In the 1990s Canada was in dire straits. Its spending outstripped revenues, its credit rating was being downgraded and bold action was required to get Canada’s economy to where it is today, the envy of the G8. Chretien, to his credit, took bold action and says of the state of Canada’s finances back then “We would have been Greece of today.” Canada bounced back, in part, due to the Canada/US Free Trade Agreement, which faced vocal opposition. The deal was negotiated by former Prime Minister Mulroney’s government, who also introduced the Goods and Service Tax (GST), which Chretien promised to tear up.
It is inconceivable that the present Super Committee did not have the courage to significantly cut spending. Congress will also in all likelihood nix the automatic trigger that would have cut spending automatically. This really proves that Congress is not serious about cutting spending. As an outsider, I think it’s a sad day for America. The debt has reached $15 Trillion and is growing. The only difference between the United States and Greece, is the ability of the Federal Reserve to print money.
The Super Committee failed because it lacked a vision and leadership. That leadership should have originated from the oval office. Once again election campaigns and ideology trumped over the good of the global economy and the American people. The American people deserve better.
There would have been a day when we would have been the Greece of today,” recalled then-prime minister Jean Chretien, a Liberal who ended up chopping cherished social programs in one of the most dramatic fiscal turnarounds ever.
“I knew we were in a bind and we had to do something,” Chretien, 77, told Reuters in a rare interview.
Canada’s shift from pariah to fiscal darling provides lessons for Washington as lawmakers find few easy answers to the huge U.S. deficit and debt burden, and for European countries staggering under their own massive budget problems.
“Everyone wants to know how we did it,” said political economist Brian Lee Crowley, head of the Ottawa-based thinktank Macdonald-Laurier Institute, who has examined the lessons of the 1990s.
But to win its budget wars, Canada first had to realize how dire its situation was and then dramatically shrink the size of government rather than just limit the pace of spending growth.