Читать книгу Northern Light: Lessons for America from Canada's Fiscal Fix - Robert P. Murphy - Страница 4

The United States now finds itself in a fiscal crisis that is quickly spinning out of control. If present trends continue, the federal debt will soon reach what many economists believe is the danger zone of 90 percent of GDP, while entitlement spending and interest costs will eventually consume virtually the entire federal budget.

The ultimate solution to this problem is at once obvious and difficult: The federal government must cut spending, and then restrain its growth until tax receipts have surpassed it. Only by running a string of actual budget surpluses can the debt burden quickly be brought under control. Eventually the vicious cycle of a debt snowball can be replaced by the virtuous cycle of budget surpluses leading to tax relief, which in turn will promote even stronger economic growth and a healthier fiscal position for the government.

Although the solution to the fiscal crisis is clear, it will be politically difficult to implement. Yet those who say it is impossible need to review recent history. Canada faced a fiscal crisis in the mid-1990s that in many respects was more severe than the one facing the United States today. The Canadians found the will to cut spending and federal employment by at least a tenth over the course of a few short years. They produced their first balanced budget in decades, and quickly emerged from their fiscal hole to become a model of fiscal discipline. Finally, and perhaps most importantly, the Canadian episode of fiscal austerity went hand-in-hand with continued economic growth and falling unemployment rates.