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Former Under Secretary of Homeland Security, Author of “Deadly Indifference”, National Security Blog Expert - The National Journal, Political Blogger - The Daily Caller, Radio Talk Show Host - "The Michael Brown Show", Founder & Chairman - Apoklayyis, Inc.

Canadian Liberals Get It. When Will American Liberals (and Conservatives)?

Imagine waking up and reading this story: [He] was charged with pulling his nation out of the fiscal death spiral. He did it with deep cuts in federal spending over two years that amounted to 10% of the budget, excluding interest costs. Nothing was spared…What drove the left-of-center Liberals to shoulder the burden of downsizing government in the 1994 and 1995 budgets — [He] takes great pains to point out — was not ideology but “arithmetic.” That is to say that everyone recognized that the magnitude of the debt, and the cost of servicing it, was unsustainable.

Unsustainable.

If you’re wondering who the story above is about, look to the north. In a Wall Street Journal piece today the facts are laid out about where Canada was, which is where we are, and how they pulled out of the fiscal doldrums.

Here’s more of the story: The problem had been building over many years. In 1965, federal spending had been 15% of GDP. By 1993 it was 23%. Markets didn’t like it. Between February and March of 1994, the three-month Canadian Treasury bill rate went to 5.82% from 3.85%. The Mexican peso crisis in December of that year didn’t help. By February 1995 the interest rate on the Canadian Treasury bill reached 7.8%. In a world of increasing uncertainty and a flight to quality, Canada was paying dearly for its deteriorating risk profile. As the exchange rate sank, Canadians were getting poorer and the government was speeding toward a wall.

We’re in the same position, although we are still the reserve currency of the world. But for how long, with Bernanke implementing quantitative easing for an indefinite period. Some 70% of U.S. debt is now purchased and owned by the Federal Reserve.

Unless we stop spending, we’re going over the fiscal cliff. For some reason, even the liberals in Canada recognized the problem and they did something about it.

When will liberals – and elected conservatives – do the same?

Read the full story from the Wall Street Journal here.

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One Response to “Canadian Liberals Get It. When Will American Liberals (and Conservatives)?”

  1. Josh #

    I agree with you we need to cut spending and move towards the Canadian model, the solutions are right before our eyes. We need to look at history and the experience of other nations and apply some of the solutions that have worked for others. Just because we are America, does not mean that the laws of economics or the laws of empire do not apply to us. We can learn from the situation the British Empire was in during the late 19th and early 20th century, we need to pull back from our empire and concentrate our limited resources on our own health. We can also learn from the Canadian model, where liberals and conservatives compromised on their beliefs, for the good of the nation.

    Why is it that several countries that have social policy far more progressive leftist than our own, are in better shape fiscally than we are. Canada and Norway have cradle to the grave protections for all of their citizens and a radically more progressive tax structure than we do yet both countries run little if any spending deficits and have healthy economies. These facts seem to point to the fact that the Republicans may be wrong about what makes for a healthy nation economically. In the case of Canada and Norway progressive tax codes do not result in an economy with no opportunity.

    The problem that I see facing us today is that you have a Radical right, who refuses to compromise on military spending to pull back from our empire. They refuse to compromise on tax policy; they refuse to compromise on tax subsidies to big business. There is room for compromise with the democrats, what we need is true statesmen who are willing to compromise themselves out of office for the good of the nation.

    September 25, 2012 at 12:08 pm