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On debt, Canada shows us the way out

Wondering how seriously to take the Obama administration’s claims that its new $3.8 trillion budget plan represents fiscal restraint? Look northward, to Canada. Compared to the belt-tightening that government imposed on itself in recent years, Obama’s effort appears trivial indeed.

A new report from McKinsey Global Institute, “Debt and Deleveraging: The Global Credit Bubble and its Economic Consequences” tells the story. As of 1998, Canada’s total debt -- the combined obligations of government, households, financial and non-financial corporations -- stood at 240 percent of gross domestic product, up 44 percentage points from the 1988 level. Government, both provincial and federal, was responsible for much of the increase. And so government, especially the federal government under the leadership of Paul Martin, who served first as finance minister and then prime minister, led the way in debt reduction.

Ottawa cut farm and business subsidies, scaled back social programs (including health care) and eliminated 55,000 public sector jobs. Interest groups howled. But these measures reduced government debt from 84 percent of GDP in 1998 to 58 percent of GDP in 2005. By contrast, Obama’s latest plan contemplates growth in the U.S. federal debt from 53 percent of GDP last year to 77 percent in 2020. Chrystia Freeland and Paul Krugman have recently sung the praises of Canadian bank regulation, which kept the debt of its financial institutions down to a dull roar. Yet timely fiscal discipline is also a major reason that Canada has been able to confront the global downturn in the best overall financial shape of any major industrial country.

“Canada’s deleveraging episode provides a model for countries with highly indebted governments today,” the McKinsey Global Institute report notes. “The key requirement was the political will to force through unpopular government spending cuts.” Still no sign of that will in Washington.

By Charles Lane  | February 2, 2010; 12:11 PM ET
Categories:  Lane  | Tags:  Charles Lane  
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Comments

And I bet they don't spend $1T/year on "defense"

Posted by: thor2 | February 2, 2010 12:51 PM | Report abuse

'Washington is spending hard earned
taxpayer money, like it's Monopoly Money"

Hi, I'm barack obama,
and I am Washington.

Posted by: simonsays1 | February 2, 2010 12:53 PM | Report abuse

I agree with thor2, but Canada doesn't have "corporate welfare" plans as well.


And I bet they don't spend $1T/year on "defense"

Posted by: thor2

Posted by: smtpgirl08 | February 2, 2010 12:57 PM | Report abuse

I was surprised that Canada reduced their debt. Great for them; what a beautiful country.
As for the US, it won't be until everything hits the fan before anything is done. Voters are the problem. They expect something for nothing. They want all the services but "Don't increase my taxes!!". We live in a different world that has many with the integrity to pay what is due. Unfortunately, we are dominated by the spineless fools who howl when their sacred cow gets cut or when increaing taxes is suggested. A perfect example of this is in Virginia where the roads crumble and that dime a gallon is just way too much to fix the roads. When you look at the frivilous things that these fools piss their money away on it makes you wonder why they would prefer potholes and traffic jams over having more time to themselves. When the unemployment rate hits 15%, no one will buy our bonds, and the economy is going to hell this is when the selffish fools will think about paying the debt back. Keep on being cheap - it will cost you more in the long run. How vain and stupid.

Posted by: letztry39 | February 2, 2010 1:00 PM | Report abuse

So in looking at Canada let's remember that part of their better fiscal picture is their higher tax rates, specifically their income tax is more progressive and taxes higher individuals more than ours does. Increasing taxes on the wealthiest and the highest earners should be something that we learn from Canada and incorporate into fixing our own fiscal picture.

Posted by: jhaskett2002 | February 2, 2010 1:01 PM | Report abuse

We don't copy no other fellers. Ain't no body know nothing except us. We're Mericans. We're number one.

Posted by: rusty3 | February 2, 2010 1:04 PM | Report abuse

We have interest groups that the Canadians don't have, and some of these groups work together to kill reforms. For us, it's going to take a crisis and some kind of IMF-style bailout before anything serious will be done.

The most likely scenario for such a thing occuring would be the aftermath of another war in the Middle East, at which point our European and East Asian creditors would scream "enough" and insist that we scale back our suppport of Israel, Jordan, Egypt, the Saudis and the Gulf States. Then we could cut our military by about 2/3. Our military and intelligence spending dwarfs everything else in the Federal budget.

That's on the spending side. Canadians also pay about 1/3 more taxes than we do. Americans have an almost instinctive aversion to taxes; that's why they're Canadians, their ancestors stayed with the British Empire and paid the British taxes while our ancestors revolted and became Americans.

So, yes, there will eventually be a cut-back of government, and no, it will not happen as a result of any phased approach planned by our Federal government. Congress is not a very good planner. That requires skills that Congress doesn't have- like intelligence, integrity, etc.

Posted by: ripvanwinkleincollege | February 2, 2010 1:06 PM | Report abuse

As an ex-pat Canadian I take pride in my homeland's achievements. However, before getting too excited, we should note that the cited reduction in Canadian government debt occurred between 1998 and 2005. To compare this to the effect of policies enacted here in 2010, when the economic climate is much different, is potentially misleading. What are the current Canadian budget projections for 2011 and into the out years?

Posted by: ben9 | February 2, 2010 1:11 PM | Report abuse

Lane, you must really be trying to kill off every effort to reduce our deficit spending. Don't you realize that suggesting anything outside the U.S. as a possible model for us is the absolute kiss of death? Think of health care, where the very valid and completely true arguments that every other developed country does a better and cheaper job of it than we do were denied?

Now you've gone and done it. People will be saying that only socialist states balance their budgets; that Canadians wait in long lines to get their entitelement handouts; that balancing the budget is a "government takeover" of what ... the government budget?

Aside from the utterly unjustified prejudice that we do everything better than anybody else, it's also true - as many have pointed out here - that the Canadians don't have defense expenditures of our magnitude, and they do, apparently, have politicians with some courage and a sense of duty. Big differences.

Posted by: threeoaksgone | February 2, 2010 1:17 PM | Report abuse

Our entitlement programs are one thing and relatively easy to fix, always have been. Problem is, you need political backbone to enact the reforms which no one has had the past ~35 years. The folks who have, keep getting shot down by the nations mental midgets who are easily influenced by the interested parties.

Social Security? Never was intended to be the defacto 401K program for everyone. It was enacted ~70 years ago to keep old poor people from starving. According to most recent numbers, 70% of all people currently collecting social security, also are still making more than 65K a year from their personal investments after retirement. 20% of the people receiving social security are making in excess of 100K a year post retirement from their investments.

We as a nation are spending hundreds of billions a year basically giving well off retired people money to make their boat payment.

Instituing a cap on who could collect based on income after they retire would not only save uncle sam hundreds of billions per year, but less would have to be collected from our paychecks, saving every single american.

Healthcare - We see the blowback Obama is getting. Apparently some special interests and their sheeple would rather see healtchare costs continue to increase at 10% per year indefinitely, taking heathcare from the number 2, to the number 1 largest expense our country has. I really wodner what Republicans will say in a decade when our yearly medicare/medicade expenditures alone have exceeded 2 trillion a year?

Defense - Folks...take all other military spending combined from every other nation in the world, and we spend 3 times that just ourselves.

Clinton streamlined the military during his tenure (which was also overseen by a Republican dominated Congress, so keep your dems are weak on defense strawman to yourselves) to a more responsible level. Its been 9 years since Clinton, and even allowing for inflation, we spend 120% more per year on our military than we did 9 years ago. Ridiculous. Our military spending (with the latest budget) just got back to par to what we were spending at the height of the cold war 30 years ago (as a measure of GDP). Enough is enough.

I swear to god, Give me a red pen and one day, I could easily lop off ~1.5 trillion in long term yearly spending. But the only goal of any politician is to get reelected.

