While We Burn & Our Politicians Dither, Spending Cuts—Not Higher Taxes—Saved Canada!

By John Sykes

Canada was failing. Our often-critized neighbors to the North were the subject of political humor and buffoonery. The Wall Street Journal writes:

When Jean Chretien became prime minister in 1993, Canada faced a fiscal and economic breakdown. The government's share of the economy had climbed to 53% in 1992, from 28% in 1960. Deficits had tripled as a percentage of gross domestic product over the prior two decades. Government debt was nearly 70% of GDP [Ours is approaching 100% fast] and growing rapidly. Interest payments on the debt took up 35 cents of every tax dollar.

Unlike our liberals, caught up in a venal game of buying power with our tax dollars, “Liberals up there listened to voters, and their economy is now growing faster than ours.”

Mr. Chretien and his finance minister, Paul Martin, took decisive action. "Canadians have told us that they want the deficit brought down by reducing government spending, not by raising taxes, and we agree," Mr. Martin said. The new administration slashed spending. Unemployment benefits were cut by nearly 40%. The ratio of spending cuts to tax increases was nearly 7-to-1. Federal employment was reduced by 14%. Canada's national railway and air-traffic-control system were privatized.

Hey. It worked just like it has in many other examples.

The economy rebounded. Between 1995 and 1998, a $36.6 billion deficit turned into a $3 billion surplus. Canada's debt-to-GDP ratio was cut in half in a decade. Canada now has faster economic growth than America (3.3% in 2010, compared to 2.9% in the U.S.), a lower jobless rate (7.2% in June, when the U.S. rate was 9.2%), a deficit-to-GDP ratio that's a quarter of ours, and a stronger dollar.

Canadians now look back at us as they move forward. They know!

… former Canadian Ambassador to the U.S. Allan Gottleib writes: "If we want to see what would have become of Canada had we not lived through the difficult changes, we need look no further than Washington, D.C., where unreformed entitlements and undisciplined borrowing are hobbling America's power to be a world leader."

Why is it that real world, real time examples like this don’t take root here? Is it abuse of and love for political power? Time and time again history has proven that cutting spending not raising taxes is the answer!

Does President Obama continually insist on raising taxes because this debt crisis will make his long game, income redistribution, happen sooner?

So we burn as Obama fiddles and a useless, hopeless Congress dithers and postures ….