Thursday, August 18, 2022
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
No Result
View All Result
Macdonald-Laurier Institute

Crowley in Roll Call, the newspaper of Capitol Hill: Deficit Reduction Lessons From Canada

October 16, 2012
in Columns, In the Media, Latest News
Reading Time: 3 mins read
A A

October 16, 2012 – Roll Call, the newspaper of Capitol Hill, has published an op-ed by MLI’s Brian Lee Crowley today, “Deficit Reduction Lessons From Canada.” He writes, “Bold and skillful politicians can take a plan far more rigorous than Bowles-Simpson or Ryan and turn it into a recipe for political and economic success. Americans know how bad the situation is; like Canadians, they might actually appreciate political leaders who acknowledge reality and deal with the budget as adults.” Full op-ed is copied below.

Roll Call is a newspaper published in Washington, D.C. Every issue is delivered directly to Congress and the White House.

 

Crowley: Deficit Reduction Lessons From Canada

By Brian Lee Crowley, Roll Call, October 16, 2012

With the selection of Rep. Paul Ryan as Mitt Romney’s running mate, the debate over America’s fiscal challenge now hovers like Banquo’s ghost over November’s election. Two plans are on the table to respond to that challenge: the Bowles-Simpson Commission’s report and the 2013 House Budget Resolution, known as the “Ryan plan.”

While many commentators denounce such plans as too draconian and politically unrealistic, Canada faced a debt crisis in the mid-1990s and adopted fiscal reforms that were far more muscular than what is proposed by Bowles-Simpson or Ryan. Canada shows the budget can be balanced in a few years, not decades, without jeopardizing the economic recovery or gutting the welfare state, as many critics fear.

In the mid-1990s the Canadian budget had been in deficit for two decades. A third of all revenue was being frittered away on interest on the debt. A Wall Street Journal editorial from Jan. 12, 1995, declared the country “has now become an honorary member of the Third World in the unmanageability of its debt problem.”

Deliverance came when the center-left Liberal government tabled its budget in February 1995. This document was a defining moment in Canada’s fiscal history.

More astonishing than the bold plans for a rollback was that Canadians did what they said. Total Canadian federal government spending fell by more than 7 percent over two years, while program spending (excluding interest) fell by almost 10 percent. As a share of the economy, federal spending fell from almost 22 percent to
19 percent during the same period. By January 1998, federal employment was down by 51,000, a drop of 14 percent.

Ottawa ran 11 consecutive surpluses beginning in 1997-98. With the federal government paying down debt and the economy expanding, total public debt plummeted over the following decade.

To take the full measure of Canada’s achievement, compare it with Bowles-Simpson and Ryan. Bowles-Simpson doesn’t ever cut absolute federal spending relative to the year before implementation. The Ryan plan does propose actual spending cuts from the status quo, but not nearly as vigorous as Canada’s.

By the fourth year of reform, total Canadian federal spending was still slightly less than it had been the year before reform. In contrast, in the fourth year of its projections, the Ryan plan anticipates spending almost 2 percent greater than its year-zero baseline, while Bowles-Simpson projects spending more than 10 percent greater. By the 10th year of reform, Bowles-Simpson projects federal spending to stabilize around 22 percent of gross domestic product. The Ryan plan aspires to reduce spending to just less than 20 percent in the 10th year.

Canada’s federal spending went from 21.5 percent of GDP in 1994 to 15.2 percent in 2004. The allegedly draconian Ryan plan calls for medium-term spending almost a third higher than the Canadian government actually accomplished.

Finally we come to the deficit and debt. In a mere two years, the Canadian government transformed a $32 billion deficit (4 percent of GDP) into a surplus of $2.5 billion. In contrast, neither Bowles-Simpson nor House budget resolutions even attempt to balance the budget in the medium term; they simply stabilize the federal deficit at about 1 percent of GDP. The Ryan plan explicitly calls for more red ink in each of the next 27 years.

These inadequate plans are all premised on the notion that reining in out-of-control public spending is painful and politically dangerous and must be approached defensively and fearfully. Canada’s experience was quite different. Once politicians explained why reform was indispensable, it was cheered on by the voters. Reforming governments, of whatever stripe, were consistently re-elected.

The U.S. faces a serious fiscal crisis, as all sides are beginning to recognize. The rather timid response of the two political parties is based on an underestimation of both the appetite of the voter for fiscal responsibility and an overestimation of the pain required to fix the problem.

As Canada shows, bold and skillful politicians can take a plan far more rigorous than Bowles-Simpson or Ryan and turn it into a recipe for political and economic success. Americans know how bad the situation is; like Canadians, they might actually appreciate political leaders who acknowledge reality and deal with the budget as adults.

Brian Lee Crowley is managing director of the Macdonald-Laurier Institute.

Previous Post

New book by MLI Senior Fellow Alex Wilner: Deterring Terrorism

Next Post

European style debt crisis could happen here: MLI study

Related Posts

Why conservatives are grateful for the society we have: Brian Lee Crowley in the National Post
Inside Policy

Canada’s conundrum of peak government and unfettered spending: Ken Coates for Inside Policy

August 17, 2022
Iran Is About to Murder Another Journalist: Mariam Memarsadeghi in the Tablet
Columns

Iran Is About to Murder Another Journalist: Mariam Memarsadeghi in the Tablet

August 16, 2022
An era of great power competition: Implications for the United States and Canada
Foreign Policy Program

An era of great power competition: Implications for the United States and Canada

August 15, 2022
Next Post
MLI: A Top 20 New Think Tank Worldwide in 2010

European style debt crisis could happen here: MLI study

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario
K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Follow us on

Newsletter Signup

First Name
Last Name
Email Address

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

Inside Policy Magazine

  • Current Issue
  • Back Issues
  • Advertising
  • Inside Policy Blog
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.