Posted by: Nosh1 | February 2, 2010 1:20 PM | Report abuse

The Federal budget broke $100 billion for the first time in 1962. Defense spending accounted for a little more than 50% of that year's budget. We've had about 600% inflation since then and population went from around 200 million to 300 million. Taking inflation and population growth into account, that would equate to a $900 billion budget for 2010. Where did the $3.8 trillion come from--even while reducing defense spending as a percent of budget by almost 60%? Unfunded entitlement programs and debt servicing account for most of it. SS, Medicare, Medicaid and debt servicing account for almost $2.5 out of the $3.8 trillion dollar budget. The three entitlement programs are essentially insolvent because they were never placed on a solid financial footing from the beginning. If we taxed the wealthiest 3% of the population at 100% rate, it would not cover the costs of this budget. When the bottom 40% have no "skin" in the game, the budget is irrelevant. The politicians have shown that they are relentlessly incapable of fiscal restraint and the only thing a thinking adult can do is "throw the wrench in the monkey works." The politicians behave like children who have broken the piggybank and headed straight for the candy store. If somebody had told Ted Kennedy in 1980($300 billion budget) that by the end of that decade, the Feds would have $1 trillion to play with, he would have wet his pants and thought he'd gone to heaven. When 1990 rolled around, that $1 trillion wasn't even close to enough for the politicians' demands. They DO NOT deserve our trust.

Posted by: kmsbears | February 2, 2010 1:21 PM | Report abuse

Sorry to fill the list with multiple posts, but I must comment on the references to Canada's higher tax rates. To make a fair comparison one must, at the very least, add our taxes PLUS our health insurance premiums before comparing to the Canadian tax rates since health care is included in their taxes. Then, one must figure in what one gets for their money: substantially lower college/vocational school tuition, etc. This comparison is, as a result, rather murky.

I do, however, agree that a big difference is our defense spending. The cost of Pax Romana suffocated Rome, the cost of a bloated military helped to bring down the USSR, and the cost of Pax Americana is choking us.

Posted by: ben9 | February 2, 2010 1:25 PM | Report abuse

So the girl who parties to hard occassionally should take lessons from the reformed alcoholic?

Posted by: Wallenstein | February 2, 2010 1:26 PM | Report abuse

Lets not forget that what Canada is doing which US is not, they are:

1- Canada has Universal Nationalized Health Care, what Republican lunatics in US call "Socialism.." - more on this here:
http://anoox.com/blog/UHC.34590

2- Canada is not wasting its people's Taxes on unnecessary Wars or a Gargantuan Military as US is - more on this here:
http://anoox.com/blog/Real_News.34029

Posted by: RealNews1 | February 2, 2010 1:29 PM | Report abuse

Truism understood by nearly everyone except neo-Marxist moonbats: raising marginal tax rates inhibits economic growth. And economic growth is the only effective antidote against unemployment.

So any politician who promotes higher marginal taxation yet says he's in favor of full employment is speaking out of both sides of his lying mouth.

Posted by: wumhenry | February 2, 2010 1:30 PM | Report abuse

Canadians pay a higher tax than American's and canadianS get FREE health care. jno comparison. The rich do noit get richer in canada, and so they do not have trhe same economic problems. BTW, Canada has a subsidized America car manfuacturing system that manufactures pa4rts for American cars. The economy that makes parts for American was subsidized heavily.

This article is disgenuous towards real economic reforms, but more of the twist the knoife in the current Administrations back. Just so we are clear, the HBush Administration disallowed the US to purchase cheapeer drugs from Canada, under the guise of les quality based on lower price.

this is a SPIN article with politics twists.

Pathetic!

Posted by: patmatthews | February 2, 2010 1:34 PM | Report abuse

I agree that the kind of tax increases and spending cuts needed to get the debt down are highly unlikely with the current Congress. However, simply saying that Congress won't act or the voters won't support it (both of which are true) is a cop-out.

Likewise, saying that it'll have to take a crisis to force us to action only perpetuates the idea that we're victims incapable of acting on our own. Besides, the recent financial crisis that threatened to bring the whole system down didn't result in the changes needed to prevent another one; so it isn't necessarily correct to say that a crisis of epic proportions would force us to make the painful sacrifices.

What's needed is a way to deal with the problems of current Congressional intransigence/cowardice/etc. and (perceived) popular unwillingness to sacrifice. A tall (and possibly impossible) order, I know; but until we find a way to deal with them, we'll continue to have the government we deserve, i.e. do-nothing.

Posted by: enigma78a | February 2, 2010 1:36 PM | Report abuse

One thing Canada does you'll never see in Limbaugh Jesuslandia is grant temporary worker permits for strong, young immigrant workers. They tax their incomes and collect social security from them to shore up Canada's aging white baby boomer population. Some of the money these people earn does go back to their home countries but so do these workers when their time is up.

In America, Huckabees would rather demonize immigrant workers (especially Mexicans) for another hateful, racist Rove "wedge issue" as part of the GOP's "Southern Strategy" and still exploit them by enticing them here to work for low wages (and, of course, no health insurance) for big, unpunished corporations who now, more than ever (thanks to Alito), can buy elections and the outcome of political issues.

Too bad it's too damned cold to live in Canada.

Posted by: coloradodog | February 2, 2010 1:39 PM | Report abuse

Gotta love my country *sniff*

Posted by: ThatCNDGirl | February 2, 2010 1:39 PM | Report abuse

Part of the issue is that, in America, half the electorate is convinced that cutting revenues reduces the deficit.

Posted by: davestickler | February 2, 2010 1:40 PM | Report abuse

America is the greatest country ever. Period. I'm still trying to convince my fellow country men that we should get involved in your awesome wars and force folks to invest their retirement savings in the market, because the marketplace is like the awesomest place to dump all our savings. Plus, we dont get the great pols like George Bush, Rick Santorum or Sarah Palin to guide us to the light!

Posted by: dmls2000 | February 2, 2010 1:45 PM | Report abuse

Canadian people and politician are more decent and honest compared to their american cousins. I have lived in Canada for eight years, there is always sense of community among its people they are not cut throat like people here in states.

Posted by: smart_sha | February 2, 2010 1:46 PM | Report abuse

We need substantial reductions in defense. We have been warring over eight years and it has proved a fruitless venture.

Cut defense now!

Posted by: Maddogg | February 2, 2010 1:47 PM | Report abuse

I would like to remind readers that Canada also increased their taxes at about that time by adding the GST.

Posted by: ideallydc | February 2, 2010 1:48 PM | Report abuse

I am a Canuck and am living in Canada.Your politicians lie to you same as our politicians lie to us. During your debates etc., on healthcare I couldn't believe what I was reading about our Canadian version.Most of it was like a slap in our face , as it was so utterly ridiculous. Our healthcare isn't the best it could be, but as usual, there's always some people with a little bit of power doing their best to undermine it.The American way has plenty of advantages as far as technology is concerned.What I've often wondered is why couldn't a plan be brought into use by implementing parts from both.Much too hard for the tall foreheads running the show.
And as far as Bush and Co. derailing Canadian drugs for American retirees, I think we can all agree he wasn't at the helm to represent "the average American"

Posted by: leolapinhotmailcom | February 2, 2010 1:57 PM | Report abuse

I know very little about Mr. Lane, but if he is spinning the conservative model of cutting cost at the government level he has indeed forgotten to mention that Canad never had spending on their Defense budget that conservatives in our country love to spend our money on and Lane really failed to mention Canada's tax rate and the raising of taxes to cover their debt. So to be fair, it appears to be a combination of factors that neither party has had the will to work to together on but instead just spin their ideology until country becomes third world.

Posted by: jrussell1 | February 2, 2010 1:58 PM | Report abuse

Mr. Lane, you note that, "'The key requirement [to Canada's budget management success] was the political will to force through unpopular government spending cuts.' Still no sign of that will in Washington."

