Face-Off Over the Debt

Here’s an interesting article on the deficit and debt ceiling from the Pittsburgh Post-Gazette. Particularly interesting is a bit at the end, that talks about Canada and how they reduced their spending without “pushing widows and orphans into snowdrifts.”

If the debt ceiling isn’t raised, federal spending must be cut dramatically. Republicans in the House have proposed trimming $2.5 trillion over the next 10 years.

This is not as much as it sounds. The cuts essentially would reduce federal spending to what it was during President Bush’s last year in office, when few thought the federal government was starved for funds.

Still, Democrats doubtless will claim the cuts Republicans propose would force widows and orphans to beg in the streets. The experience of our neighbor to the north suggests otherwise. In 1994, Canada’s national debt was 67 percent of gross domestic product. Now it’s less than 30 percent.

To do this, Canada cut its federal spending from 17.5 percent of GDP to 11.3 percent. (In the last fiscal year, our debt exceeded 94 percent of GDP.)

Canada did this without pushing widows and orphans into snowdrifts. The budget cuts were accompanied by a higher rate of economic growth, a lower unemployment rate.

Canada’s economy is healthier than ours. The unemployment rate there is 7.6 percent. Ours is 9.4 percent. Last year the Canadian economy grew faster than any other in the G-8, roughly twice as fast as ours did.

While Democrats in charge and liberals in general will whine that those mean Republicans are trying to balance the budget on the back of Grandma’s Social Security (of which she likely got more than she ever put in), clearly it can be done.

Read the story here: Faceoff Over the Debt



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