Chretien: ‘We would have been the Greece of today’ – Canada Cut Spending and Size of Government

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.

Reuters

The result was that the Federal Liberal’s had some of the conditions created for them to reduce the deficit and get Canada back on the rails.  The hated GST and Free Trade deal are often not given credit for Canada’s rebound.   Some of us have been around long enough though to remember.   Chretien’s Finance Minister, Paul Martin, also took drastic action by cutting programs and reducing the size of government.  Despite this, the Liberal Party remained in power for more than 12 years.

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.

via Chretien: ‘We would have been the Greece of today’.

About the Author

Karl Gotthardt - Politisite Managing Editor Maj. Gotthardt is a Retired Military Officer with 35 years service in the Canadian Armed Forces. He spent most of his time in the Military in Infantry Battalions. Karl took part in training for Afghanistan as an Operator Analyst with the Canadian Maneouvre Training Centre. Karl is a qualified military parachutist and military free fall parachutist. He earned his U.S. Master Jump Wings in Fort Benning, Georgia. Karl enjoys working with horses for the last 24 year. He owns six. He has experience in breeding, training and of course riding.Karl was born in Germany and is fluent in both English and German and he speaks enough French to "get in trouble". Karl has written or writes at NowPublic, All Voices, Tek Journalism and many others.

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