That's not an accident. Canadian government is structured to support more decisive agreement on controversial actions. This was particularly true during the late 1990's. First legislation only needs to get past the House of Commons to become law. Second Canadian Members of Parliament are much less independent than their U.S. counterparts and therefore are more likely to vote as their Party tells them.

Third the late 1990's Liberal government had concentrated power so tightly in Prime Minister Chretien's office that a popular book referred to his reign as "the friendly dictatorship." Fourth after the splintering of the Progressive Conservatives in 1993, the Liberals were the only federal political party operating on a nation-wide basis. Between 1993 and 2005, the federal Liberals only had regional competitors to deal with.

You can blame Washington if you want. But the behavior of U.S. politicians is not likely to rise that far above the circumstances in which they dwell and work. Canada's enviable fiscal circumstances are largely the result of ideal political conditions unlikely to arise again there (or anywhere else for that matter).

The Chretien government took advantage of near-perfect conditions to introduce very controversial reforms. That government deserves credit for that. However we in America are doing the best we can collectively to deal with our fiscal problems through a political system that, unlike Canada's, weighs the need for checks, balances and consensus higher than it weighs the need for expedient actions.

Posted by: newspapers100 | February 2, 2010 2:04 PM | Report abuse

Canada had zero bank failures during this "world wide recession".
Why? Because Canada has adequate banking regulation. We still don't.

Posted by: Jihm | February 2, 2010 2:10 PM | Report abuse

A few statistics:
The Canadian GDP is 1/10 of the US.
Per capita, the US GDP is 4th in the world, Canada 12th

I would tread lightly on looking to Canada to fix things.

TAXES
There is no deduction on home mortgage interest. In most cases, they have higher income & sales taxes at all levels (Federal, Provincial, Local).

Are you proposing we eliminate mortgage the tax deduction?

Government EMPLOYMENT: (from BLS web site)
Federal Civ Employees 2.1 Million
US Military ( active ) 1.5 Million
US Postal Service 0.85 Million
St. & Local(FT pd empl) 17.1 Million
---------------------------------------
Total 21.55 Million

Total Employed
Labor Force(today) = 139.3 Million

Gov/Total = 15.47%

Government Labor is now greater than 15% of the total work force.

It needs to be around 10% MAX.
Revenue streams need to be generated in the PRIVATE sector.
The economy will not recover nor will the deficit get truly reduced until we get a handle on this monstrous level of government employment

State, Local & Federal governments for the benefit of the majority of us should trim their employment ranks by 8-9 % each year over the next 3 years to get us back below 10% Gov/Total employment ratios. Maybe then we might have a chance of getting out of this mess.

Higher taxes & more government will only make it worse.

Posted by: porchfan | February 2, 2010 2:19 PM | Report abuse

A few statistics:
The Canadian GDP is 1/10 of the US.
Per capita, the US GDP is 4th in the world, Canada 12th

I would tread lightly on looking to Canada to fix things.

TAXES
There is no deduction on home mortgage interest. In most cases, they have higher income & sales taxes at all levels (Federal, Provincial, Local).

Are you proposing we eliminate mortgage the tax deduction?

Government EMPLOYMENT: (from BLS web site)
Federal Civ Employees 2.1 Million
US Military ( active ) 1.5 Million
US Postal Service 0.85 Million
St. & Local(FT pd empl) 17.1 Million
---------------------------------------
Total 21.55 Million

Total Employed
Labor Force(today) = 139.3 Million

Gov/Total = 15.47%

Government Labor is now greater than 15% of the total work force.

It needs to be around 10% MAX.
Revenue streams need to be generated in the PRIVATE sector.
The economy will not recover nor will the deficit get truly reduced until we get a handle on this monstrous level of government employment

State, Local & Federal governments for the benefit of the majority of us should trim their employment ranks by 8-9 % each year over the next 3 years to get us back below 10% Gov/Total employment ratios. Maybe then we might have a chance of getting out of this mess.

Higher taxes & more government will only make it worse.

Posted by: porchfan | February 2, 2010 2:20 PM | Report abuse

Give us exactly nine months from today. We will put people in office who will cut this budget and send the message to the November 2012 class. Are you listening Mr. Obama?

Posted by: hz9604 | February 2, 2010 2:22 PM | Report abuse

The prudence and effectiveness of the Canadian government is mirrored by its private financial sector. While our banking system (and those of some of the European countries) came close to melting down over collateralized mortgages, I kept wondering why I didn't hear anything about Canadian banks taking a hit. It turned out that, for the most part, they found the slicing and dicing of mortgages into securities to be too exotic and risky, hence they enjoyed continued solvency.

I would point out to one poster the problem with simply declaring that people with an income over X dollars forego getting Social Security payments. Those monies have been automatically deducted from paychecks over the decades. I can only imagine the political firestorm that would erupt if the government suddenly told hundreds of thousands of people, "Sorry, you're not getting your money back."

Better to up the retirement age (why is anyone retiring at 62, even with a reduced monthly payment, unless they are disabled) and make other actuarial adjustments than to tell folks, "Sorry, you paid in but you ain't getting it back."

Posted by: jhpurdy | February 2, 2010 2:22 PM | Report abuse

As a Canadian, I'm a little proud but we are still overspending right now.

Interestingly.. Canada's effort was led by the Center-Left (the Liberal Party) and cuts were supported or unopposed by the Right (with exceptions).

The biggest cuts were to State transfers mostly in the health care space (yes.. waiting lines and less service), and critically the old-age pension system was reformed . Ouch Ouch !! Also we got lucky and partly grew out of debt during the booming 1990s.

The key was recognition by Canada's Liberals that a BIG majority of Canadians were fed up with debt and worried about their future.. sort of like the voters of Massachusetts. Canada pretty much froze most spending programs including defence for almost a decade. States too were starved for cash and had to make painful cuts. It was very very painful.

Unfortunately, the Democrats still are pushing unaffordable health care and are unwilling to rein in social security spending. They are over-reaching for failure... and it will not be pretty.

If I was a Democrat, I'd worry my brand will be toxic with voters very soon.

Posted by: pvilso24 | February 2, 2010 2:23 PM | Report abuse

The debt needs to be handled, but cutting spending now could easily drive us bakc into a full recession/depression. How about raising the tax rates on wealth?

Posted by: stevensp1 | February 2, 2010 2:28 PM | Report abuse

Just want to add to the post from porchfan. While it's true that there is no mortgage interest deduction in Canada, when you sell your house you pay no taxes on the sale. You keep the profits tax free as long as it's your main residence.

Posted by: lemoip | February 2, 2010 2:36 PM | Report abuse

Canada is a great example that universal health care is possible. We do not have government run health care and we have so much debt. American government do little for its people. Thank God we have public Education and I do not know for how long, because according to Republicans, government should not spend too much in education. Conservative representatives want to trash our public schools so they can give OUR SCHOOL SYSTEM to the private sector WITHOUT regulation!!! Then we will see the hard reality of a Third World Nation where only the wealthy has access to good schools.

USA spends too much because Americans love wars and LOVE to give money to defense contractors. We are in trouble because George W. Bush made us believe that WAR is the best way to catch terrorists, but at the same time, he cut taxes for the wealthy. Only a republican President to do such amazing thing...

Perhaps Canada has a regulated financial system where corporations need to obey and follow certain rules.

It is not fair to compare USA and Canada... more analysis are needed.

Posted by: lucavalcanti | February 2, 2010 2:37 PM | Report abuse

Wait now. Canada's GDP is $1.5 trillion dollars. The US GDP is $13. trillion. Canada sits on vast shale oil reserves, the US has little oil reserves at all and used most of what it had. You can't compare Canada's economy to the US. Even their population is only 33 million. You're comparing apples to walnuts. They also don't have Wall St.

