prime Minister
Paul Martin warning the USA to get its fiscal house in order. The problem can be seen clearly in this comparison of the debt levels of the two nations. Click on the chart for a more readable version.
Martin and Prime Minister Chrétien, under whom he served as
finance minister from 1993 to 2001, are members of Canada’s “Liberal Party,”
whatever that means, but still cut federal spending by about 10% to reverse a
destructive trend in debt as a percent of GDP.
Cuts, according to the linked article, included closing of 52 hospitals and termination of thousands of
jobs, accompanied by large corporate and personal tax cuts to stimulate
economic activity and tax revenues.
The key phrase that caught my eye in the article was this:
The key phrase that caught my eye in the article was this:
What drove the left-of-center Liberals to shoulder the burden of downsizing government in the 1994 and 1995 budgets—Mr. Martin takes great pains to point out—was not ideology but "arithmetic." That is to say that everyone recognized that the magnitude of the debt, and the cost of servicing it, was unsustainable.
Well, if we had more “Liberals” like those in the USA, we
would have a lot less need for “Conservatives.”
Of course there are “Conservatives” in Canada, and they are unhappy about the recent reversal of the downward trend in Canadian debt as a percent of GDP. They even run a DebtClock showing that the total is approaching $592B.
And “Progressives” argue that interest rates are low and
debt is no big deal and spending should resume.
You can read their arguments and see a nice chart here.
Note: Release of government financial information seems to
lag a good bit more in Canada than in the USA.
Official debt numbers only seem to go through 2008. But here is an article including a longer
term chart on Canadian debt as a percent of GDP, just for comparison with the
one I created using unofficial data for 2009-2011.
Canadian Liberals...
ReplyDeleteYes, Canada is more liberal. But their Parliament has been much more functional at setting policy and budgeting. Part of the problem of dysfunction in Congress is the extreme partisanship and ideological warfare. Moderate Republicans and Democrats are becoming a endangered species. And those on the widening extremes are seem to be less inclined to work on budgets and policies that will be interpreted as being a traitor to party hardliners. In congress there has become less and less respect for political and ideological differences. A large chunk of our debt problem has been our wars Iraq and Afghanistan. Obama led the Democratic charge to finish Iraq asap and go on to Afghanistan. That election campaign line probably helped him get elected. Many progressives (me), pacifists(almost me), and isolationists (not me) found these wars to be ill advised at best; and the costs for these wars represent a huge portion of our deficit spending. On the bright side, employment of military and related industries has helped unemployment. If Romney gets elected we will have a slightly greater chance of going to war with Iran.