Читать книгу Northern Light: Lessons for America from Canada's Fiscal Fix - Robert P. Murphy - Страница 15

The importance of the 1995 fiscal reforms can scarcely be exaggerated. The size of the federal government shrank significantly, balancing its budget within three years, which yielded the first surplus the Canadian government had enjoyed in almost a quarter century. Canada’s federal government transformed itself from a fiscal basket case to the envy of the industrialized world.

Equally as important as the nominal reductions in outlays is how government spending and revenues compared with the economy. All told, federal government spending (program spending plus interest payments) fell by 17 percentage points of GDP over two years.

The federal government ran 11 consecutive budget surpluses beginning in 1997/98. Consistent surpluses meant a reduction in the dollar-value of federal debt. With the federal government paying down debt and the economy expanding, the total public debt plummeted from 80.5 percent of GDP in 1997/98 to 45 percent a decade later.

The Canadian experience shows that with courageous leadership and sound policy, even a serious fiscal crisis can be reversed in just a few short years. US policymakers should pay close attention to the lessons from Canada.