Posted by: clairevb | February 2, 2010 2:43 PM | Report abuse

I am a Canadian citizen living in the US right now and I love it here.Taking everything into consideration, I cannot think of any other country endowed with so much natural beauty that are easily accessible for everybody to cherish and enjoy. I lived in Canada for 20 years and also lived in Australia for 6 years.
I believe I can make some valid comparisons. There is one undeniable fact about these 3 countries: British colonization and inheritance of the english language, civility and hard work based on religious beliefs and democratic ideals in governance.
The USA is exceptional due to the fact it is the only country to rebel against the British but not completely severe their ties with them. Having all this life experiences in these 3 countries and have seen the peoples way of life, I have to admit that Canada has been a better place to raise a family. I have 2 happily married sons there right now. In Canada you do not have to spend tons of money on private schools if you do not like public schools.
It may be true that non-military expenditure play a big part of their economic prosperity compared to us. On the other hand, what would it be like if the british has not prevailed over there? Would we worry about the Russians?
As far as I know, Canada and Australia never got into the sub-prime mortgage business, hence the 2 countries did not suffer severely from the recession. I have relatives in Australia and constantly in touch with them. America has a deep seated belief in "Manifest Destiny" and knowing the way of global politics, it cannot be achieved without a strong military establishment. Compare to our problem and worries about the southern border, true or not, we in this country are a lot better off with Canada on our border to the north, the Russians are more worrisome than the rest of south america. Lastly, there are 2 compelling reasons why Canada is somewhat more financially in good shape:
1. benefits for millions of illegal aliens that make no contributions in return.
2. benefits for not very productive minority groups.

Posted by: amorsolo | February 2, 2010 2:46 PM | Report abuse

The problem with the US budget, besides Defense spending increases, are the increase in entitlements due to Baby Boomers and medical inflation.

In Canada, provinces run the health care, not Ottawa. While Ottawa has been running surpluses until the recent financial crisis, the provinces are deep in debt. Quebec and Ontario, where 60% of Canadians live, both have deep deficits and have for years.

Meanwhile, US states largely run surplus budgets because they offload medical responsibilities to the Federal government.

It's important to look at both sides of the equation and not just the Federal level. Canadian provinces are struggling in debt because of the same forces pushing Medicare costs in the US>

Posted by: AxelDC | February 2, 2010 2:58 PM | Report abuse

Well, Mr Lane has pretty much hit the nail on the head here. In order for us to get out from underneath our crushing debt, some very unpopular decisions need to be made. When you boil it all down, there's three options. 1: Spend Less. 2: Take in more. 3: Combination of the above. As we know, this would mean cutting some programs that people like. This would mean raising taxes.
BTW to Thor - Not sure where you're getting the 1 Trillion number. The FY 2011 has about 700B for Defense, which includes a base budget of 548.9B, and a supplemental for the wars of 159.3B.
Here's the problem. Our political parties are more interested in preventing their opposites from governing, and keeping themselves in power than they are in actually leading, and creating sound policy. I don't know where we got off course, but we have. If the attitude doesn't change, we're in for a major problem. And frankly, my generation (I'm in my late 20s) will be the ones paying.

Posted by: ehertsch1 | February 2, 2010 3:04 PM | Report abuse

The socialists up here have found that it's easier to steal my money than to earn their own.

If you Americans would have our tax burden, you'd have a 1T surplus, even under Obama.

Posted by: davepenner | February 2, 2010 3:08 PM | Report abuse

I'm glad we're finally cutting all the insane farm subsidies and ethanol subsidies and reducing the oil subsidies from 90 percent of the DOE budget down to 50 percent.

Small moves, but good.

Posted by: WillSeattle | February 2, 2010 3:14 PM | Report abuse

Readers commenting on Canada's "progressive" tax rates are completely wrong. The top personal income tax rate in Canada is 29%. The top rate in the U.S. is 35%. Yes, Canada's model is one to aspire to, because it is more free market than the U.S.

Posted by: CSfairfax | February 2, 2010 3:39 PM | Report abuse

Politicans in this country have two aims in life; getting elected and then getting re-elected. The idea of doing the right thing is something that would never occur to them. It might damage their prospects of getting re-elected. Therefore, there is no chance of them making hard decisions on anything. Least anyone doubt the validity of this line of reasoning I give them health care, immigration, social security, banking and financial reform, and on and on.

Posted by: jeffreed | February 2, 2010 3:40 PM | Report abuse

Good Luck with the change.

The first interest group that has to take a whacking is all of the public employee unions.

Since JFK legalized them they have become an ever increasing danger to the private citizen.

Posted by: krankyman | February 2, 2010 3:47 PM | Report abuse

Listen all you sheep. We had a good run, I mean 200 good years at least. The last 30 aint been so good. So, its time to realize we aint what we used to be. Our government is is corrupt, politicians more corrupt, a defense industry that became just what Dwight D told us it would. Now we have more bombs then brains. So, we got we asked for. Most people are too stupid to see they have been hoodwinked as long as they have cable TV and booze. Its time for a second revolution and restore a government that is really of the people and for the people. Or, well, can you speak Chinese?

Posted by: rjb121891 | February 2, 2010 3:50 PM | Report abuse

So in 1998, Canada began cutting costs (subsidies, social programs), and I assume raising taxes, although that isn’t mentioned in the article. All well and good for balancing the budget. That same time frame (1998 to now), GWB gave a 1.6 trillion tax cut to his friends, spent 2 trillion in Iraq and Afghanistan, and stood back as 8 million jobs were outshored to China and India – and he didn’t raise taxes!

Now, is the game plan for prosperity to REVERSE what GWB and the Neocons implemented in those years? If so, I would suggest tossing out all those in Congress who FAILED in their oversight duties to the America people as a good start.

Posted by: shadowmagician | February 2, 2010 3:52 PM | Report abuse

Another case of comparing apples with kumquats. There is one basic first step, recoginizing that spending isn't the answer and that a budget means spending only what you really have. The current administration and congress would best be suited if it changed all it "budget" offices to the new title of "spend" offices.

Posted by: staterighter | February 2, 2010 3:53 PM | Report abuse

Good Luck with the change.

The first interest group that has to take a whacking is all of the public employee unions.

Since JFK legalized them they have become an ever increasing danger to the private citizen.

Posted by: krankyman

-----------------------------------------------------

Yea because when I think threats to our economy and way of life I think about 2-3% of our population who don't pull in multi million dollar bonuses and cook up schemes to cheat working Americans out of their savings.

If gov't workers on #1 on your list you need to step back and review the rest of the landscape.

Couldn't you have at least said career politicians.......that's so easy even a mental patient couldn't help but agree with you.

Posted by: theobserver4 | February 2, 2010 3:57 PM | Report abuse

Readers commenting on Canada's "progressive" tax rates are completely wrong. The top personal income tax rate in Canada is 29%. The top rate in the U.S. is 35%. Yes, Canada's model is one to aspire to, because it is more free market than the U.S.

======================
That's Federal tax rates. What happens when you add in the State and Provincial taxes? I'm pretty sure health care in Canada is paid for on the Provincial level, and I wouldn't be surprised if there was a massive disparity between the top US State tax brackets and top Canadian Provincial tax brackets.

Posted by: thetan | February 2, 2010 4:00 PM | Report abuse

Actually, Canada's top federal income tax rate is only 29%, lower than the US's. Provincial income tax tap rates range from %5-10%, still lower than the top marginal rate faced by DC or NY residents.

Canada does have a national 5% VAT tax which is hardly progressive, along with provincial sales taxes. Capital gains are taxed at half of an individuals income tax rate.

The lesson here is that if we want to keep wide-spread middle class entitlements like social security, medicare, the mortgage interest deduction, etc, the middle class needs to step up and pay for them.
-------------------------------------------
jhaskett2002 wrote:

So in looking at Canada let's remember that part of their better fiscal picture is their higher tax rates, specifically their income tax is more progressive and taxes higher individuals more than ours does. Increasing taxes on the wealthiest and the highest earners should be something that we learn from Canada and incorporate into fixing our own fiscal picture.

Posted by: jph11 | February 2, 2010 4:02 PM | Report abuse

I think one of the biggest differences between Canadians and Americans is that in Canada we have debates on what we construe as fair levels of taxation. The government provides us with services that yours doesn't, that's true, but in return we pay higher taxes. Most Canadians think it a fair trade, even those such as myself who have never had to use the health care system yet pay taxes into it.
Democrats talk about more services and Republicans talk about lower taxes and who gets elected is usually someone who actually does both, which is a significant problem.

Posted by: adamvanderlip | February 2, 2010 4:04 PM | Report abuse

Wait for absolute disaster, suck on it, then react slowly. It's the American Way (see: Pearl Harbor, the Great Depression, the price of oil, Terrorism, de-regulation, Airlines, California, the Missouri Compromise and Civil War, on and on and on and on).

Posted by: Please_Fix_VAs_Roads | February 2, 2010 4:10 PM | Report abuse

Hmmm...what exactly are Canada's national security commitments around the world? They can neither project power nor sustain the little power they do project. Canada lives in a fireproof house next to the fire department...they have no national security concerns for which they have to commit resources at all.

Posted by: diehlwithit | February 2, 2010 4:16 PM | Report abuse

Defense spending is a red herring! Anyone who says that's what put us in this hole is either an ignoramus or a liar. As this plainly proves: http://www.cato-at-liberty.org/2010/02/01/five-decades-of-federal-spending/

Posted by: wumhenry | February 2, 2010 4:28 PM | Report abuse

Copy Canada? Pahleeze! We've got such a superiority-complex that the very notion of doing something that's successful, but originates outside our borders would give our obese egos too much of "the biggest loser" workout.

Posted by: callosumlink | February 2, 2010 4:45 PM | Report abuse

['Washington is spending hard earned
taxpayer money, like it's Monopoly Money"

Hi, I'm barack obama,
and I am Washington.

Posted by: simonsays1 | February 2, 2010 12:53 PM]


"it's okay to get into deficits during economic downturns...."

Hi I'm every Republican for the past 3 decades who, all the sudden, wants government to balance budgets when I've criticized Democrats for wanting to do just that. Remember "Tax and spend liberals" and "borrow and spend Republicans". That's the way it's been for decades. Till now. See, change has occured.

Posted by: callosumlink | February 2, 2010 4:49 PM | Report abuse

An insane comparison -- Canada's "success" has been driven on the back of massive increases in commodity prices. They have a ton of land and natural resources...and not many people. None of the three conditions are things for which the Canadian government can take an ounce of credit.

Posted by: TMFOtter | February 2, 2010 5:10 PM | Report abuse

Its easy to play the blame game, but the fact of the matter 1998 was a boom year. We could have cut spending then. But now its too late. If we cut spending now we would exacerbate the recession. It happened under Roosevelt in 1937. What we have to do it play it cool till this blows over, and then instead of raising interest rates to cool the economy, like was done under Greeenspan, we raise taxes or cut spending - whichever.

Posted by: khripin | February 2, 2010 5:13 PM | Report abuse

wumhenry,

I don't get your point that "defense" spending ("war-of-aggression" spending would be closer to truth!) is a red herring even after reading Chris Edwards'brief note and following the chart he presents as exhibit in his Cato@Liberty opinion piece. During the past decade, "war-of-aggression" spending has indubitably gone up significantly, as Edwards acknowledges and as shown in his chart. The actual situation is most clearly described in a piece by John Cassidy in The New Yorker ( http://www.newyorker.com/online/blogs/johncassidy/#ixzz0e1xuH9DQ): " In 2000, the budget was still benefitting from a peace dividend. Between 1987 and 2000, defense spending as a share of GDP fell from 6.1 per cent to 3.0 per cent; then came 9/11. By 2009, half the dividend had disappeared—the Pentagon was consuming 4.6 per cent of GDP". And as Edwards puts it in the opinion piece you refer us to, milirtary spending is jumping to "an even higher level of around 4.9 percent of GDP".

Posted by: FUZZYTRUTHSEEKER | February 2, 2010 5:19 PM | Report abuse

Those citing the defense budget are fools. Yes, there is waste there, and we are in two stupid wars that should be ended immediately, but it won't even come close to solving the problem.

Our Medicare, Medicaid, and Social Security systems are the greatest government cost. In Canada they don't get the latest and greatest treatments with no wait. Unfortunately you are up against the most insidious voting block of all, the seniors and baby boomers who are taking us for everything we have. The amount they paid into Medicare is so much less than they are taking from it now- it's ridiculous.

Why don't we freeze paying for health innovations that don't cut costs until we figure out how to pay for what we already have.

I am completely against the tax the rich concept. We have already reached a situation where fewer than half of our population pays taxes. One reason these people aren't opposed to more spending is that they aren't paying for it.

Posted by: staticvars | February 2, 2010 5:23 PM | Report abuse

The idea that Canada is a Scandinavian like Socialist State is an urban myth that is getting very outdated. The 'high tax- high service' model of governance has been getting steadily dismantled by in Canada since about 1985. That said, healthcare and a reasonable social safety net remain, primarily because the population at large is extremely supportive of them.
As for taxes, I can tell you that in Alberta the top federal income tax rate is 29% (reached on earnings over $140 000), the provincial rate is 10% (flat). Income below about $20 0000 is pretty much tax free. Sales tax is 5% on pretty much everything except groceries.
It is my suspicion that these tax rates are quite similar to those in a lot of US States, especially when you factor in health care.

Posted by: Zaphod1 | February 2, 2010 5:26 PM | Report abuse

It is not a good comparison. Canada produces 102,575 bbl/day of petroleum per million people, while the U.S. only produces 28,083 bbl/day per million people. In a petroleum-based global economy it is easy to fill state coffers rapidly with tax revenues from the production, distribution and export of crude as Canada does especially as crude prices increase drastically. The U.S. is restrained both in its reserves and in its will to tap them, which, in some part, contributes to our fiscal position.

Posted by: Jeff_in_DC | February 2, 2010 5:49 PM | Report abuse

fuzzytruthseeker wrote:
>>I don't get your point that "defense" spending ... is a red herring even after reading ... the chart [at http://www.cato-at-liberty.org/2010/02/01/five-decades-of-federal-spending/]. During the past decade, "war-of-aggression" spending has indubitably gone up significantly, as shown in [the] chart. The actual situation is most clearly described in a piece by John Cassidy in The New Yorker: ".... Between 1987 and 2000, defense spending as a share of GDP fell from 6.1 per cent to 3.0 per cent; then came 9/11. By 2009, half the dividend had disappeared—the Pentagon was consuming 4.6 per cent of GDP".<<

While obsessing over the modest increase in defense spending since its five-decade, pre-9/11 nadir in 2000, you and John Cassidy ignore an elephant in the room: namely, non-defense spending, now at approximately 18% of GDP -- the highest it's ever been since WWII. I stand by what I said before: blaming the current fiscal mess on defense spending is BS.

Posted by: wumhenry | February 2, 2010 5:50 PM | Report abuse

Canada - doesn't make the defense expenditures we do as many other readers caught on to.

And they benefited from the high price of oil - they export oil to us and other countries as well - which most readers weren't aware of.

Canada has tremendous hydro-electric potential and a resources to person ratio second to none.

However, Canada is falling into the same trap that we are - everywhere you go - instead of being able to buy quality Canadian products to buy as souvenirs you saw junk - made in China.

Posted by: agapn9 | February 2, 2010 6:04 PM | Report abuse

The solution for U.S. is simple - fire Obama!

Posted by: GordonShumway | February 2, 2010 6:04 PM | Report abuse

I forgot, how many unnecessary wars is Canada fighting - last I heard it was just the one in Afghanistan, while we're still in Iraq and still fighting the insane Drug War against MJ.

Hmmm.

A lot easier to run a surplus with a lot fewer wars of convenience.

Posted by: WillSeattle | February 2, 2010 6:09 PM | Report abuse

Here's a novel idea. Instead of taxing the wealth-producting people aka "the rich" why don't we set a flat tax rate the EVERYONE pays. Something like half the country now pays NO taxes and somehow we've created a bunch of losers who feel entitled to the fruits of others' labors just because they live here. Our forefathers would absolutely cry at how worthless and weak people have become. I think the Constitution promises the "pursuit of happiness" not "happiness guaranteed" which is what many now believe. As Maggie Thather is alleged to have said "socialism is great until you run out of other people's money."

Posted by: rcoveringdem | February 2, 2010 6:27 PM | Report abuse

As you note, Paul Krugman already sang the praises of Canada's policies. But you say their success is due to "timely financial discipline". But financial discipline... right now..... is not timely!!!!!!!!!

We're in the midst of a financial crisis!! Spending is mandatory. "Timely financial discipline would have been 8 years ago... when Bush decided to invade Iraq for no apparent reason and cut taxes for the wealthiest 1%, who'd just collected a windfall from the Clinton economy.

Lane, in case you did not know, you're a moron. And you are certainly no ecomomist. You should never ever mention Paul Krugman in any article you write... as if you are in his league. It only serves to highlight your short-comings.

You beat out Bill Kristol and Richard Cohen as the stupidest pundit in America.

Posted by: kurthunt | February 2, 2010 6:33 PM | Report abuse

What's this? A conservative praising Canada? Isn't Canada the country with "socialist" healthcare? How can the Caandian govt afford to give everyone free healthcare, yet still run a healthy surplus, when the US is running up a huge debt despite being the only developed world government that simply leaves its citizens to die uncared for?

Canada has two huge advantages over the US:

1. Because public healthcare is vastly more efficient than the US model, Canadians don't have $10,000s taken out of their income for insurance. Thus they can afford to pay slightly higher taxes yet still take home more of their pay than Americans do.

2. Above all, Canada is not burdened by legions of idiotic proto-fascistic "conservative" militarists (like Mr Lane) bent on global domination and eternal war.
Unlike Americans, Canadians don't believe in Military Big Government.
Unlike Americans, we don't believe that the Earth was promised to us by God as his special nation, to rule over with our armed forces.

It's amazing how much money you can save when you're not an insane fascistic warmonger bent on subjugating all foreigners.
Americans should try it.

Posted by: kevrobb | February 2, 2010 6:34 PM | Report abuse

Canada's defense expenditures are nil. They have no navy or air force to speak of...and an army about the size of a US separate brigade. They have no serious military commitments either necessary or unnecessary anywhere in the world. So...when the Canadian parliament thinks "national security", they look south to their patron. Don't tell me it doesn't mean anything.

Posted by: diehlwithit | February 2, 2010 6:36 PM | Report abuse

I am a dual citizen of Canada and the United States and see each nation as unique. Canada has profited greatly by the U.S. bearing the burden of interntional security. However, it's unfair to say Canada has not borne its burden which a fair look at Canada's contribution in the wars of the C 20 will bear out. Health care is not free in Canada; even after taxes we pay a premium of about $100 a month. That said, health care is basic in Canada, and on the avereage we do not have the same ready access and expectation of level of treatment my employer in the U.S. provided. Taxes are higher. University tuition is much cheaper. Canada has its strengths and weaknesses just as the U.S. does and has the same issues of those who want government to provide everything and those who believe they govern best who govern least. Whatever the differences, the key to good economics - it isn't that complicated - and the same for the nations' governments as it is for individual households: We need to discipline ourselves to live within our means; cultivate that kind of self-reliance that doesn't "shoot the moon" financially in good times but put something aside for a dry season. Our kin knew this and built two great nations who have come down the years together. Let's keep them that way, prosperous and at home with each other on this continent.

Posted by: malafry | February 2, 2010 6:38 PM | Report abuse

Let's all think back to 2002 or 2003, when Dick Cheney said that 'Reagan proved that deficits don't matter'.

Cheney and Reagan were both stellar idiots. Deficits DO matter. And the only time they are forgivable is when they are absolutely necessary.... like when we're in the midst of an economic crisis... like right now. Keynes and FDR proved that - stellar geniuses, both.

Posted by: kurthunt | February 2, 2010 6:41 PM | Report abuse

In answer to above:
Canada's defense expenditures are about $25 billion a year.
They have both a Navy and Air Force, both of which are currently active in Afghanistan and Haiti.
There are about 70 000 men and women in the Canadian Forces.
They have supported every US military involvement in the last hundred years, except Vietnam and Iraq (It appears their greatest skill is picking when to pass!)

Posted by: Zaphod1 | February 2, 2010 6:45 PM | Report abuse

According to the Canada Revenue Agency website, the Canadian federal income tax rates are about 15% for the first 40K, 22% for the next 40K, 26% for the next 40K, and it caps out at 29% on everything over 126K.

It looks like they tax lower incomes at a higher rate than we do and 29% on higher incomes is a lot less than the 35% we charge.

Posted by: AZShan | February 2, 2010 6:46 PM | Report abuse

Whack defense spending by 60%, that will make a big dent in the debt.

Decrease troop levels, if we put the soldiers into making businesses rather than leveling business, that will help GDP growth.

Posted by: camasca | February 2, 2010 6:57 PM | Report abuse

Maybe we should have copied Canada when they DIDN'T invade Iraq for no good reason.

That would have been fiscally disciplined.

But we had morons like Lane beating the war drums.

That's why Canada is better than us. They don't give column space to idiots like Lane. They put them in well-funded, well-run mental wards.

Posted by: kurthunt | February 2, 2010 7:00 PM | Report abuse


Sen. Brown to GOP: Don't Count On Me For Every Vote

By Susie Madrak Friday Jan 29, 2010 2:00pm


http://crooksandliars.com/susie-madrak/sen-brown-gop-dont-count-me-every-vot


The newest senator's in a vulnerable position. He's from a fairly liberal state (although apparently not as liberal as everyone thinks) and he's got to run again in four two years. I think we'll see some very interesting votes from the other Senator Brown:

BOSTON – Scott Brown says he has already told Senate Republican leaders they won't always be able to count on his vote.

The man who staged an upset in last week's Massachusetts Senate special election, in part by pledging to be the 41st GOP vote against President Barack Obama's health care overhaul, told The Associated Press in an interview Thursday that he staked his claim in early conversations with Senate Minority Leader Mitch McConnell and Minority Whip Jon Kyl.

"I already told them, you know, `I got here with the help of a close group of friends and very little help from anyone down there, so there'll be issues when I'll be with you and there are issues when I won't be with you,'" Brown said Thursday during the half-hour interview. "So, I just need to look at each vote and then make a proper analysis and then decide."

Posted by: omaarsblade | February 2, 2010 7:02 PM | Report abuse

I am all for reduction in Government spending. To start, let's repeal all Bush tax cuts and eliminate all corporate welfare and farm subsidies. Then, pull our military out of Iraq and Afghanistan. Finally, implement real health care reform that actually regulates health care insurance industries and controls runaway pharmaceutical profits. Consider extending health care welfare benefits only after a 15% - 20% reduction in costs is realized.

Posted by: JD15 | February 2, 2010 7:07 PM | Report abuse

Lets all keep in mind that both Republicans and Democrats are fighting like mad to protect their favorite spending projects. Every single project has some constituency or it wouldn't exist.

It is Republicans however that are blocking many needed reforms, like pay-go and setting up a bipartisan commission like the base closure commission in which a package of spending cuts and tax increases must be voted up or down without amendments.

It will be impossible to solve this problem without everyone in government trying to actually govern and a be willing to work together.

As as I can tell, the Republican's have a working political strategy that consists of pontificating about how big the deficits are and making speeches how this is all about liberal spending, while refusing to acknowledge that almost all of the underlying deficit problems were laid down when they were in charge of both branches of congress (6 of the 8), and held the white house the entire time.

This really is not about blaming anyone, its just laying out the facts on the ground. I understand and can forgive mistakes, even when for whatever reason those responsible do not or can not apologize for them. What I cannot abide however is demagoguery and hypocritical political posturing while this great country suffocates in mountains of debt.

Posted by: reussere | February 2, 2010 7:24 PM | Report abuse

Fareed Zakaria had an excellent article about Canadian banks, in Newsweek. Feb 07/09
called "The Canadian Solution".
Pierre Eliot Trudeau once said that living next to your country was like sleeping next to an elephant,; every twitch, every little movement impacts us and our safety and security.
And near the end of the Vietnam War, we did indeed start to train some of our service people to go to 'Nam in some kind of a supportive role; I know because one of my brothers was one of those trained. But the mission was suddenly canceled.
We avoided following you into Iraq only because we happened to have Chrietien as PM, and the conservatives were in a minority, especially cause the other two parties, the NDP, and the Bloc were
on the side of the Liberals.
We too can be a prideful nation, and we shouldn't be.
But no one will ever duplicate, in the history of the world, the relationship our two countries share, like we share a continent.
Let us learn from our own, and our neighbours mistakes, and be like we were on 9/11, Katrina, California, Washington, and British Columbia supporting each other fighting wild fires, it goes both ways, and may it always be so.

Posted by: katem1 | February 2, 2010 7:37 PM | Report abuse

we work here like slaves 15 hours day and pay over %14 Tax and more many of are Immigrant or canadian having so difficalt times here like me landed here from Iran 1995 have dream to get marride buy house and never happen , canada lies , and are government just take care of own employer or talking about politics , over 200,000 homeless and many of are canadian do not have money to look after on own tooth people stolen apple from grocery here , www.notcanada.com
is one of the pages are complaine over this country. is fine place for lazy rich people canada

Posted by: stopthewar | February 2, 2010 7:50 PM | Report abuse

The USA already balanced its budget . . . when Clinton was President.

In 1993, a Democratic Congress and a Democratic President passed the budget (barely, with no Republican support) that cut spending and increased taxes.

The reward? Voters put Republicans in charge of the House in 1994.

By 1998, the budget had a surplus--for the first time in over 25 years. Clinton's reward? The Republicans IMPEACHED him.

In seems clear the voters could care less about a balanced budget.

Posted by: guitar1 | February 2, 2010 7:53 PM | Report abuse

For far, FAR too many of us, any idea that is not original with us is not only suspect, it is insidious and wrong. Use other countries' ideas? Are you kidding? We'd rather bankrupt ourselves with "the best health care system in the world!" than admit that we could learn from others.

I'm sure that any workable solution we can devise to any of our enormous problems will have some (likely many) uniquely American features, as well it should. But American Exceptionalism now comes with too great a price tag. We may THINK we have the best country in the world, but we won't have it for long if we can't lose the egocentric macho posturing.

America needs a strong defense, not because we have any imminent threat from from any other nation-state, but because abandoning the world will leave a vacuum. And that vacuum WILL be filled, and certainly not in a way we'd like. That said, we can't spend as much as we do on defense anymore. We can't, not unless we want to leave our grandkids in abject poverty. And I'm not a traitor for saying so.

Posted by: post_reader_in_wv | February 2, 2010 7:53 PM | Report abuse

Naaa, we're too stubborn/stupid/utterly convinced we're right about EVERYTHING and know what's best for EVERYBODY. Too bad, as we're also just about the youngest kid on the planet.

Posted by: lunasatic | February 2, 2010 8:03 PM | Report abuse

Canada got into a jam when Mulrooney the then Conservative PM followed his mentor Reagan and his policies which drove us into debts we'd never seen before. It took 10+ years of careful Liberal fiscal prudence to stabilize the budget then run surpluses to start paying down the the National debt run up by the Conservatives. Harper, our current PM, is a Conservative to the right of Mulrooney who cut the VAT taxation by 29%, the reason we are back into a deficit position again. It was considered smart politics at the time but poor policy.... still is. He's taking the credit for the stability of our banking system which was rated no. 1 in the world by the OECD (the US is 40th, the UK 44th) the hallmark of the Liberal administations whereas the current Minister of Finance did allow the semblance of the subprime mess to start in Canada just before the whole messy thing blew up. As to the defence expenditures, we don't have overseas possession or fiscal interests to protect but in another currency with 140+ lives lost in Afganistan, PER CAPITA we've sadly outspent the US in that category...and nobody attacked us. BTW did you guys know we supplied 20% of the Obama Auto bailout package though only 10% your size in population and GDP? It was interesting that Ontario chipped in $6 billon whereas Michigan was noted as not participating.

Posted by: sjag1 | February 2, 2010 8:06 PM | Report abuse

Just out of curosity, does anyone know the average percentage of Canadian citizens voting in any given Canadian national election? Or do they have the same 2% of the voting population "representing" the other 98% that we have? Just wondering.

Posted by: lunasatic | February 2, 2010 8:09 PM | Report abuse

Canada is doing many things right because it does not have a Republican Party. If we export these phony demagogues to Canada, their political system will be a mess within few months.

Posted by: ithinker | February 2, 2010 8:15 PM | Report abuse

Hey, I have an idea. Lets sell The Pentagon To Ze aka Blackwater. That way Ze can pay us taxpayers. Problem solved. Now we get to have decent affordable healthcare.

Posted by: fabricmaven1 | February 2, 2010 8:21 PM | Report abuse

lunasatic: It depends on wether there is a hot button issue in play, but here's some specifics. 2000 @61.2% turnout and 2006 @64.7. It costs the average Canadian MP 60 cents per voter to get elected (by law)with no company or union donations allowed and Elections Canada will match what you can raise yourself up to 30 cents per voter to the 60 cent maximum. A major party will spend about $18 million to contest all 305 seats, and Elections Canada may kick in as much as $9 million. Once you are elected the Speaker of the House sees to all your staffing, research, admin. and travel needs..we have no equivalent of K St.

Posted by: sjag1 | February 2, 2010 8:28 PM | Report abuse

for those that do not like this country,move to canada like the low life cowards did during the vietnam fiasco,but please stay there and live the wonderful life u deserve.

Posted by: pofinpa | February 2, 2010 8:32 PM | Report abuse

How unfortunate that the current occupant of the White House and the majority of the Congress want to spend, spend, spend.

Tough to fulfill one's desire for proliferate spending when the wallet is empty.

We need a government that recognizes the deficit and entitlements as the greatest threat to our national security.

Promote the general welfare and provide for the common defense. Obama should have those words whispered in his ear every day he is in office. Perhaps twice a day.

Posted by: krankyman | February 2, 2010 8:48 PM | Report abuse

As a Canadian I say that Mr. Lane is quite correct in stating that Canada cut it's deficit and debt but describing it an economists phrase as "forcing through unpopular measures" is somewhat simplistic. First of all Mr. Martin & Mr. Cretien protected their core constituency's, namely Ontario and Quebec, before slashing all the subsidies and transfer payments they were supposed to make for such joint Federal-Provincial programs such as medicare and leaving the provinces on the hook for the lost funds. The provinces therefore had to either close hospitals or increase taxes. Being the operators of medical facilities as well as being a lot closer to local population that was now seeing taxes rise or services reduced they got the blame.

A second interesting move was to let the Canadian dollar fall to nearly US$0.70 which was great for creating manufacturing jobs, such as in Ontario and Quebec, but a disaster for anything you would like to import such as fresh food from California in the winter.

Playing one part of the country off against another is an old game in Canadian politics which I hope the US doesn't adopt. In Canada if you have the populations of Quebec and Ontario voting for you then the rest of the country really doesn't matter. Try to imagine a party controlling the US Congress and Presidency with only votes from New York and California and being successful. Not really possible is it? Yet that is effectively what has happened in the past in Canada. Our present government is one the few in the last half century to include members from all regions.

The main problem in all of this is that the remedies used in Canada work here because we have a very different form of government. Party discipline is very strong and having members vote against the party line is rare. We also have a collection of parties representing different philosophies and opinions. A minority view stays a minority view and doesn't get it's hands on power as seems to have happened to the Democratic Party. Our senate is appointed, not elected, so there is really no one to contradict a governing partys' policies.

Comparing the two countries is like comparing apples and oranges. We may share the same continent but our political systems are a world apart.

Posted by: RockDoctor | February 2, 2010 9:12 PM | Report abuse

Canada, eh! It's good that Canada's budget burden is not as much as in the United States. The liberal governments in Canada did the correct thing in lowering their budget burden. The budget burden will continue to rise in the United States but there will be a spending freeze because too much budget burden is not good.

Posted by: LibertyForAll | February 2, 2010 9:22 PM | Report abuse

Mr. Lane wants the United States to "copy Canada," but somehow this probably does not include emulating their universal health care system.

Posted by: Aprogressiveindependent | February 2, 2010 9:47 PM | Report abuse

So all the conservatives here in America didn't say boo when George Bush was racking up the debt. Now that Obama is in, they blame it all on him. Stupid liars. And in Canada they have universal health care which is much cheaper than our stupid health system that bloats the pockets of insurance companies and costs us twice as much. Will the conservatives admit that? no.... they just lie, lie, lie... and want to cut taxed for the rich, which is what got us into this mess under George W. Bush anyway. Republicans are only for the rich getting richer... the rest is all lies to pull the wool over ordinary people's eyes.

Posted by: goldie2 | February 2, 2010 9:52 PM | Report abuse

I live in British Columbia. My income tax rate starts at 15% for earnings over $11,000 and progresses to 43.7% max on earnings over $137,000. There is a sales tax of 12% on everything. The interest on my home mortgage is tax deductable only if the money is used for investment purposes. An individual in BC pays $648 annually for healthcare. Any healthcare benefits from an employer are taxable. Our healthcare is not as good as we would like but it is not nearly as medieval as detractors would have you believe. There is a big difference between what you need and what you want. All in our system costs us half what your system does. Each individual is allowed a tax sheltered investment fund of 18% of income up to an annual limit of $20,000.
Small businesses with an income under $500k are taxed at 13.5%. Corporations are taxed at 35%. The corporate tax rate is being reduced each year to reach a max of 25% in 2012. There are 2 main regulations on Canadian banks. They must have reserves of 20% and they are limited in the amount of debt they can offload. Home mortgages are insured. There are no interest payment only mortgages.
Canada's oil reserves are huge only when you count the tar sands. Conventional reserves are about 5.8 billion barrels about a quarter of the US reserves. Your natural gas reserves are larger than ours.
The petroleum reserves are provincially owned and most of the income goes to the province. Tar sands plants need about $60/bbl to break even and probably $75-$100/bbl to justify expansion. Nowhere near as lucrative as Texas.
The main difference between us is in our view of the relationship between the state and the individual. You believe in the individual's right to limitless success in return for assuming responsibility for his own wellbeing and government stay out of it. We have a darker view of life that suggests that the individual is helpless before the winds of fate. That if you succeed in life it is due in no small part to sheer good luck. The state is there to protect the individual from the worst of fate and provide him an environment to succeed in. Unemployment and ill health are not personal failings. We aren't experiencing the income spreads that you do and social mobility is higher than in the US.

Posted by: cowichan | February 2, 2010 10:05 PM | Report abuse

Let me get this straight...you are advocating cutting federal jobs and spending in a deep recession?!!!

In addition, it is the non-discretionary funding (SS, medicare, VA benefits, Military) that is causing the huge deficits, An easier strategy would be to end the illegal wars and close some military bases.

The truth is that our allies including Canada save significant money by not having to pay their fair share for global peacekeeping as well as their national security operations.

Then they promptly use these savings to balance their books and to invest in their social and infrastructure programs.

Posted by: BlackLibertarian | February 2, 2010 10:15 PM | Report abuse

Terrible Posting. He compares what Canada did in the past to what we MAY do in the future. Notice that after the wonderful period of cutting, Canada was able to get its debt as a percentage of GDP down to 5% MORE than we had 5years ago. This is not comparing apples to oranges; it's comparing apples to squid.

Posted by: lensch | February 2, 2010 10:27 PM | Report abuse

Of course we can do it. We were running budget surpluses under Clinton. Then Bush was elected and everything became a shambles. So the secret is just keep the Democrats in the White House for 8 years. It will take some time to clean up the Republican mess.

Posted by: hithere2 | February 2, 2010 10:36 PM | Report abuse

Does anyone know what our debt was as a percentage at the end of the Clinton years? this is not rhetorical

Posted by: NYClefty | February 2, 2010 10:40 PM | Report abuse

Canada is simply different from the United States. It is different in so many subtle ways that comparisons are never exact and omit relevant detail. Canadian society is much more coherent than American society ever was. It simply has to be in environmentally hostile conditions where one is reliant more directly on the good will of others and the performance of necessary duties by the state. I regret the decline of publicly owned services by the state in Canada. I treasure the ones that remain.

I do not think Canada is any sense a model for Americans to follow. The historical social imperatives are quite different. May they remain so into the future. I find it supremely ironic that the country which sought to invade and annex Canada during the war of 1812-14 and which was eventually repulsed with some considerable vigor would now be looking northward for exemplary performance. We have a very good thing going here north of the 49th parallel. The fewer people know about it the better as far as I'm concerned. Go back to sleep Merkans.

Posted by: kartoon | February 2, 2010 10:41 PM | Report abuse

kudoes to "enigma for an insightful post.

Posted by: onifadee | February 2, 2010 10:43 PM | Report abuse

How about cutting off funding for Bush's two unfunded wars for nothing namely the Iraq war and the Afghanistan war? That would be an excellent starting point to reduce debt.

Posted by: moxford0 | February 2, 2010 11:05 PM | Report abuse

Canada has national healthcare.

Can we?

Posted by: lichtme | February 3, 2010 12:05 AM | Report abuse

As a Canadian who is intimately interested in U.S. politics I can tell you that the only difference between our 2 countries is ideology. Canada isn't nearly as religious or divided politically as America. Sarah Palin wouldn't stand a chance up here. The only thing that would initiate a rebellion north of the 49th parallel is a ban on hockey.

Posted by: wturecki | February 3, 2010 12:15 AM | Report abuse

I'm glad to see you all are keeping an open mind and reacting to the information and opinions presented rather than riding away on the hobbyhorses of your own preconceptions.

Posted by: robert17 | February 3, 2010 12:32 AM | Report abuse

Look. I have read, listened to and watched every single one of these anti-government critiques from the conservatives and from the media and they all have one thing in common: None of them have the courage to pin this debt where it actually belongs--on the American people.

There is a reason Presidents, Senators and congressmen are loathe to take the actions needed: cutting spending and raising taxes. It is because of you--the media--and of the benefiting constituencies in both parties who prefer to keep the status quo if they are asked for any sacrifice.

And yes that goes for you in the media as well because you benefit from the campaign financing structure of our political campaigns, thus you are loathe to change to public financing because it would cut into your political ad revenues.

Nothing is going to happen until you in the media stop pitting both ends against the middle for your own profit and ratings and until the American voters are made to understand that if they really want change, they too are going to have to make sacrifices.

Posted by: jaxas70 | February 3, 2010 10:49 AM | Report abuse

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